Monthly Archives

March 2020

new-property-checks

What checks do you need to carry out on a new property?

By Blog, Development Finance

When purchasing a new property, there are many things you need to consider. Forgetting to carry out necessary steps before you decide to buy a house and continue with moving in could cause you problems in the future. For example, undiagnosed issues with the house could run you up an expensive bill or affect the value of the property.

Here is some advice to guide you through the property buying process and the things you need to check with regards to a new property.

  • Checking the electrics
  • Check the gas
  • Water and drainage search
  • Spot signs of damp
  • Look for rot
  • Age of roof
  • Consider the plumbing

 

Checking the electrics

Making sure the electrics are in good condition is vitally important. A survey on your house will not look at the state of these so it is well worth getting an Electrical Installation Condition report. This report will carry out the necessary checks to make sure the electrics in your property are safe. An electrics report could help you save thousands of pounds, as rewiring can be expensive.

Check the gas

When buying a new property, get a gas safety record (also known as a gas safety certificate) for your new home. Asking the current owners for this record on all appliances in the property is vitally important for your safety.

Appliances that are unsafe to use could lead to carbon monoxide poisoning, fires, gas leaks, and even explosions. Do not make the assumption that all gas appliances in your new house will be safe to use – always check.

If it has been over 12 months since the last gas safety record has been done, or the current owners are unable to provide a record, obtain one yourself. Contact a Gas Safe registered engineer prior to you moving in.

 

Water and draining search

Do not overlook the importance of checking water and sewage before buying a house. This is important, as it means you will not encounter unforeseen difficulties after you have purchased the property.

A Drainage and Water Search is typically carried out as part of the conveyancing process. Your conveyancing solicitor will contact the water company supplier for your home to check for things such as:

  • Whether there is a water meter
  • Where does the water supply come from
  • Are there sewers or water mains at the house
  • Are there any problems with water pressure
  • Who is responsible for drainage at the property

Does it have subsidence?

Subsidence can have a huge impact on a property’s structural safety as well as its overall value. Therefore, making sure it is detected before buying is key.

Subsidence is when the ground underneath your property sinks, over time this may cause your property’s foundations to become misaligned.

Signs of subsidence in your property include:

A crack in a property caused by subsidence will usually:

  • Have a width larger than 3mm
  • Be located close to a door or window
  • A diagonal crack wider at the top than at the bottom
  • Visibility is both on the inside and outside of the property

If you want to purchase a house that you suspected has subsidence issues, get a full buildings survey carried out.

 

Spot signs of damp

Damp can cause significant damage to your home, can be costly to fix and can also trigger health problems such as respiratory issues or allergic reactions.

 

crack-damp

 

As a result, checking for damp before buying a new property is well worth doing. Here are some ways you can spot the signs of damp:

  • Damp patches on walls and plastering
  • Water streaming down windows
  • Peeling wallpaper
  • Damaged plaster
  • Damaged skirting boards
  • Springy floorboards
  • Wall discolouration

 

Look for rot

Rot is caused when the timber has been exposed to wet conditions, and this can lead to a number of property problems. It is highly recommended you check for rot in the home-buying process. The signs of wet rot include the following:

  • Springy or bouncy floors – rot can affect floor joists or floorboards
  • Darkened timber – discoloration is caused by wet rot
  • Damp smell – rot can be a leading cause of this
  • Flaking paint or peeling wallpaper
  • Fungal growth – this is usually white, black or yellow in colour
  • Crack timber – usually linear
  • Spongy timber – when pressed

 

What is the age of the roof?

Checking how old the roof is on a property you want to purchase is another thing to consider. Replacing roofs can be costly, and newer roofs typically only last for 15-20 years in total.

 

Consider the plumbing

When viewing a property, ask if the pipes are lead and run the taps to see what the water pressure is like. You should also check if the boiler and radiators work in the building and how old these are.

bank-of-england

What does base rate cut mean for the UK property market?

By Blog, Development Finance

The Bank of England (BoE) has just announced a base rate cut of 0.5 percent following the outbreak of Coronavirus across Europe.  This represents the biggest cut since the financial crisis back in 2008. This emergency interest cut from 0.75 percent to 0.25 percent has been done by BoE to ease a possible recession and an overall slowdown in the economy if coronavirus spreads further into the UK.

What will be the expected impact for the property market following this base rate cut? Here is what is anticipated to happen.

  • Better mortgage rates
  • Will not apply to fixed-rate mortgages
  • Good news for landlords
  • Those applying for a mortgage will benefit
  • Positive news for property investors

Better mortgage rates

A historically low base rate will likely mean good news for those with mortgages. This is because a reduced base rate will likely then make interest rates on standard variable rate and tracker mortgages lower. This is down to the fact that the base rate is the interest charged by the BoE to borrow money, which is then reflected in the interest rates people in the UK pay.

The total amount that can be saved for a tracker mortgage will be dependent on if your mortgage is interest-only or not.

Unlikely to apply for fixed-rate mortgages

Unfortunately, if you have a fixed-rate mortgage (approximately 92.4% of all approved mortgages were fixed-rate in the final quarter of 2019) then the rate cut will not be passed on. This is because this mortgage term applies for between two and five years.

The only way you could potentially benefit is if you decided to remortgage your property. Think carefully if it is worth doing so, taking into account things such as cancellation fees.

 

Good news for buy-to-let mortgages

The base rate cut is good news for landlords, as almost all of the buy-to-let mortgages are provided on an interest-only basis. That means if interest-rates are reduced, it can only be advantageous for those with buy-to-lets.

 

Those looking to get a mortgage will benefit

If you are currently in the process of looking to buy a property and require a mortgage, now is the time to take advantage of mortgages being at historically low levels.

For example, the current base rate means this is a great opportunity to benefit from a low fixed-rate deal. A fixed-rate deal will mean that you can lock in a deal and if the base rate increases later on, you will not be impacted for the duration of the term.

 

Positive for property investors

Reduced interest rates are also better for property investors, as it helps to reduce the cost of borrowing for property development finance. It also increases the opportunity to boost profits in the longer term, thanks to the lower rate of interest.

gazumping-house

Gazumping – what you need to know about it

By Blog, Development Finance

If you are buying a property, or about to go through the process of doing so, you have likely heard of the term gazumping. But what exactly does it mean? If you are a buyer, making sure that you know what gazumping is key, so you are aware of the ways it may set you back, as well as what you can do to avoid it.

What is gazumping?

The act of gazumping is when another buyer puts in a higher offer on the property you are currently in the process of buying and the seller accepts this last-minute offer instead.

For anyone who has gone through the experience of having their offer accepted by a seller, only to have it suddenly rejected due to another buyer’s higher offer, can attest it is a difficult situation to be in.

 

What happens if I am gazumped?

For the majority of buyers who find themselves being gazumped by another buyer offer, there are really only two options.

The first is to make a higher offer than the other buyer who has gazumped you. This may mean having to pay a significant amount more, which may be out of your property budget.

The alternative, and for many there is no other choice, but to start all over again and carry out a new property search.

Is gazumping illegal?

No, as unpleasant as it is for buyers to go through, it is not illegal under English law. The property agreement only becomes legally binding once contracts have been exchanged, meaning that gazumping is effectively exempt.

You can see on a variety of property listings online are listed as ‘Sold STC’ meaning an offer has been received and accepted, but the sale is ‘subject to contracts’ meaning contracts have not come into exchange yet.

What are the consequences of gazumping?

Apart from the main consequence – losing the property you were buying-  other negatives include the high costs accumulated, as gazumping usually occurs later on in the property process. Buyers have usually already spent a considerable amount on surveys and paying a conveyancer, as well as arranging a mortgage.

When can gazumping happen?

Unfortunately, gazumping can take place at any time prior to contracts being exchanged between two parties.

The main reason gazumping occurs is, as previously mentioned, is because another buyer has made a higher bid than you. However, in a small number of cases, the reason could be down to timing issues. For example, if the property buying process is going too slowly (such as the conveyancing survey taking too long to complete) then the seller may choose another buyer who can move at a quicker rate.

 

How to avoid being gazumped

Here are the main ways you can reduce the risk of being gazumped:

  • Get the property taken off the market
  • Take out specialist insurance
  • Buy at auction
  • Move things quickly

 

Get the property taken off the market

When your offer is accepted by the seller, make sure you ask the seller to remove the property off the market. Ensure this been done in writing as otherwise, it will not be legally binding.

The same applies to estate agents listing the property. Ask them to remove signs from outside the house as well as removing the listing online.

 

Take out specialist insurance

If a seller decides to pick a last-minute higher offer from someone else and you do not want to outbid them, there is little you can do other than insure yourself. You can purchase home buyer protection insurance so that you can rest assured you can claim back things such as property surveys or conveyancing fees if need be.

 

Buy at auction

If you want to avoid the problem of gazumping outright, then consider buying a property at auction. However, make sure you are fully aware of how the process works, as it also comes with its own set of risks too.

 

Move things quickly

To reduce the risk of gazumping, it is in your best interest to make sure the process is moving as speedily as possible. What do we mean by this? Things such as making sure you are in very regular contact with your mortgage broker and conveyancing solicitors, as well as always responding quickly to information requests. You should also ensure forms are signed and returned promptly too.

brexit-house-prices

How has the property market improved in 2020 after the Brexit result?

By Blog, Development Finance

It is good news all round for the property market, ever since the UK general election outcome in December 2019 and since the country began its year-long transition phase in January 2020 out of the EU.

House prices rising rapidly

According to the recently published Nationwide index, house prices have been rising at a dramatic rate. In fact, they have been rising at the fastest annual rate in 18 months. For example, the average property increased in value by around £200 in February 2020. That means the average home is estimated to be worth £216,092, with inflation for house prices reaching 2.3 percent.

 

House prices rising in every region of the UK

In even better news, data compiled by the Land Registry has shown that house prices have risen in every region in the UK since the election result in December 2019. This is the first time it has happened in the last two years.

Data from the Land Registry shows that house prices increased by 2.2% in December, which is a rise from 1.7% in the previous month.

December 2019 was the very first month where prices increased in every single region and counties since February 2018.

 

Mortgage approvals are soaring

Not only are house prices in the UK on the up, but mortgage approvals too. This will be music to the ears of prospective buyers, with levels rising to the highest since before the Brexit referendum took place in 2016.

The latest figures, which are a part of the most recent money and credit report created by the Bank of England, show that approvals are at the highest since February 2016.

Approximately 71,000 mortgage applications were approved in January 2020, far exceeding recent forecasts made by property experts. The numbers are also four percent higher than in December 2019. In the last month of 2019, mortgage approvals were at 67,000.

 

Remortgage approvals rising in 2020

There has been a spike in the number of confirmed remortgages too in January 2020. Remortgage approvals in the UK are now up by 3.9 percent, with over 52,1000 deals approved in the first month of the year.

 

Why is the property market booming?

Property development experts believe that the landslide election outcome in December 2019 leading to a confirmed Brexit in January 2020 has helped to result in a more stable economic outlook. This has had a huge impact on buyers’ and sellers attitudes to the UK property market.

However, experts have also highlighted that if the coronavirus outbreak continues to spread in the UK, property prices could fall in the coming months.

 

 

coronavirus-property-market

How is coronavirus affecting the property market?

By Blog, Development Finance

Coronavirus has had a huge impact on the global economy, with share prices dramatically dropping at the same rate as the 2008 financial crisis and China’s economy is already suffering considerably. However, has the property market in the UK been affected so far? Only mildly.

Minor dips in the housebuilding market

So far coronavirus has only mildly impacted the property development finance market in the UK, with a small decrease in share prices. Housebuilding firms such as Berkeley and Vistry have seen their shares flatline and Crest Nicholson was down by 0.57%. However, the impact of the virus on house prices in the next coming months is not yet known.

A strong February for house prices

February was a good month for house prices, with the average price of a house increasing 2.8 percent compared to the same time last year. According to the recently published Halifax House Price Index, prices were increasing by 2.9 per cent per quarter, meaning that the average price of a property in the UK is now around £240,677.

There has been a stable level of both buyer and seller activity in recent months, far better than has been seen in recent years. Property experts strongly believe that this is because the jobs market is strong, borrowing rates are almost at a record low and the end of uncertainty regarding Brexit. Average house prices in the UK rose considerably in February alone. Many have seen that as a welcome return to a healthy property market. But, this may be at risk now due to the spread worldwide of coronavirus taking place at a rapid rate in the last few weeks.

 

Coronavirus could threaten UK house prices

Experts believe that if the coronavirus spreads more prominently to the UK, this could pose a significant blow to the housing market.

This is partly based on the fact that political uncertainty in the last two years had a huge impact on prices and the virus could have the same effect in causing falling price growth and transactions.

For example, new builds abroad have already stopped, with new travel restrictions in place meaning that it is more difficult for developers to attract interest from foreign investors.

In the long-term, this could be harmful to foreign investment if such restrictions are in force for a considerable period of time. It will also likely have a knock-on effect on house prices.

 

House buyers and sellers could put plans on hold

In a survey carried out recently by Benham and Reeves, their data revealed that 17 percent have already put plans on hold for buying or selling property due to the coronavirus.

If fears become more widespread, then market activity may fall once again despite an otherwise strong start to the year.