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WILL HOUSE PRICES DROP IN 2021?

As we all know the property market was basically closed for three months due to the outbreak of the Coronavirus. This has obviously led to a lot of uncertainty about the property market with many people expecting a drop in prices over the forthcoming months.

So, what do expect to happen in the market in 2021? It was announced last week the UK have entered a recession with statistics identifying the economy crashed by 20.4% from April to June the worst figures since 2008.

The reasons for the recession are simple Gross Domestic Product (GDP) plunged as for obvious reasons less money was spent in all industries. Furthermore, output from our factories etc fell overnight when the Country was put in lockdown. Generally value’s in anything fall when unemployment rises and because of this demand drops. Its down to these reasons that we saw property prices drop significantly in 2008.

When the pandemic hit the initial fears were the market was going to suffer the same impact however has this has not been the case since the market re-opened.

Here at FastMove and a number of other companies involved in the industry have announced strong figures in sales agreed over the last few weeks.

Our Managing Director Christian Armitage recently stated ‘In the last month we have agreed the highest amount of agreed sales over the last 6 years month to month, which is incredible given what has happened in the Country in the last 3 months.’ He went onto say ‘It’s because of this high demand the industry has actually seen an increase in house prices whereas everyone was convinced we were going to see the opposite. The levels of interest in people moving home may not just be down to the market been closed for three months, it may also be down to people realising they want something different from their property.

However, the famous saying goes all that glitter is not gold, and this maybe the case for the industry at the moment. Although we are seeing SOLD boards going up by the minute the question has to be how many of these sales will actually complete? I suspect a large percentage of the agreed sales will actually fall through, the main reason down to buyers not being able to obtain funding.

We speak to mortgage brokers all over the Country on a daily basis and the majority of them are finding things really tough. Since Covid-19 there is no doubt lenders have tightened their criteria significantly, for example larger deposits are now required and self-employed applicants are being scrutinised to levels brokers have never experienced before. However, it’s a case of taking each day one at a time and we all have to keep going and stay positive’

Whilst things appear to be a lot better than predicted do people think prices will drop in 2021? Although no one has a crystal ball many economists expert prices to fall over the next couple of years with many expecting the main drop to occur once the government furlough scheme ends and people are left to paddle their canoe independently.

 

 

 

 

 

 

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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 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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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.

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How Is The Coronavirus Affecting The Mortgage Market

How is Coronavirus Affecting The Mortgage Market  

To say the mortgage market is volatile at the moment is an understatement. The market is basically changing every hour as the Country starts to feel the real impact of Covid- 19. Certain lenders pulled all their products from the mortgage market last week, with some re-introducing certain options this week whilst others are still not in the market for business. Furthermore, interest rates are at 0.1% the lowest in history and banks and building societies have also offered lenders a 3- month payment holiday. The industry is seeing levels of activity and change like never before. Obviously, with all these changes happening in such a short space of time the market does seem to lack a lot of transparency, furthermore with the government implementing the strict guidelines in place leaves the whole situation with so many unanswered questions. If you do have any questions we are here to listen and hopefully point you in the right direction. This article will hopefully answer the most common questions we have been asked. However, if we don’t answer yours, we can only apologise but please call us on 03333 232 199 and we will point you in the right direction.  

I have exchanged contracts, but the government says we can’t move what should I do?  

Although the government have made it quite clear in all their correspondence you shouldn’t complete a house sale. However, if you have exchanged contracts I would suggest speaking to your solicitor as this could be classed as an exceptional circumstance. If you breach the contract and don’t complete there maybe huge financial consequences. Therefore, completion may still be possible as planned but moving into your new home still might not happen until rules are relaxed.  

Will I qualify for a payment holiday?  

The government has asked all lenders to offer customers a 3 month payment holiday. Payment breaks apply to all types of borrowers i.e. homeowners, landlords and anyone else. There is one exception where a payment holiday may not apply, that is if your mortgage is already in arrears. If you are in arrears it still maybe possible for the holiday to be granted.  

How do I apply for a payment holiday?  

Firstly, one thing to consider is lenders are under extreme pressure at the moment due to the amount of people applying for payment holidays. Furthermore, they may have furloughed some of the staff, making things even harder for the lenders. A large percentage of the banks/building societies have the option to apply for payment holidays through their website. For the ones that don’t I would advise to call them as soon as they open in a morning. Check their website for their opening hours.

My mortgage term is coming to an end should I look to Re-mortgage?

As mentioned earlier in this article some lenders have pulled out of the market completely whilst others only have products on offer with a low loan to value. However, there are still a large number of banks/building societies offering deals with a LTV of 90% for example and with interest rates at 0.1% now might be the time to at least speak to someone about a re-mortgage. You also have to consider that the mortgage market will probably ger harder before it gets better over the coming months, making a discussion now even more important.  

We are here to help  

I hope we have answered the majority of your questions. However, if you have any further questions or would like to speak to someone about a Re-mortgage please call us on 03333 232 199 and we will point you in the right direction.            

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Properties Still Selling During Lockdown.

Don’t think your property won’t sell during lock down, it is still possible. Here at FastMove we know its going to be hard to sell properties during lockdown, mainly because people cannot get out to view the respective homes. However, we are pleased to announce we have sold three properties since lock down with the use of a video tour taken by the vendor. Our Managing Director Christian Armitage recently stated, in times like this you just need to think outside the box.

The process was pretty simple the interested parties registered interest in the properties. On all occasions the buyers new the areas concerned so just needed to see the internal elements of the property to satisfy them. All it took was to put the vendor and buyer in touch with each other allowing the to Face-time each other. On all occasions they were happy with the content and made an offer which was accepted.

One of our vendors said ‘We had resorted to the fact our property was not going to sell until the government had relaxed the lock down rules. However, due to the initiative and never lie down attitude of my estate agent we are in a position now we are Sold Subject To Contract.’

Obviously, it’s in the early stages of the process and all buyers have confirmed they want to view the property once the rules are relaxed but at least we can instruct solicitors to generate some momentum. Furthermore, it gives the public hope that

  1. If their property is currently on the market it still may sell
  • If you are looking to sell your property it still maybe worthwhile listing your property as this has proved people are still looking for properties.

Here at FastMove we strongly feel if you have a property to sell and would like to sell it relatively quickly to market the property now. We think this for two reasons

  1. We have already illustrated people are still looking at properties they may want to purchase
  • Given the current crisis the Country is in, there is the chance there maybe a drop in the market. Granted it will recover but we don’t know how long this will take and if you would like to sell quickly by advertising your property now you are giving yourself the best chance to meet your objective.

Stay Safe.

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House Market Suspended?

We all know things are hugely uncertain at the moment, this article is going to explain how it is this affecting the property market at the moment?

Many people are stating the best way to describe the market as been currently suspended, the main reason been lenders are unable to obtain valuations. However, I feel this is not 100% correct. Yes, you are right to think lenders cannot send physical valuers into the respective properties but there are alternative options.

Lenders do have the option of running a desktop valuation, or alternatively there are rumours circulating that some lenders will ask the vendor to take photos or even a video of the property to work from.

Granted they will not adopt these strategies to mortgage applications where the applicant requires a 95% loan to value product because the risk to the lender is too high. However, if the applicant has a 50% deposit the risk is a lot less to the bank, this is where these alternative methods may prove beneficial. So in summary mortgages on purchases have not paused but have slowed down significantly with even some lenders removing themselves completely from the market.

Then we have to think about the viewings. It’s quite clear from the government guidelines physical viewings at properties is an absolute no, no. However, lots of agents have reacted accordingly and are offering virtual tours of properties allowing prospective buyers the opportunity to see inside. This again comes with risk and is another reason why the property market has slowed.

There is also the investors to consider. A large proportion of these are the cash buyers and will often buy the property without viewing it. All they are interested in is the balance sheet and as long as the works for them they will not be bothered about anything else.

The one thing that will have a huge impact on the market is the media. Once negativity about the market hits the media the industry will basically pause and this has already started to happen.

Yesterday the Daily Mail’s front page splash headline is “Don’t move home” and yesterday The Telegraph’s business section reports “Government suspends the housing market”. 

 I also feel that buyers will take advantage of how volatile the market is at the moment. I feel if people do still want to make an offer on a property they will offer a lower price than what they would have done two weeks ago. They will be hoping the seller(s) are in a position where they don’t have a choice but to accept or they feel the property market is going to drop significantly.  

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Mortgage Approvals Hit Four Year High

Estate Agents irrespective of where they are in the Country should be prepared for a busy few months according to the date released by the Bank Of England. The Bank Of England confirmed that the amount mortgage approvals related to house purchases have hit a four year high. If this is correct it is obviously illustrating the amount of house buyers looking to purchase a new home is on the rise.

It has been well documented that pre-election and pre-Brexit there was so much uncertainty in people’s mindsets. People felt both their lives and the Country were at a crossroads and because of this were not willing to commit to buying a new property.

Christian Armitage Managing Director of the online estate agent FastMove recently commented. ‘Towards the end of November and throughout the whole of December the market was really slow. Everything was down

  1. The amount of instructions
  2. The amount of viewings
  3. The amount of offers
  4. The amount of sales agreed

He goes onto say

‘Granted the industry is generally slow that time of year. However, this year was extra slow and there is no doubt this was down to the two main elements of the election and Brexit.  Since Borris Johnsons landslide win at the election and the closure on Brexit final looming there is no doubt people a lot more motivated to look for a new home.’

With the market getting stronger house buyers will soon beware of future house price rises and therefore will look to make the move probably faster than they first thought before the market moves against them.

As well as looking to secure their new home people are also looking at securing the best long-term fix rate to take full advantage of the low interest rates been offered.

However, the question we all need to answer is how long will the ‘Borris bounce back’ last? There is no doubt there is a lot of confidence and positivity about the housing market at the moment. However, this could fade very fast if trade negotiations re Brexit don’t go to plan.

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WHY USING CHEAPER ESTATE AGENTS STRENGTHENS THE CHANCE OF SELLING.

As we all know the online estate agency industry is growing by the day with Purplebricks still been the market leader. However, this does not make them the best.

The main reason why the online agents appeared and still do more attractive than the high street agents are the savings the vendor can make when it comes to commission. However, although the savings are great I strongly feel the vendors are not using these savings to their maximum advantage.

Why do I say this? Basically, it’s simple too many vendors are concentrating on the offers they are receiving before commission is taken into consideration (Gross amount) rather than thinking of the amount after the commission has been paid (Net amount). I strongly believe this mindset is holding back 1000’s of people from agreeing to sell their property, its madness.

Why do I think this? Its simple. Let’s take a £250,000 property for example. There are two options, the high street estate agent are offering to sell for 1.5% commission and the online estate agent have a package at £800 no sale no fee. Let’s say someone offers £240,000 for the property. With the high street agent, the commission charged would be £4,320 (including VAT) making the NET amount £235,680 whereas the local agent would be £800 making the NET amount £239,200. In our example the vendor declines. However, the question is if they have appointed the online estate agent would the vendor accept £242,000 if they had gone with the local agent? This is where the madness comes into it as you would be amazed by the amount that would.

Why is this mad? It’s obvious accepting £242,000 would leave the vendor with a NET amount of £237,644 which is less than the offer of £240,000 with the online estate agent.

This is why the online agents with the attractive commission rates offer the vendor a higher chance of selling. It gives the vendor more chance of getting an offer which gives them the money in their pocket they require after agents commission has been paid.

Although this article is to push the vendor to use the cheapest estate agent but one thing to remember is the service standards the agent offers is equally if not more important. It’s ok going with an agent who only charges £100. If this is the case you are going to have to take your own photos which is fine, host your own viewings which is fine, but you still need an agent who is

  1. Going to answer the phone when people call to enquire or book viewings
  2. Negotiate hard for you
  3. Progress your sale tenaciously with the solicitors to get the sale through as quick and seamless as possible

The art is to find an estate agent who is not greedy and have the mindset that building a business takes time and they are not in a rush for success. Once you come across an online estate agent with this ethos you will have found an agent that is well priced and at the same time offers excellent levels of service.