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Asking Prices At Their Highest In Six Years

Although many experts are predicting a huge decline in the housing market in the forthcoming months due to Covid-19. The latest monthly statistics indicate there was an increase of 1.5% in the average asking price in the last month. This means the overall increase in the last 12 months is 2.0%.

The increase of asking prices in the last month is the highest month to month surge since 2014. If you consider these figures were taken before the change in stamp duty regulations one could expect this figure to increase next month, given the substantial savings now available to any buyers.

It is reported that new sales instructions are getting to back to where they were pre Covid-19, however this is not the case in Wales and Scotland where there are still heavy restrictions in place.

Reports state that the strongest area in England is Yorkshire where there is an apparent increase of 2.7%, a significant improvement. It is also reported that in London new instructions are back to the where they were before the Pandemic, which is great news for the Country as London is generally the leader in which the other regions follow.

Whilst Yorkshire is the strongest performer in the UK the East of England is the worst however the area has still improved, which illustrates the improvement in the industry is consistent across the whole of England.

Although the average prices have increased the amount of new instructions in June compared to June 2019 was down by 9%, however given the circumstances I am sure forecasts would have predicted a higher fall.

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HOW LONG WILL THE BUOYANT MARKET LAST?

I am sure you have thought the same over the last week or so, ‘houses seem to be flying off the shelf’.

You are right in your thoughts there are a lot of sold boards currently going up, which illustrates the housing market is strong. However, as the famous saying goes ‘looks can be deceiving’. Before coming with up the assumption all is well with the property market we have to consider the following

  • The market has been basically closed for three months so what percentage of these sales are backlog?
  • As we all know finding a buyer for a property is one thing, getting the transaction completed is another. This has always been the case in the industry, however early indications are the amount of sales that fall through may be higher than normal. The main reason for this is the buyer been unable to obtain a mortgage. There are a considerable amount of buyers who were granted a mortgage in principal pre-lockdown and are now looking to make an offer on a property they desire. Unfortunately, and you can understand why, due to covid-19 lenders have tightened their lending criteria significantly. Because of these unforeseen circumstances a high level of the agreement in principals will no longer qualify. For example, buyers who have a 5% deposit. Pre-Covid 19 if you had a 5% deposit there was a strong chance you would be able to obtain a mortgage subject to a strong credit score. However, now this is basically impossible. This is why if the estate agent selling the property is not on the ball at point of offer the house will be marked as ‘SOLD’ only to be re-listed later down the line.

Although some properties listed as sold will be eventually be relisted due to the reasons detailed above there will still be a level which will complete. With the recent changes in stamp duty experts predict a decent level of sales will continue to be agreed.

However, although the property market maybe buoyant the question is ‘how long is this going to last?’ The government are currently helping a significant number of people with the loss of their incomes due to Covid-19, for example the furlough scheme. But what is going to happen once the government remove the cushion?

Analysts predict there are going to be a significant number of people who are made redundant once the furloughing stops. Therefore, with unemployment rising it goes without saying the amount of people looking to move will decrease which in turn may affect the property market in a negative way.

Due to the point illustrated above If you are looking to sell your property the window of opportunity maybe now.  If you would like a Free Valuation contact us today on 03333 232 199. All our terms are on a no sale no fee basis and we only charge £800 on completion irrespective of value.

 

 

 

 

 

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HOW WILL THE STAMP DUTY HOLIDAY WORK?

HOW WILL THE STAMP DUTY HOLIDAY WORK?

Today the Chancellor Rishi Sunak announced a holiday on stamp duty for property purchases up to £500,000 with immediate effect. The initial suggestions are this is going to last until March in a bid to stimulate the housing market and help all people looking to purchase a property since the impact of the Coronavirus.

The holiday applies to people who complete a transaction on their main residence up to £500,000 in England and Northern Ireland, which could save people up to £15,000, a significant amount of money. People who complete on properties for higher than £500,000 will only be charged stamp duty on the difference between the £500,000 and the respective purchase price.

The governments objectives for this move are

  • To help buyers who have been hit financially by the coronavirus
  • To boost the property market as a whole hit by the market basically been closed during lockdown.

I AM LOOKING TO PURCHASE A PROPERTY HOW MUCH STAMP DUTY WILL I PAY?

As previously explained if you are looking to purchase a property and the agreed purchase price is anything up to £500,000 then you will not be liable to pay any stamp duty. The next tier is a purchase price from £500,001 – £925,000 where a stamp duty level of 5% will be due. The next tier been £925,001-£1.5 Million at 10% and anything over £1.5 Million a liability of 12% will be payable.

Landlords and second home buyers also qualify for the cut but they are still liable for the extra 3% charge once stamp duty applies to the transaction.

SO WHAT HAS CHANGED?

Prior to the announcement stamp duty was due on any agreed purchases at £125,000 or higher. However, any first-time buyers didn’t pay the liability on any agreed purchase up to £300,000.

WHAT ABOUT IF I HAVE JUST COMPLETED A TRANSACTION?

The stamp duty holiday came into effect today (08th July 2020). Therefore, if for example you completed on a purchase last week you will not be liable for any refunds and stamp duty will be paid at the rate before the holiday came into force.  However, one thing to consider is stamp duty is payable on completion not exchange. Therefore, if for example you exchanged contracts on your agreed purchase last week and the completion date is 10th July 2020 you will be entitled to the stamp duty holiday.

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ARE PAYMENT HOLIDAYS GOING TO BE EXTENDED FURTHER?

There are reports that the chancellor Rishi Sunak is currently working with the FCA and industry to help put further processes in place to extend mortgage payment holidays. These will apply to all those people who are still in financial difficulty because of the Coronavirus. Although a decision has not been made yet reports suggest the are looking at ways to continue support when it runs out at the end of June.

However, the importance of explaining the consequences of taking a payment holiday must by marked out in black and white according to a number of experts.

Martin Lewis ‘The Money Saving Expert’ explained last week ‘The FCA has confirmed, sadly, that while credit files shouldn’t be impacted by mortgage or other payment holidays, lenders are still allowed to take them into account when making their acceptance decisions.’

“It’s impossible to say yet how widespread this will be or how substantial the impact will be we’ll start to learn that over the next year. 

“Each lender’s assessment process is different, it’s a dark art that’s hidden from the public and never published, so this is likely to be yet another factor applicant’s will need to navigate.”

However, for a large percentage of people they have no option, due to the financial impact covid-19 has had on their personal circumstances and Mr Lewis did state that you should take the holiday if it is imperative due to cash flow reasons.

In regards to extending payment holidays the general consensus is that given the huge impact and downturn on the economy a further extension seems very sensible.

But there is no doubt this cannot go on forever and the government will need to devise a clear and dynamic strategy on how to bring this to a close.

If you were unaware of the option to take a payment holiday on your mortgage account, loans or any credit cards contact the respective lenders website. There you will find the relevant information on how to apply for the payment break.

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THEY ARE CALLING IT THE CORONA-COASTER

The new name given to the property industry is the ‘Corona Coaster’. The first set of figures have been released relating to property transactions in the UK since lockdown. There were just 55,381 residential sales completed in March with a huge number of solicitors confirming they did not complete one sale. In contrast to January where there were over 100,000 sales completed, a 4 year high. Just looking at these two figures you can see where the name ‘corona coaster’ has come from.  

Further statistics confirm that each conveyancer completed on average 15 transactions each in March, the lowest since 2013.

However, when you look at the whole first quarter of 2020 a 5% increase is evident with over 235,000 sales completed. However, it will be interesting to see how quarter two pans out given the industry has returned to some form of normality.

Since the market re-opened last Wednesday Rightmove have reported some positive numbers as far as interest is concerned with a high percentage of these been first-time-buyers. However, many experts predict that these first time-buyers might be slightly disappointed as the reductions and discounts they are hoping may not be there.

The property portal Rightmove released date illustrating that 60% of first-time buyers postponed their plans to buy a new property. However, now lockdown on the market has slightly relaxed these first-time buyers have decided now is the time to book a viewing. Because of this influx there isn’t any early indication that property prices are going down as there is plenty of demand. These thoughts were backed up by Rightmove as their data indicates that asking prices are up 2%.  The question is how long will this last for? Is it just a honeymoon period or a backlog given in reality the market has been closed for nearly 8 weeks?

Therefore, the clever tactic for some who aren’t in a rush might be to wait whilst things pan out as that deal maybe there it might just be a waiting game until the honeymoon period is over. On the other hand there will be obviously those sellers who need to sell fast for whatever reason so if you are looking for a bargain it maybe worthwhile calling a few agents to see if they have a vendor who are in a personal situation where they need a quick sale.

But it’s pretty obvious and the property market as many other markets comes down to the basic economics of supply and demand. Whilst there is plenty of demand which at the moment there seems to be you if you are wanting to make an offer on a property you may need to pay the asking price or if not very close to it.

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CAN I NOW VIEW A PROPERTY AND MOVE HOUSE?

It goes without saying there is a high level of uncertainty at the moment with more grey areas than ever and this includes the property industry.

We are receiving a high level of calls for clarity on what house sellers and buyers can and can’t do.

On Wednesday it was clarified by the government that estate agents were formally allowed to return to work with the respect of social distancing and strict hygiene measures. Along with estate agent’s construction workers were also advised they could start their engines with the intentions of kick starting the property market.

So, I suppose the first question is

CAN I VIEW A PROPERTY?

During lockdown physical viewings on properties were not permitted, however many estate agents were offering virtual viewings by using apps such as WhatsApp and Facetime in the form of a video call. Since the slight relaxation by the government it is now possible to attend a physical viewing of a property, which has to be good news for everyone. However, it goes without saying that social distancing measures have to be respected by all parties. Furthermore, the government have advised sellers to ensure all external, internal and cupboard doors are open prior to the viewing, which will avoid contact between viewer and fixtures within your property. One thing the government has said is that only one viewing at a time, so open houses are a no no, there should also be a good sized gap in between each viewing.

CAN I NOW MOVE HOUSE?

You may have agreed to sell your property and completed the legal process prior to the lockdown or even during lockdown but due to the restrictions have been unable to move out of your house and into your new home. Good news, if all parties in your chain feel comfortable about completing the transaction and moving you can. However, again it goes without saying that this has to be done with the respect of social distancing and a thorough deep clean of the property you move into is advised. Another recommendation would be to try and move yourself without using a removal company but if this is not possible ensure you use a company who has the right measures in place.

UPDATE ON EXISTING TRANSACTIONS

Prior to lockdown there were 1000’s of people who had agreed to sell their property but due to a number of reasons their house sale stalled. This week we have seen valuers/surveyors return to their job of work. The Land Registry have started to complete applications and a number of solicitor practices have asked their employees to return to work. All of this should help those transactions which had hit a brick wall so if you were one of these people I would expect you to see progress on your sale/purchase shortly.

HOW HAS THE INDUSTRY REACTED SINCE THE OPENING OF THE PROPERTY INDUSTRY

Figures don’t lie and the property portal Rightmove stated its website experienced a 45% jump in traffic to the site following the formal re-opening of estate agencies across the Country.  Another interested statistic was enquiries about viewings had increased by 70% and there were 2,115 new properties listed in the first 5 hours of trading. This is really positive for everyone who is thinking about selling their property.

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LENDERS START TO RE-ENTER THE MARKET

In the last week a number of main-stream lenders have launched more products to the market which offer more generous terms, making it easier to get a home loan.

This is excellent news for the whole economy and should give the industry a huge boost. At the start of the month all lenders had pulled a large percentage of their products only offering mortgages to people with large deposits.

One example of a change made recently to the market is Halifax have resumed loans at 85% Loan to value where is was previously 80%.

In fairness to all the lenders it is quite impressive they have loosened things so quickly given how busy they were at the start of lockdown supporting all their customers with payment holidays.

During lockdown lenders have still been issuing mortgage offers even though their valuers have not been able to attend the respective property. To overcome this they have had to rely on their systems and information available on the internet by carrying out what they call a ‘desktop valuation’. Granted it took a few days for lenders to put these processes in place furthermore the underwriting has been a lot stricter and generally only been available with applicants with a significant deposit.

A huge amount of people will have held off from applying for a mortgage, whether a re-mortgage or purchase mortgage is required. If you are one of these people, now might be the perfect time to at least speak to someone, so why not give us a call on 03333 232 199? One of our in house mortgage brokers will offer you free mortgage advice and source you the best product to suit your circumstances.

Although certain economists predict we are facing recession fixed rate mortgages continue to be at an all-time low, with the base rate been nearly 0%. However, many experts predict its only a matter of time before interest rates start to rise, mainly because of the crisis the economy may face due to covid-19.  

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CAMPAIGN LAUNCHES TO CONTROL VIEWINGS, AND SDLT HOLIDAYS

There has recently been a campaign launched asking the government to introduce what has been described as a ‘Property Sector Support Package’. The aim of the package is to kick start the property market since lock down.

The main points detailed in this campaign are

  1. Contactless viewings
  2. A loan of £1,500 for buyer who complete a purchase
  3. A SDLT (Stamp Duty Land Tax) Holiday

The campaign identifies all the following measure will be adhered to with regards to contactless viewings, ensuring people are protected from coming into contact with people.

  1. Back to Back viewings will not take place
  2. Viewings will not take place in a property where one of the residents have symptoms of covid-19
  3. Viewers will wait in their cars until they are told they can enter the property
  4. All vendors will ensure all cupboards are open, lights on, and no direct contact is made with anyone hosting or attending the viewing

The document then goes onto explain what the government could also consider to kick-start the market, these are

  1. A six-month holiday break on all SDLT transactions and any other tax’s involved in a residential property transaction. This element would have a huge effect on the market especially with people wanting to upsize and therefore introducing to the market more first-time buyer properties.
  • A cash of incentive of £1,500 to any homebuyer in the form of an interest-free loan, which has to be paid when the buyer sells the property. Therefore, this is not a grant as the money will come eventually come back into the system.

The campaign goes onto state that more than 1 million homes are bought and sold every year in the UK.

People have to consider its not just the estate agents, solicitors and mortgage brokers who will be affected by a significant drop in property transactions. There are figures which state the impact on DIY and home removals could be in excess of £8 Billion.

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HOW CAN I SELL MY HOUSE DURING LOCKDOWN?

We are fully aware we are all in circumstances which very few of us have experienced before. Only those who were brave enough to live through the war will have experienced what we are all living through at the moment.

The best way to summarise things today is your life is on pause, the most frustrating thing I suppose is we do not know how long this will last. The 3-week lock down expires on Monday however there are strong rumours suggesting this will be extended.

Some people will be finding the level of uncertainty hard to comprehend and that will probably include those people who want to sell their property, whatever stage you are at in the process.

You may be thinking about putting your property on the market, if this is the case it maybe worthwhile waiting till lockdown is relaxed as people are not physically allowed to view properties. However, there are ways round this, for example virtual tours which we have offered numerous times already with some been successful. So, if your property has an EPC already please check the EPC register for clarification here              or ask your estate agent there is nothing to stop you listing your property. Granted the levels of attention won’t be at their highest but there is still chance a buyer maybe found.

Alternatively, you maybe in a position where you have found a buyer. If the buyer requires a mortgage, we would strongly suggest speaking to your estate agent to see if the buyer can use a lender who will work from a desktop valuation. Similar to a virtual viewing the lender will run extensive reports on the property and make a decision on the value without having to send a valuer into the property because again this is permitted.

You me even be further into the process where the buyers have their finance, solicitors have finished their work and the sale is ready to complete. Unfortunately, this is where it gets slightly tricky. Last night it was announced by the law society that solicitors should only work on simultaneous exchange and completions. With the government not allowing anyone out of their house apart for medical reasons, work if necessary and shopping this is where things grind to a halt.

Its times like this where your estate agent needs to show their true value as communication is going to be so, so important to keep your sale going. There is a large percentage of sellers who are going to hit a wall. What I mean by this is their sale will get to a stage where everything is complete but unfortunately the solicitors will not be able to complete the transaction. Therefore, its imperative your agent stays in regular contact reassuring them you still want to sell the property once lockdown is relaxed. This may be ok for some but if you are relying on the funds from the sale things become slightly more stressful.

In these instances, there are other avenues you could explore. For example, there is the we buy any house industry. This industry is made up of companies who buy properties for cash. From our research we believe a large percentage of them have stopped buying due to the uncertainty. However, there are some sill offering their services. Better still they are buying properties without the need of a survey, inspection or valuation allowing them to complete on agreed deals today. So, if you need to sell a property fast and require it to complete asap this maybe the option for you. To help here is a number for you 03333 232 199. They will offer you a free no obligation valuation.

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THE NEW YEAR IS HERE

No, we don’t mean the New Year as far as the calendar is concerned, we mean it’s the start of the new tax year.

This article will identify a number of changes that may affect your finances. Some of the areas you will see changes are in pensions and ISA’s of which a large percentage of the population have one of these or both so its worth discussing. There are a few things you can do to hopefully save yourself some money this year and with what’s going on with the world at the moment there is no better time to save a penny or two.

If you would like to speak to someone please contact us on 03333 232 199 and we will point you in the right direction.

INCOME TAX

The amount of personal income you can make before any tax is due is £12,500 and this has remained the same for 2020. However, what has changed is the age allowance where everybody now has the same personal allowance. For people earning over £100,000 your allowance will reduce significantly irrespective of your age. Basically, it reduces £1 for every £2 you earn over £100,000. Therefore, for everyone earning over £125,000 now personal allowance will be £0.

DIVIDENDS TAX

Like Income Tax the Dividend Tax allowance will remain the same for this year. After you have had your personal allowance the tax due will be as follows. For base rate tax payers the level is 7.5% and for higher rate 32.5%.

Capital Gains Tax

For this tax year there has been a slight rise in allowance for capital gains from £12,000 to £12,300. Once this has been exhausted lower rate tax payers will have to pay 10% on any profits over the £12,300 threshold with higher rate paying 20%. However, when we talk about investment properties the levels of tax increases with lower rate at 18% and higher 28%

Inheritance Tax

The tax threshold for inheritance is £325,000 anything over that is taxable at a rate of 40%. However, to allow people to pass on their family homes to their loved ones a home allowance threshold is applied separately.

Pensions

The majority of people are allowed to put £40,000 into their pension for the next year. The main difference this year for pensions is previously when people earned £110,000 the allowance of £40,000 started to reduce. However that has now been increased to £240,000 a significant change allowing a lot more people to place the full £40,000 into their pension pot.

ISA’s

Finally, we discuss ISA’s (Interest Free Saving Accounts). The amount people can place in an ISA tax free has remained the same at £20,000.

There is also the lifetime ISA which is something so many people use who are looking to buy a new home. The Lifetime ISA allows people to save £4,000 per year tax free.