September content property

A brief guide to your Help to Buy options

If you’re a first-time buyer looking to purchase a property, then you’ll almost certainly be aware of the Help to Buy scheme and its success in helping people get onto the property ladder. What you may not be aware of is how the scheme works, and how it helps buyers to secure deposits for homes that would otherwise be out of their reach.

With that in mind, we’ve put together a rough guide to how Help to Buy works.

Can you get a sufficient deposit together?

Most standard mortgages require a deposit of at least 5% of the value of the home you want to purchase. If you are able to get the capital required, then you may not need to apply for any scheme.

Equity Loans

If your deposit doesn’t stretch that far, however, never fear! This is where Help to Buy comes in. If you have a 5% deposit, you can apply for an equity loan for purchasing new-build properties. The Government will lend you up to 20% of the property’s price, but you’ll have to start paying interest on that loan after five years.

For example, should you purchase a £200,000 house, you’d pay £10,000 (5%), get a mortgage for £150,000 (75%) and the Government would loan you the remaining £40,000 (20%).

ISAs

If you’re still saving for that all-important deposit, then a Help to Buy ISA is available to you, with the Government adding 25% on top of the value of your savings, with up to 2.6% interest tax-free. A word of caution; if you’re considering this option, then you would need to apply for your ISA prior to 30^th November this year. Click here to learn more.

Shared Ownership

If you can’t stretch your finances to be able to afford the entirety of a mortgage, Shared Ownership provides you with the opportunity to buy a share of your home (between 25% and 75% of the property’s value) whilst paying rent on the remaining share. You can also buy bigger shares in the property once you’re able to, offering you flexibility for the future whilst owning a significant stake in the home you wanted.

Purchasing a home doesn’t have to be beyond any first-time buyer. Speak to our financial experts about your Help to Buy options and find out how you can finally buy the property of your dreams.

A guide to loft conversions

For some of us, a great option to increase the floorspace in our homes is to move upwards into the loft area. However, if you’re considering converting your attic space into living space, there are a few factors that you should consider before starting any work…

Is it worth it?

When you are weighing up the potential of a loft conversion, it’s worth deliberating whether the cost of the work is equal to the value which you are adding to your property, so that you don’t end up overspending with no hope of recouping the costs when you decide to sell up. A loft conversion can add up to 20% to the value of a property, a significant amount; however, the cost of completing the works can vary depending on the type of space that you have available and the complexity of the requisite works. Shop around for your building quotes so that you have multiple options and then compare property prices in your area that have had loft conversions to see the difference in price; this should give you a strong idea in terms of budgeting.

Is my loft suitable for conversion?

Not all lofts can be converted into bona fide living space, as there are some caveats in terms of the available head height in the area, the pitch of the roof, the structure of the roof and obstacles such as water tanks or chimneys which may obstruct the area. When you measure from the bottom of the ridge timber to the top of the ceiling joist, you need to have at least 2.2m of usable space for a conversion to be suitable.

Do I need planning permission?

Depending on the type of conversion that you are implementing, you may not need any planning permissions whatsoever. As of 30^th May this year, “Permitted Development” rules grant rights to enable homeowners to undertake some types of building work without the need for any permissions. If you are completing a simple conversion, with no structural changes to the roof, then you will most likely not require planning permission, making the process a lot simpler. To read about “Permitted Development”, see government guidelines here: https://www.gov.uk/guidance/when-is-permission-required

How do I intend on using the space?

One of the most important questions to ask yourself before you commit to the building work is what exactly you need the extra space for. In some instances, this will be an easy question to answer; for example, if you’re a growing family in need of an extra bedroom. However, for others the use of the room may not be so clear-cut. If you’re adding the extra space simply because you’re feeling a little squeezed for space in your property, then a loft conversion may well be the wrong answer as, although you’ll be increasing your living area, you will most certainly be losing useful storage metres. If you are looking for more space, then consider moving into a more appropriate property in your area – you may well have made a profit on your current property which would enable you to upsize.

Don’t fall foul of your insurer

Before completing any works on your property, ensure that your insurer has been fully briefed with regards to the possible changes to your property as you don’t want to invalidate your home insurance. Adding value to your property may affect your premiums, and any building work being completed (such as floors being taken up or electrics changed) can result in damage to the property which may not be subject to insurance claims.

Tackling condensation in the home

If allowed to enter your home unchecked, dampness can cause untold damage to your property, possessions, and even to your health. Dampness can be expensive to remove, and at the very least, causes an unpleasant and lingering musty smell.

Condensation is just one form of dampness but it is the most common and often most ignored. During summer, your guard is down. How can my house be affected by condensation when it is a problem typically associated with cold weather?

The truth is that condensation can be caused by changing temperatures that occur within your household, and not just outside of it. Kitchens, bathrooms, and attics are more susceptible to this problem due to there being higher chances of steam or inadequate ventilation in these rooms.

So before your condensation issue escalates into a full-blown black mould problem, we have a few recommendations for you that can keep your home, health, and happiness better protected.

Know the signs

Nip your condensation problem in the bud by keeping an eye out for:

Excess water on your window sills
Peeling paint or plaster
Mould on clothes or fabrics
Musty smells
Presence of black mould

Unfortunately, by the time that some condensation warning signs are discernible, the damage can already be quite extensive, and that’s why it’s best to take a preventative rather than a reactive approach.

Our suggestions

When facing difficulties with condensation, good ventilation is key.

Give your house plenty of room to breathe. Leave small gaps between your furniture and walls, don’t cram too much into too tight of a space – as air will not be able to circulate efficiently – and hang wet laundry outside.

It is essential that your kitchen is properly ventilated whilst you are cooking! Cover pots and pans, and make use of your extractor fan. Don’t have one? Invest now and save yourself a bigger bill later on. It’s also important to have properly ventilated washing machines and tumble dryers.

If able, close your kitchen door when cooking or boiling a kettle. This may seem excessive but it will stop condensation spreading from room to room.

As for your bathroom, keep your windows open during and after baths or showers. Again, invest in an extractor fan if you have a windowless bathroom. Mould growth will thrive in this environment, and without proper bathroom ventilation, you risk breathing in these harmful spores.

Say no to condensation

Whether you are trying to sell your house, or simply live in it, condensation must be dealt with before the problem progresses beyond your control.

Ventilate your home following our suggestions and provide a cleaner, healthier environment for yourself and your household.

Our guide to decorating your dining room

Your dining room serves a very defined purpose in your home; it is the space where your family has their meals and gets the sustenance that they need to go about their day. In such an important space, take the time to put together a cohesively designed room that maximises the space and provides you with flexibility.

The Table
What is a dining room without a table? When it comes to this space, the table is king and therefore make sure that you take your time to decide what kind will suit your needs best. Consider the number of people in your household, the age of the people in your household and what else the table is used for. If you have a household with young children, for example, is a glass table really appropriate to your needs? When it comes to material, there are plenty of options from the traditional wood, to glass and the more contemporary materials such as concrete.

The Space
How do you use your dining room? If the space is used mainly for entertaining purposes then you can tailor it to your needs to create a more adult, sophisticated feel. Utilise dark wood materials and heavy fabrics, such as velvet, in order to create a demure venue perfect for a well-versed host. If your dining room is used on a day-to-day basis for more than just eating – i.e. a social space or homework hub – then use more versatile coverings on your chairs which can be popped into the washing machine. Painting the walls may be a good option if you’re looking for a long-lasting decorating option, especially with the wipe-clean variants on the market. If your dining room is large enough, then utilise the space by incorporating a sideboard to provide extra storage space.

The Lighting
Lighting in your dining room should be a key concern, as this will largely dictate what you can use the room for. Having a light source above your table makes the most sense, whether that be spotlights which can be dimmed or brightened, depending on the occasion, or something a touch grander. Around the room, think about adding lamps in order to change the ambience.

The Decoration
The decoration in your dining room will no doubt need to be hardwearing in order to deal with the daily wear-and-tear of mealtimes, but that doesn’t mean that you have to be completely utilitarian in the design. Embrace the outdoors by choosing some plants to place around the room; placing a selection of houseplants at different heights will create lots of interest and create a natural feel to the space. If you’re looking to add a touch of personality to your room, then use a neutral palette on the walls and flooring, and then accent this with pops of colour or texture by using accessories. A feature piece of furniture is also a great way to ignite some interest in your room; think about armchairs in prime colours or bold prints on lampshades to give your room some flair.

When will you move into your 'forever home'?

Everybody has their own notion of a forever home, whether that is a sprawling mansion, a chic downtown loft or a quaint cottage in the country. However, when do you think that you will be moving into that dream residence?

Research conducted by the Nottingham Building Society has shown that homebuyers expect to be purchasing their forever home, that is the property that they will live in for the rest of their lives, when they are around 41 years old. This is despite the statistics showing that the average age of those who have already purchased their final property being 36, displaying a certain level of pessimism amongst those surveyed.

Ben Osgood, senior mortgage manager at The Nottingham, said: “You would naturally assume people always want more so it’s really refreshing to see so many people realising they already live in their forever home.

“A home-buyer’s ‘wish list’ is often created when purchasing their first house but more often than not there’s a degree of compromise required when people are first getting on to the ladder.
“As you travel up the property ladder, taking the next step gets more and more expensive so we’re seeing an increasing number of people asking about additional borrowing so they can remodel and extend to turn their current home into somewhere they have no reason to move from.”

When it comes to that elusive forever home, one of the most important factors is the location of the property with 50% of people who were surveyed by The Nottingham placing this as their key factor. As well as location being central in the search for a forever home, the size of the property (16%), price (13%) and the appearance (8%) all ranked highly amongst those surveyed.

House prices rise at fastest rate for 3 months

Mortgage lender Nationwide has indicated that house prices in August rose at the fastest annual pace in three months, with prices rising 0.6% year-on-year. This upturn in pace is contributing to the widespread sentiment that the housing market is beginning to perform particularly strongly once more.

Supporting the figures from Nationwide, reallymoving.com have published their August monthly House Price Forecast which predicts continuing growth in prices across the United Kingdom.

According to the report: “Average values are set to rise by 1.5% over the next three months (August to October 2019), continuing their steady climb. Particularly strong growth in August will see prices increase by 3.2%, and whilst they’ll then dip by 1.4% in September, they will be up 3.1% annually – the largest annual increase since November 2018.”

CEO of reallymoving.com Rob Houghton has this to say on the current status of the property market;

“The outlook for the property market over the next three months is remarkably positive, considering the current political and economic context. The recent election of a new Prime Minister who is committed to leaving the EU on Halloween even if a deal isn’t reached could mean clouds are gathering on the horizon, but any impact on prices in the short term is likely to be mitigated by the urgency of home movers to complete deals in the next three months.”

How has Brexit created opportunity in the property market?

Data released from Rightmove has shown that agreed house sales last month rose 6.1% from the same point last year, with every single region showing improvement. Considering the current climate of Brexit, could this upsurge in the property market actually be attributed to the relative political instability, rather than in spite of it?

It’s been another period of gigantic upheaval in British politics in regard to Brexit, but months of uncertainty have seemingly encouraged a spike in activity in a rush to beat the currently unstable deadline of October 31st. Buyers and sellers are therefore making something of a concerted effort to complete their property transactions within the next quarter.

Supporting this microcosm of activity in the market are the number of UK mortgage approvals which have also rose significantly. Approvals for house purchases rose to their highest level for two and a half years in July, with Howard Archer, chief economic adviser to the EY ITEM Club, stating that: “It is possible that mortgage activity is being lifted by some people looking to complete their house purchases before Brexit occurs on 31 October, given the major uncertainties surrounding the UK successfully leaving the EU with a deal.”

Speaking prior to recent developments in the House of Commons, CEO of reallymoving Rob Houghton says: “The outlook for the property market over the next three months is remarkably positive, considering the current political and economic context. The recent election of a new Prime Minister who is committed to leaving the EU on Halloween even if a deal isn’t reached could mean clouds are gathering on the horizon, but any impact on prices in the short term is likely to be mitigated by the urgency of home movers to complete deals in the next three months.”

Landlords reveal their ideal tenant

Every landlord has their image of the perfect tenant. With recent statistics from the English Housing Survey now showing that 4.5m households now rent from private landlords - a harmonious relationship between both parties is the only way to ensure a long-term, mutually beneficial tenancy. But what qualities make the perfect tenant?

In a recent study performed by Intus Lettings, 500 landlords were asked to reveal what type of person makes their perfect tenant. According to the poll, the majority of landlords would prefer a couple with no children, with 29% of landlords stating they would prefer to rent to that demographic.

The second favourite type of tenants is single, young professionals, with 1 in four landlords preferring them as a tenant, followed by parents and children, who were favoured by 20% of the surveyed landlords.

Despite representing a lucrative market for landlords willing to invest time and money, the least popular type of tenant was students, with only 1% favouring their demographic.

The study also prompted landlords to specify what aspect of the vetting process will usually persuade them towards signing up a tenant. The majority of respondents (40%) agreed that a good reference was likely to persuade them to agree to a tenancy, followed by the attitude and manner of the prospective tenant during the viewing. The age and marital status of the tenants proved to be the least important factor.

When it comes to the biggest landlord fears and frustrations, costly damage to their property and furniture were the primary concerns, with failure to pay the rent on time coming in second.

Rental market defying the usual summer slowdown

Rental properties have defied the usual summer slowdown which is often seen in the housing market due to several factors, including summer holidays and children not being at school. According to the latest data from the Agency Express Property Activity index, properties let nationally were up 6% month-on-month.

The Agency Express index is based on the number of lettings boards which are erected each month, and is therefore a particularly up-to-date measure of activity in the marketplace. According to the board company, as well as properties ‘Let’ being up 6%, the number of properties entering the lettings market also increased by 8.5% month-on-month.

Some regions which observed particularly strong growth are listed below:

Properties ‘to let’
South East 16.4%
Yorkshire & Humberside 16.1%
South West 10.8%
Wales 10.8%

Properties ‘let’
North East 17.2%
Yorkshire & Humberside 7%
South West 6.7%
London 5.8%
Wales 4.3%
South East 4%

Stephen Watson, managing director of Agency Express, commented: “July has been an unexpected month for the UK lettings market. Usually we would see slower movement throughout the summer holidays but this month’s activity, which is somewhat reflective of an increase in our customer base has been buoyant.

“Looking forwards, while we expect to see further increases in August, we don’t envisage a real pickup in activity until September. It will be interesting to see if the current rate of activity continues.”

Section 21 Update

In brief, Section 21 is the right for landlords to evict tenants from their property after their fixed-term contract has come to an end, and with no need for a reason as long as eight weeks’ notice has been given. The government had announced earlier in the year that they intended to abolish this in order to give tenants more security and longer-term guarantees in their rental fees.

Both negative and positive reactions have been recorded with tenants deeming the move as positive due to the additional guarantees which will be extended to them and landlords worried about potential difficulties when removing problem tenants.

A prominent agent recently came out in favour of the abolition, seeing it as a gateway to a newer type of tenant who is a lifestyle renter, rather than renting out of financial necessity.

However, Richard Lambert, CEO of the National Landlord Association, has stated; “Claims by the Government and tenant support groups that Section 21 is the leading cause of homelessness are not supported by the available evidence. They are factually incorrect, misleading and just plain wrong. No reasonable landlord would seek to evict a tenant without good cause.

Most evictions are a symptom of wider issues, such as the freeze on local housing allowance, insecure jobs, and the lack of support for vulnerable tenants to sustain private tenancies successfully. The increase in the use of no-fault evictions through Section 21 is because landlords simply don’t have faith in the courts being able to deal with eviction cases, however justified their reason.

That’s why we’re appealing directly to the Prime Minister to save section 21. Landlords are running businesses and have very few options when it comes to managing the risks they face. The focus should instead be on fixing the issues that contribute to this risk.”

With government proposals moving forwards, and the consultation period on the proposal currently running to 12th October this year, we could see the proposals come into place either towards the end of 2020 or start of 2021.
Iain McKenzie, CEO The Guild of Property Professionals, said of the Government’s proposal and coming into law; “What this means is that should the law come into place, it will not impact tenancies that are already in place at the time it is passed. So, landlords in these agreements will still be able to use Section 21 until the tenancy comes to an end. Any new agreement thereafter will then become an assured tenancy,” he adds.

Should you pay your mortgage off early?

New research from financial services firm Hargreaves Lansdown has shown that one in six of us who have purchased a property will either be over 65 by the time the mortgage is fully paid off, or the loan will never be fully paid off. The question stands, therefore, as to whether you should pay your mortgage off early or not?

As the average age of homeowners creeps upwards, and first-time buyers are entering the marketplace beyond 30 years old, the prospect of entering into retirement with a mortgage still to pay is going to be a reality for many. Research conducted by the Financial Conduct Authority supports this notion, with the FCA forecasting that 40% of first-time buyers in 2017 would still be repaying their home loans at 65.

First and foremost, do your sums to see whether you have anything to worry about in the first place. If you are going to be receiving a healthy pension anyway, then the prospect of continuing mortgage payments may not be anything to worry about. On the other hand, if you are going to be on a lower income than you’re currently accustomed to, then mortgage payments may well prove to be a stretch. If this is the case, here are a few options to help you pay that mortgage off sooner:

Overpay whilst you can
Speak with your mortgage provider to see when your prospective final payment is, and use this to incentivise yourself to pay early when you can afford it. Many mortgages will not charge you for overpaying, instead embracing the higher payments so double-check with your provider and overpay in order to bring forwards that final payment date.

Consider remortgaging
With interest rates at record-low levels, many borrowers are now considering remortgaging in order to obtain a more favourable mortgage. Eventually, you will be moved onto your lender’s standard variable rate (SVR) if you do not remortgage or move onto a different deal during your mortgage term. Avoid these less favourable mortgage rates which will extend your mortgage term, and you could slice years off your repayment schedule just by switching providers or plans.

Reduce your mortgage term
Rather than overpaying on your current mortgage plan, reassess your financial status to see what you can really afford now. You will most likely be in a different economic position now to when you first purchased your property, and potentially able to afford higher repayments. If this is the case, and you are likely to remain in a stable position for the foreseeable future, then reducing your term and increasing your monthly payments is a guaranteed way to pay off your mortgage more quickly.

Proposed reforms to stamp duty

Proposed reforms to stamp duty could offer dividends for the property market, with buy-to-let landlords set to reap the benefits should the Government make changes to the current system.

During his leadership campaign, Prime Minister Boris Johnson pledged to cut stamp duty in the cases of sales under £500,000 and over £1.5m, alongside a suggestion that further cuts could be made to help those at the lower end of the property market in an effort to assist first-time buyers.

At present, landlords or other homebuyers are required to pay a 3% stamp duty surcharge when purchasing a second property, a significant deterrent for the Buy-to-Let sector at a time when homes worth between £250,001 and £925,000 are already subject to a 5% surcharge.

But research suggests that just 10% of properties purchased in 2019 so far would have been liable for stamp duty should the second property tax be removed, leaving landlords in a healthier position financially and encouraging them to invest in Buy-to-Let homes. The impact on the market as a whole is easy to see; more properties purchased makes for a healthier market as a whole, alongside offering more options for renters.

Managing Director of mortgages.online Paul Flavin offered the following on the current state of play: “The increased stamp duty payable on buy-to-let purchases, and the removal of the ability to offset mortgage costs has put many investors off the property market, with a knock on effect of reducing the stock of rental properties.

“We have two basic messages for the Chancellor (Sajid Javid). Relief for buy-to-let investors and measures to stabilise the economy with clarity once and for all on Brexit, are both needed urgently. We would encourage the Chancellor to look again at the negative impact these measures have.”

Plans to switch stamp duty from buyers to sellers in an effort to encourage more first-time buyers to enter the market have already been quashed by Javid, but it’s clear that reforms on stamp duty are required in order to encourage buyers, whether landlords or otherwise to purchase property.