Tag: First Time Buyer

Stamp Duty Holiday – Survival of the quickest

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Now is a good time to sell your property.

Houses and even flats are flying off of the market like hot cakes.

Now that buyers with as little as 5% deposit are in the mix, they have more choice and are competing with first time buyers and home movers for properties that would have previously been unaffordable and out of their budget.

In terms of applying for a mortgage, the same affordability factors apply (i.e annual salary, debt to income ratio and stress testing).

This new initiative means that those who can generally afford a £200,000.00 property, but just didn’t have £20,000.00 for a 10% deposit, can now buy a property within that price range with a 5% £10,000.00 deposit.

It’s important to note that nothing is ever done as a good will gesture. This kind of lending does present risks to lenders which is why you’ll find that interest rates are a lot higher when a buyer is presenting less deposit and borrowing more (loan to value).

Before the pandemic and the 5% deposit initiate, a 90% mortgage which meant the borrower would of been presenting 10% deposit, had interest rates in and around the 1.89% region. Now for the similar kind of mortgage, you’re looking at 3.49% interest rates. Shocking! That’s almost double!

  1. Find out how much a bank is willing to lend you & get a decision in principle (known as a DIP or AIP)
  2. Look for properties within your budget. See it, view it & make an Offer on the property within 24 hours.

“I called the Estate Agent to arrange a viewing as soon as the property came on the market and within minutes it was gone!“

You snooze, you loose…

Remember, it’s survival of the quickest!

The evil chain that stole my dream home – House hunting in a pandemic

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Part 2

When we started house hunting in March 2020 it was a ghost town.

We had agents at our beck and call and were spoilt for choice. The houses that were on the market had been there for a while, no real haste and vendors were happy to get people through their doors.

As the months progressed we took our time, looked around and didn’t make any real commitments.

Once the Chancellor made the stamp duty holiday announcement in July 2020, everything changed dramatically!

We noticed that as soon as a house came on the market, it was gone within 7 days.

I was set up for email alerts and was quite quick to book viewings, but before we could get through the door, the house had been sold subject to contracts!

A trend that was quite apparent was that home movers were making the most out of this stamp duty treat.

The stamp duty holiday meant that people could use this time to size up, relocate and make money! (Equity)

Let’s bear in mind that we were in the thick of a pandemic and forced to stay indoors for the foreseeable. If your 24 hours, 7 days a week is going to be your home, then it may as well be somewhere you feel comfortable and love being.

We saw city lovers opting for properties in the country/the outskirts of the M25 due to the flexibility of working from home and not having to commute in to corporate inner city offices. Not forgetting to mention that you get a lot more for your pound outside London.

What you’d spend on a 2 bedroom London flat, you could buy a 4-5 bedroom house with generous garden space outside London.

Ultimately the housing market was booming, it was the right time and everything was working in every home owners favour.

UNTIL we were all reminded time after time that we are in a pandemic, people are dying and services aren’t running at their usual speed.

Our chain fell apart because the upper upper chain had a Covid fatality and the middle chain participants had quite a bit of strain placed on their relationship due to lockdown Covid side effects.

All in all house hunting in a pandemic is not for the faint hearted.

Resilience, empathy and speed are key.

Chains fall apart, people let you down, but our lives are priceless and as long as we hold on tight to those, we have all that we need!

The evil chain that stole my dream home – Background Story

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Part 1

In this series I will be detailing the personal experience of trying to buy & sell property throughout the COVID-19 pandemic.

2 weeks ago I shared disappointing news on my Instagram I had received a week prior. 

My husband and I were in the process of selling our flat and buying a new family home with a garden in acknowledgement of our son turning 1 and the need to size up. 

This all fell through 1 day before exchange was due and 2 weeks before completion was due.

Many had questions, many were scared, many didn’t want this to happen to them, so here we are.

Enjoy the 4 part series.

March

In March 2020 we put our property on the market. A week later the country was placed in a lockdown due to the rapid spread and threat of the COVID-19 virus.

This was not a great start to a journey we thought would be quite simple given my background and the fact that we’ve bought a property before with ease.

Everything was bought to a dramatic holt. No movement.

May

Things began to ease and we started to house hunt and made Offers on 2 properties – these were accepted. Now we just needed to find a buyer for our flat. Fast forward a few weeks – we lost house 1 because we took too long. With the seller being on haste, she sold the house to a chain free first time buyer for a lesser amount.

The second house was still in the works and both the agent and seller were patient with us.

July

In July 2020 the Chancellor announced the stamp duty holiday. This was great news for us. This stamp duty holiday meant that our expenses were to be bought right down. We then understood that we had more money to play with. It was a matter of, do we look for bigger houses? Or continue with what we had been looking at, presenting more deposit bringing our mortgage down/doing a more luxurious Reno job. 

August

At this point we’ve had around 5 viewings. No serious offers and everyone commenting on our slightly dated kitchen. 

September 

Aware of the stamp duty holiday potentially coming to an end in March 2021, we started to house hunt in September 2020 with the hope to exchange contracts and complete on our Sale/Purchase around December 2020 – January 2021

October

The second house we had made an offer on in May had been sold at this point due to our lack of a buyer. We were okay with this as we wasn’t too keen on all of the works the electrics needed. The house was a detached Edwardian home and needed a full rewiring (alarm bells).

Later this month we had a buyer! We began to give up hope until this lovely man came for a viewing with his business partner, shook hands with my husband and determined a gentleman’s contract had been made. 

We began to scramble because we no longer had a house we wanted. We immediately started to view properties, short list and then we found the one!

It was beautiful, had a drive, garage and a newly fitted modern wood burning fireplace.

We made an offer, it was accepted and the rush was on!

Days later our solicitors couldn’t get hold of our buyer and he advised that he was no longer looking for an investment flat as he had previously only dealt with houses due to leases bla bla bla. 

This was very disheartening and meant that we were now causing delays for the house we were buying.

November 

The agent that was orchestrating  our purchase of the house was great and quickly helped us find suitable buyers. We had viewings after viewings and eventually accepted an offer with the condition that things had to proceed quite quickly. 

December 

Searches had been paid for. Leasehold paperwork had been paid for. The solicitors we’re going through the motions and satisfying as much as they could.

Everyone in the chain was getting itchy feet. Things were dragging and our buyers were taking their sweet time. Eventually they got their mortgage sorted, searches back and we all awaited exchange/completion dates. Given the festive season, we knew this wouldn’t take place until the New Year

January 2021

COVID-19 was lurking. Some in the chain became victims and there were layers knocked off of the upper chain – this meant that it went from 6 parts to 4 parts.

It was understood by all parties that completion had to take place 2 weeks after the exchange of contracts due to the top of the chain’s situation.

14th January – the day before the anticipated exchange of contracts. We receive a call from the agent letting us know that unfortunately the sellers of the house we were hoping to buy are no longer proceeding for personal reasons. Everything fell apart. 

FAQ’s

What is the Stamp Duty Holiday? 

On 8 July 2020, the Chancellor of the Exchequer announced a temporary stamp duty holiday that cut the rate of stamp duty to zero per cent for all properties £500,000 or under until 31 March 2021.

What is Stamp Duty?

Stamp duty is the tax governments place on legal documents, usually in the transfer of assets or property. … These taxes were called stamp duties because a physical stamp was used on the document as proof that the document had been recorded and the tax liability paid.

What is a Chain?

A chain is a series of linked house purchases which are mutually dependent for a successful outcome. Your chain consists of the person you’re selling a home to, and the person you’re buying from.

Join me next Monday for post 2 of 4.

There will be a New Post every Monday of February 2021

8th February 2021 – “The evil chain that stole my dream home – House hunting in a pandemic”

15th February 2021 – “The evil chain that stole my dream home – No chain, no pain. New builds”

Coming soon – “The evil chain that stole my dream home – Recovery. What’s next?”

How to Guide: Dealing with Solicitors and ensuring your Property Purchase is dealt with in a timely manner

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Over the years we have discussed putting in the ground work to ensure that your credit is up to par and you have the right processes in place to save more than you spend.

We then went on to discuss the Mortgage Application process, affordability and the difference between a Mortgage Broker and going straight to a High Street Bank.

In the midst of the above we discussed the valuation process, covenants and the enemy of progress that is known as Japanese knot weed.

We’ve briefly touched on making an Offer on a property and ways in which you can justify offering 5 to 10 thousand pounds less than the asking price.

Today we are going to focus on the last leg of the property acquisition process – Solicitors!

It is so easy to get tangled up in a tumbleweed of legal jargon and be scared away by the legal process, but it is quite simple, especially with Residential purchases.

Below are my top 3 tips to dealing with solicitors and ensuring your case is dealt with in a timely manner.

  1. Fill out all questionnaires and property packs following the instructions of your solicitors to a T. If it says to use block capitals and black ink, do it! If for whatever reason the solicitors forget to do something later on down the line, they can turn that delay back around on you and claim that they were waiting for “correctly filled out forms”.

2. Reply to all emails in a timely manner responding to ALL questions. If you need to do a little bit of research, do it. Don’t reply to an email in parts. Respond answering all questions in one go. Be very specific and over share if you think any detail will help. Delays often occur when solicitors have a response to question 1 & 3, but are waiting for a response to question 2. This may come weeks later and get lost within the email thread.

3. Searches. These need to be done promptly as some can take up to 6 weeks to come back. Some solicitors require some sort of payment before carrying out any searches as these are non-refundable and will need to be paid for whether the transaction goes ahead or not. Pay the fee and get the ball rolling from day 1.

There are so many other details we can dive in to, but the top 3 have sometimes been the difference between someone completing on their purchase in 7 weeks and someone completing in 7 months.

“Movers are more likely to benefit from the Stamp Duty holiday than first time buyers”.

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Original picture: Woburn Sands area

It’s no secret that we are in a pandemic. The Government has been updating us quite frequently regarding new procedures and initiatives to help the economy and those who are going through a really hard time.

One of the initiatives that was announced was the Stamp Duty holiday. This was a bid to boost Britains housing market.

What this means is that someone who decided to sell their home and buy a new one would no longer have to pay stamp duty on the new property providing it cost them £500,000 or less.

This initiative doesn’t do much for first time buyers as they haven’t had to pay stamp duty on the first £300,000 of their first property for some time, however, previously they would of had to pay 5% on the excess amount between £300,001 – £500,000. 

As soon as this initiative was announced, the housing market picked up massively. The boost most definitely took place!

Home owners used this opportunity to save thousands of pounds. 

To give you an idea of how great this initiative is, check out this example:

Someone sells their house for £350,000, moves and buys a house for £400,000 as they want to upsize and have enough equity to do so. In 2019 and even up to 8 July 2020, they would of had to pay £10,000 in stamp duty. 

Fast forward to now, this person would pay £0 stamp duty hence the urgency in the housing market.

Many people are trying to move, upsize, downsize and the rest of it before the end of March 2021. April 2021 is the beginning of a new financial year and looking at the deficit the country is currently in due to furlough, bail out funds and the rest of it, we are all going to pay with the potential increase of taxes and the return of stamp duty!

We also have another issue on our hands. Due to the property demand being high, many are prepared to pay a lot more for certain properties in the way of a bidding war…

This is a discussion for next week. 

London working, outside London Living: 5 Steps to making it outside London.

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Today we are going to be discussing something that is very close to home for me – the big commute!

It’s no secret that London is the place to be in order to receive a quality salary. This tends to be because salaries incorporate the extortionate costs of zone 1-3 travel and the general cost of living. Let’s not forget that London is the heart of the UK. London is home to the Bank of England, the worldwide beloved Big Ben and the Houses of Parliament to name a few! 

Throughout my career from retail right through to the financial sector I have always met people that lived in areas I had never heard of either on the outskirts or far out of London. They’d always express how affordable it was to maintain a high quality of life, whilst commuting to London and still having a considerable amount of disposable cash.

I have had the experience of renting in London for around 6 years and the most I have spent on rent is £1,200 per calendar month for a 1 bed apartment and then an additional £500 on bills & groceries. That’s a whopping £1,700 to have a roof over my head and food in my stomach. Let’s not forget that we haven’t even discussed the cost of travel, luxuries and unexpected miscellaneous expenses. I’d say my monthly expenses were not too shy of £2,500 – crazy!

Living outside London I have realised that I am able to keep the same quality salary, whilst reducing my outgoings, in turn being able to save more and invest elsewhere. Not to mention that the house prices are extremely affordable. I went from paying £1,200PCM on rent, to under £500 on my monthly Mortgage. 

Thinking about making the big move?

Here’s some tips and things to consider… 

5 Steps to making it outside London:

  1. Drive. Get your driving licence so that you don’t have to depend on your partner, taxi’s or public transport. Honestly, public transport is shocking! You can expect a bus every 30mins. 


  2. Commute. Live somewhere that is within walking/cycle distance of the train station. If you live far from the train station, you will have to drive, pay for parking or a taxi and this is counterproductive.


  3. Flexible working. The current climate has meant that the hands of many employers have been forced to be more flexible with their employees. Not commuting in to the office everyday can take some pressure off both financially and physically, this also allows you to recharge your batteries, in turn making you a lot more productive. 


  4. Opt for a bigger space. Outside London the pound goes a lot further. If you can, opt for a house/apartment with a spare room. Make this your office. Try to avoid working on your bed hunched over on your laptop. And if you can stretch a bit further, go for somewhere that has a garden or a lovely communal outdoor space.


  5. New Normal. Have an open mind. Things are going to be different, try new things. You can’t expect that London ambiance, because after all, it’s not London. 

Image Source: https://www.newstatesman.com/politics/uk/2018/02/houses-parliament-are-falling-down

A buyers Market, not a sellers…

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It’s no secret that Covid-19 has had a devastating impact on the entire world.

Millions have lost their jobs. Off of the back of this, many will have to take payment holidays on their mortgages, some may eventually fall behind on mortgage payments and some may even lose their homes due to repossession. 

What does this mean for the market?

I’m going to focus on 2 things today.

  1. It will be a buyers market, not a sellers 
  2. Lenders will have to recover a lot of unpaid debt and be a lot more frugal with who they lend to

What does this mean for you? 

The person with a home to sell…

  • Now is the time! Sell as soon as possible and sit on the funds. Move in with family, think about short term renting and sit on the proceeds of the sale as in a few months, you will be able to buy a bigger house for a lot less.
  • Fast forward a few months… If you take too long to take the leap to put your property up for sale, you may need to take an Offer much less than what you wished for.

Are you in a chain? There’ll be more about what can do next week… 

 The person with a home to buy…

  • Hold your horses. There are going to be many houses to choose from and many people desperate to sell them so this may work in your favour when it comes to negotiating on price. 
  • You may need to front more deposit than you may have initially planned due to Mortgage products being quite unstable. 90% Mortgages which require a 10% deposit have been pulled and reintroduced week by week. Lenders may also be a lot more picky with who they lend to, request much more information and be much quicker to decline applicants who don’t fit within their risk appetite 

Key take aways

Home Sellers

  • The time is now!

Home Buyers

  • Be patient. Fix your credit & save save save!

All information on my blog is opinion driven based on market trends, statistics and forecasts regarding the current situation. 

*Photo Source https://www.standard.co.uk/news/estate-agents-face-ban-on-for-sale-signs-6781275.html

Questions to ask when viewing a property

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1. When was the last time the *electrics were checked? (Particularly important for Victorian/Edwardian houses, not so relevant for New Builds)

2. Has there ever been any water damage to the property? Flood, roof leak etc.

3. How long has the property been on the market?

4. Roughly how much are the monthly property related bills? Water, gas, electric, council tax, Building insurance2, internet

5. How old is the roof? (Particularly important for Victorian/Edwardian houses, not so relevant for New Builds)

6. Have the owners done any renovations within the last 5 years?

7. How long have the owners lived here?

8. How far is the supermarket/train station?

9. What is the parking like? Do you have an allocated spot, drive way or is it first come first served?

10. Whats the crime like in the area? 

11. Does the property have a restrictive 3covenant? If the Agent is unsure, dig!

12. Is there a 4chain? How quickly does/can the owner want to proceed to completion?

Ultimately, the seller/agent has one goal, sell the property! Take what they say with a pinch of salt and do some research of your own. Ask friends that live in/know of the area. Get a feel for the vibe on the street.

Go to your official viewing in the day and once you feel like you are willing to proceed with the purchase, visit the property and its surrounding area in the night to get a real feel for what it’d be like living there. Pay close attention to noise, anti social behaviour, over crowded parking etc. 

1Electrics are particularly important, you can reasonably knock off £10,000 from the asking price of a property if the electrics have not been given the once over within the last 10 years. This is something you will definitely have to get done as soon as possible, this involves checking plug sockets, making sure no wires/cable are frayed and checking that the lights are working properly with no buzzing sound. Worse case scenario you will have to rewire the property. Rewiring a property is not cheap, but if required, is essential for older houses to prevent electrical fault damage which can ultimately lead to fires etc. 

2Building insurance is a necessity and legal requirement for a House. It is not required for a flat as you are covered under the ground rent that you pay to the Landlord/Freeholder. 

3A restrictive covenant can encourage neighbours to be to create harmony and deter anti social behaviour. It can also prevent you from carrying out certain actions like extensions, loft conversions or converting the house in to flats etc.

Obtain copies of the properties title from the official Land Registry website to be sure there’s no surprises.

4A property chain is created when more than one buyer is involved in a transaction. For example, say you are buying a home from someone and they are moving to a new home they are buying from another. That is an upward property chain, meaning that your completion date (when you move in) is likely to be affected by the date when your seller can move into their new home too.

If you’d like to add to the list of questions to ask when viewing a property, feel free to comment below. Happy House Hunting!

How does Equity work?

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The concept of equity is quite simple and in practice is a great way to see a return from an investment.

Whether you are purchasing a family home or a buy to let property for rental purposes, the location and aesthetics of the property are crucial for its potential.   

E.g

2016
Purchase Price £220,000 
Mortgage Attained £198,000 (10% Deposit)
4 Bed property bought just outside of the M25 
Walking distance from station
Local supermarkets not far
Good school catchment area
En-suite Bathroom

2020
The same house sells for £300,000
The Mortgage balance has been decreasing repayment after repayment for the last 4 year
Mortgage Balance (guesstimate) £188,000 (Dependent on interest rate)

This means that on the property you bought for £220,000 in 2016, you have made £80,000 as the value has gone up by this much across the 4 years.

When you sell the property for £300,000 you will clear the remaining Mortgage balance of £188,000 and be left with £112,000

You will then have other fees like solicitor fees, capital gains tax (on the *gain, not the sale price) and if you sold your property before the fee free period on the Mortgage product you are locked in to, you may have to pay an exit fee.

*The gain here is £80,000

All in all, worse case scenario you are left with £90,000. That is a profit of £68,000 when you take away the £22,000 deposit you initial invested for the property.

This is why many people buy properties well outside of London, fix them up and then sell them on. The money that can be made is mind blowing. However, that is only possible if you get it right!

Next week I will be speaking about what questions to ask and what to look out for when you go for a house viewing.