News

The cost of prime country houses rose by 12% during the past year as overseas buyers snapped up the most expensive properties, according to research.

The average cost of a manor house increased by 11.6% during the year to the end of June, while other country houses saw their prices rise by 10.4%, according to estate agent Knight Frank.

The group said the market was being driven by a combination of high City bonuses and increasing numbers of international buyers.

It added that overseas buyers bought 43% of properties costing more than £5 million in the South East during the past year.

The average price of a country house increased by 3.3% during the second quarter of the year.

Manor houses saw the strongest growth with their prices rising by 4.1% during the three months to average £3.1 million. Farmhouses, which typically have at least five bedrooms and several acres of land, also saw above average price growth, with their value rising by 10.6% during the past year and 3% during the past quarter to average £1.3 million.

The average price of a country cottage with three bedrooms and an acre of land reached £562,000 at the end of June, 8.9% higher than a year earlier and 2.8% higher than in April.

Liam Bailey, Knight Frank’s head of residential research, said: “2007 is proving to be a strong year for the country house market. Manor houses proved to be the strongest sub sector yet again, with prices growing by 4.1% bringing their annualised price growth to 11.6%, well above the 8.9% recorded for the mainstream national market.

“Payment of City bonuses together with an increasing international presence in the country house market has aided price growth.”

The price of country homes in East Sussex rose fastest during the year to the end of June, increasing by 27.5%, while the cost of prime properties in Wiltshire and Cornwall rose by 25%, and Kent saw increases of 18%.

Housing debt also reached £2.2 billion, according to the statistics published by the Scottish Executive.

The news comes as official figures revealed the number of council homes in the country is continuing to fall.

They show that just over 10,000 council homes were set to disappear from the sector between September this year and the same point in 2006. This estimate is a reduction of 2.9%, broadly in line with the rate of decline in recent years.

Right-to-buy sales to tenants account for about four-fifths of the drop, with the remainder down to demolitions. The figures do not include more than 8,000 homes in Inverclyde where a stock transfer to a social housing landlord was voted through last year.

Among the highest falls were in North Lanarkshire (1,291), Edinburgh (1084) and South Lanarkshire (905).

The figures showed that housing debt rose by more than £200 million between April this year and the same point in 2006. It now tops £2.2 billion, with an average of £5,710 per home.

Tory communities spokesman Jamie McGrigor said he was not surprised at this rise, arguing: “The last Scottish Executive completely failed in its task to convince people of the merits of housing stock transfer, which would have begun to substantially address the issue of this debt.”

The Tories back stock transfer which, Mr McGrigor claimed, makes housing officials more accountable to tenants and provides a more local management system.

The figures also show a range of £20 between the highest and the lowest rents. The City of Edinburgh Council is expected to have the highest rent in Scotland at £58 and Moray Council remains the lowest at £38.

Total capital expenditure in 2007/08 is projected to be £501 million, an increase of £39 million (8.4%) on 2006/07, with Midlothian, Angus and Perth and Kinross projecting the highest increases.

Retired homeowners withdrew a record £300 million from their properties during the second quarter of the year, figures have showed.

Trade body Safe Home Income Plans (Ship), which represents 90% of the equity release sector, said more than 7,400 new plans were taken out during the three months to the end of June, 16% more than during the same period a year earlier.

The total value of the new business was £302.3 million, the highest figure to date, and up from £262.8 million during the same period in 2006. Ship said the figures contributed to a record half-year for both the number of new equity release plans taken out and the value of new business.

During the first six months of 2007 14,224 new plans were sold, 11% more than during the same period a year earlier, worth a total of £596.2 million. That figure represents a 10% increase on the first half of 2006.

Equity release enables retired homeowners to withdraw equity from their home without having to move. People can either sell a portion of their home to a home reversion company for a lump sum, or they can take out a lifetime mortgage against the value of their home, with the mortgage not repaid until they die or move house.

Ship said the popularity of drawdown mortgages, which enable people to unlock cash in stages, continued to grow during the quarter. These plans now account for 47% of all new business, compared with just 21% during the same period of last year.

Jon King, chief executive of Ship, said: “This quarter’s figures demonstrate tremendous growth in business for Ship members and the equity release market as a whole.

“The number of new plans sold represent not only a record second quarter but also contribute towards a record half-year since figures were recorded.”

Research by equity release intermediary Key Retirement Solutions also showed the equity release market was enjoying strong growth. The group said demand for equity release plans had increased by 18% during the first six months of the year, while the amount of money unlocked jumped by a third to £660 million.

It also saw a strong rise in demand from consumers for drawdown mortgages, with the number of these loans taken out rising by 225% to account for 44% of all new plans. But at the same time the number of people taking out home reversion plans, under which they sell a proportion of their home, fell to account for just 6% of new business.

More than half of people with a with-profits investment say they are unhappy with its performance, a survey showed.

Around 57% of people with one of the products said they were not happy with the returns they were getting, half of whom claimed they were very unhappy.

Overall just 3% of people with one of the investments said they were very happy, while 37% said they were fairly happy, according to investment management firm Managing Partners Limited (MPL).

But despite their lack of confidence in the products, 67% of people said they planned to continue investing in them, and just 21% said they planned to stop.

A further 11% of people said they had not yet decided what they would do.

Consumers’ negative sentiment towards with-profits is shared by independent financial advisers, with only 7% of IFAs saying they had a positive view of the policies, while 67% had a negative view.

With-profits are long-term savings products that invest in the stock market and are often taken out as personal pensions or an endowment to pay off a mortgage.

They aim to smooth out investment fluctuations by holding back returns in good years to pay out in bad ones. But their performance has been hit in recent years by falling stock markets during the early part of this decade.

Jeremy Leach, managing director of MPL, said: “Despite improving stock markets, many with-profits based products continue to disappoint investors with poor returns.

“Indeed, between 1998 and 2007, the average returns on with-profits products from a number of leading providers fell by over 50%. This helps explain why only 3% of those people with these products are very happy with their current performance.”

A fifth of all claims for accidental damage to the home happen during the school summer holiday, an insurer says.

Halifax Home Insurance said it saw a 23% surge in claims for accidents around the home, such as broken windows and ruined carpets, during July and August.

It urged parents to check that their insurance policy covered accidental damage, as claims could run into hundreds of pounds.

The group, which analysed its own claims records, said homeowners in Glasgow lodged the most claims for accidental damage during the summer holidays, with people claiming an average of £565 on their insurance policy.

They were followed by Edinburgh and Newcastle, with claims averaging £495 and £510 respectively, and Merseyside and Cardiff & the West Valleys.

Other towns to be included in the group’s top 10 hotspots for accidental damage claims were Leeds, Aberdeen, Bristol, Guildford and Wakefield & Huddersfield.

Vicky Emmott, senior manager of underwriting at Halifax Home Insurance, said: “It’s particularly important at this time of year for parents to check their home insurance policies and make sure they are covered for accidental damage to the home and contents.

“This summer’s heavy rains show little sign of abating, meaning children may well find themselves cooped up indoors for hours on end when they want to be outside playing, so they may get restless and find mischievous ways to amuse themselves.”

Britons are prepared to pay nearly £5,000 extra to secure a property with a parking space, a survey shows.

Seven out of 10 people said they would be prepared to pay a premium to get a home with a driveway or designated parking space, according to Halifax Estate Agents.

People are prepared to pay an average of £4,800 more to secure somewhere to park their car, with 11% of people happy to pay between £5,000 and £10,000 extra, while 4% would pay between £10,000 and £15,000 more.

A further 1% of people even claim they would be prepared to pay up to £30,000 extra to buy a home with a drive or parking space.

Drivers aged between 55 and 64 are most likely to be prepared to pay extra at 77%, while those aged between 16 and 24 are least likely to want a parking space, with 43% saying they would not be prepared to pay a premium for somewhere that had space to park a car.

Colin Kemp, managing director of Halifax Estate Agents, said: “Our research shows that access to private parking facilities is highly desirable when searching for property.

“If you are selling your home, make sure any parking facilities are presented to reflect their intended use as much as possible. For example, clear any junk out of the garage so it obvious that there is adequate space for a car and make sure driveways are weed free and cleared of rubbish.”

Many top savings accounts are failing to increase their interest rates in line with the official cost of borrowing, research showed.

Investec Private Bank said in April 2002 nine out of 11 of the best-buy savings accounts were paying more than the then Bank of England base rate of 4%, while the remaining two were matching it.

But five years later, only three of the accounts had matched or bettered the 1.25% rise in the base rate since then, while six had increased their rates by less than 1%.

The average rise for all the accounts was just 0.92%.

Linda McBain, of Investec Private Bank, said: “Interest rates on savings accounts change regularly and it is important for people to ensure that they are receiving a fair and competitive rate.

“In order to attract a large number of savers, some banks and building societies can offer market leading rates, but once they reach their targets, they drop them dramatically.

“This is because many of their initial offerings are based on short-term bonuses.”

Latest data from property website, Rightmove, shows the average property asking price nationally rose by just 0.3% in July - the lowest monthly rise this year. And giving an annual rate of 10.3% (13.2% in June). The average asking price now stands at £240,001 (£239,317).

This year’s third interest rate rise has coincided with the lowest monthly asking price increase recorded so far in 2007. The last time growth was this low was December 2006, with -0.3% and September 2006, with a 0.2% increase.

Average national asking prices rose by just 0.3% (£684) as sellers flattened their price expectations. Indeed, the cumulative effect of the rising interest rate environment has seen prices over the last three months rise at a quarter of the pace set in the preceding three months. Between January and April asking prices rose by 6.1%, from £222,859 to £236,490. Between April and July they rose by only a further 1.5%, to £240,001.

Miles Shipside, Commercial Director of Rightmove said: This is further evidence that the ‘mini boom’ is coming to an end. As long as employment remains buoyant, prices are likely to remain broadly at these levels.

“However, depending on local supply and demand, sellers are going to have to duck and weave with their asking prices, especially if there is another rise in interest rates. This may be less likely now as there do seem to be further indicators suggesting a softening in the housing market as referred to in the MPC’s latest minutes.”

Instead of the traditional North-South divide, we now have a divide between London and the rest of the country. While the London market continues to show signs of cooling, the annual rate of increase is virtually double all other regions of the country.

The closest contender to London’s 21.7% annual increase is the Yorkshire and Humberside region, where prices have risen by 11.4%. Even the capital’s neighbours in the South East and East Anglia have a rate less than half that of London, at 10% and 10.4% respectively.

Shipside adds: “Shortages of supply will remain more acute in the capital, as suitable building land is harder to come by and demand will continue to grow as the City strives to become the financial capital of the world.

“The consequent upwards pressure on prices can be absorbed by highly paid City workers, but it exacerbates the existing problems for key workers and first time buyers in London.”

© Moneyextra.com

If you’re looking for the best teenage bank accounts you may want to take a look at these new offerings - Alliance & Leicester and HSBC have both recently opened bank accounts targeted at a younger consumer. Alliance & Leicester’s Premier 21 pays an impressive 10% interest on balances up to £1,000 up to July next year. Balances of £1,001 or more attract just 0.1% interest. As well as a high in-credit interest rate, Premier 21 account-holders also receive a linked Plus Saver Account paying 4.8% AER, a debit card, an overdraft facility (for over 18s only), and access to the account 24 hours a day via the internet, telephone and mobile phone.

For those in their early teens and younger children, HSBC has introduced the MyMoney range for 7-17 year-olds last month. It consists of a savings account - MySavings - for those aged between 7-11 years-old which pays 5.25%, and a linked current account - MyAccount - for those aged 11 and upwards.

If you don’t fancy the Alliance & Leicester or HSBC teen accounts and you’re still looking for the best teenage bank accounts, there’s not a great deal of choice out there for current accounts , although there are plenty of kids’ savings accounts to choose from. Lloyds TSB has an under-19s current account which pays 3.3% in-credit interest and Cumberland Building Society offers the 24/7 account paying 2.85%.

Other accounts have lower interest rates such as The Abbey which pays 1.5% on in-credit balances and gives account-holders a debit card and overdraft facility when they start working.

The Royal Bank of Scotland’s R21 account pays 2.27% and has a £100 buffer before overdraft charges kick in. However, unlike Alliance & Leicester’s Premier 21 it charges an eyewatering £38 for unpaid direct debits and standing orders (although such high charges are unlikely to withstand the scrutiny of the Office of Fair Trading, which began investigating current account fees in April).

© Moneyextra.com

Latest quarterly research from the Halifax shows the average price of a home in Greater London breaking through the £300,000 barrier for the first time in Q2 2007- to £313,122 - taking the average price in the capital above the new inheritance tax threshold of £300,000.

Since 1995/96 house prices across the UK have increased by 219% - more than double the 95% increase in the IHT threshold from £154,000 in 1995/96 to £300,000 for 2007/08. Indeed, the IHT threshold would now be at £490,000 - almost two-thirds above the current level of £300,000 - if it had been increased in line with house price inflation since 1995/96.

Meanwhile, the average price in the South East, the second most expensive region, rose above £250,000 for the first time in Q2 2007 to £259,904. And that takes it above the £250,000 threshold at which stamp duty is payable at 3%. As a result, someone purchasing at the average price in the region in Q2 2007 would have paid £7,797 in stamp duty; £5,302 more than a purchaser paying the region’s average price (£249,471) in the previous quarter.

If the higher stamp duty thresholds were increased in line with house price inflation since July 1997 - when the £250,000 and £500,000 thresholds were introduced - the £250,000 threshold would now stand at £720,000 and the £500,000 threshold would be £1,440,000.

And if the lowest stamp duty threshold had been increased in line with house price inflation since March 1993, it would now stand at £190,000. This would be £65,000 above its current level of £125,000.

As for local property prices, 8 towns that have seen the biggest house price rises during the last 12 months are all in Northern Ireland.

Newtownards is the UK’s top property hotspot, recording a 64% rise in prices over the past year - the average price there having risen from £139,610 in Q2 2006 to Q2 £228,310 2007.

Craigavon, a new town, has seen the second biggest rise in the UK with an increase of 57%, taking the average price there from £132,727 to £208,280 over the past year.

Regionally, the average price in the North passed £150,000 for the first time in Q2 2007, reaching £155,188. Scotland (£140,262) and Yorkshire & the Humber (£149,051) are now the only parts of the UK where the average price remains below £150,000.

The north/south divide in England has re-emerged over the past year. Greater London (18.4%), the South East (14.0%), East Anglia (10.9%) and South West (10.0%) have all recorded double digit house price growth since 2006 Q2. All the other English regions have seen single digit growth over the period. As a result, the difference between the average price in northern England and that in the south has widened from £81,681 in Q2 2006 to £103,451 in Q2 2007.

© Moneyextra.com