Your Latest Property Market Update

Buy-to-Let still proving to be a sound investment

The buy-to-let market has had somewhat of a difficult time over the past few years due to changes in government legislation and taxation. Since July this year, however, the number of buy-to-let mortgages being approved has risen considerably and is proving that there is life in the market for those looking to invest.

With competitive mortgage rates available, especially if a larger deposit has been accrued, anybody who has the desire to become a landlord now has the opportunity to do so. A new report by HomeLet showing that the average rent around the UK has reached a record high of £970 per month demonstrates that the potential to reap rewards through buy-to-let is exceptional.

HomeLet data shows that rents have increased in every single region of the United Kingdom over the past twelve months, up to 3.5% greater than at the same point in 2018. For those looking to invest, this presents tremendous opportunity to be able to invest locally and see the benefits.

Biggest annual increases in average rents

Region	August 2018	August 2019	Annual Change
London	£1,632	£1,689	+3.5%
North West	£717	£741	+3.3%
South West	£826	£852	+3.1%

In terms of rental yields, we are also seeing record highs in terms of the average yield that landlords are reaping, with the average now reaching 4.5%, up from last year and the highest in three years. For those looking to maximise their yields, there is a growing trend towards Houses of Multiple Occupancy, or HMOS, as they tend to provide a yield approximately 20% higher than a typical rental property.

Which region provides the best rental yield?
North West 6.20%
Yorkshire & The Humber 5.90%
East Midlands 5.40%
Scotland 5.30%
West Midlands 5.10%
North East 5.10%
South West 4.40%
Wales 4.20%
East of England 4.10%
London 4.10%
South East 4.00%
National average 4.50%

Everything you need to know about the Bank of Mum and Dad

There are huge lenders in the mortgage market around the United Kingdom, with high-street names competing fiercely with one another for potential business. One of the largest current lenders may well surprise you, however, as rather than a large financial institution it is the bank of mum and dad which sits at 11th in the list of largest mortgage lenders in the UK.

Parents and family members are set to lend more than £6bn in 2019, which amounts to a higher amount in mortgage pay-outs than well-known brands such as the Co-Operative Bank and Skipton Building Society. With deposits becoming ever-increasingly difficult to amass, many people are now counting on their relatives to help them take that first step onto the property ladder; recent research from Legal & General and Cebr has found that nearly 20% of all property transactions are now aided by parents and grandparents.

Those lucky enough to be able to tap into this valuable resource will be aided predominantly by cash gifts, with some releasing the equity in their homes in order to help their children (16%).

Nigel Wilson, Group Chief Executive at Legal & General, says: “The Bank of Mum and Dad continues to be the ‘iceberg’ mortgage lender beneath the surface of our housing market – all but invisible yet exerting a massive influence, funding purchases across the country and helping people to defy the economics of affordability and realise their housing dreams.”

If you are thinking of using the bank of mum and dad, then there are a few considerations to take into account:

• Banks and building societies will accept a deposit, or part thereof, that has been gifted to you – some may require confirmation in writing that the money is indeed a true gift.

• If cash is gifted to you then this may be subject to Inheritance Tax (IHT) if the gift giver is deceased within seven years of the gift.

• Inheritance limits are £3,000 per year, and previous years’ allowances may be utilised before IHT comes into play. For example, two parents could gift £18,000 with no IHT due as long as they had not gifted anything in the previous three years.

• If the money is a loan, then this will need to be declared to your potential mortgage provider detailing repayments, interest, timescales and caveats.

Family Fun and Crafts

Friday 21st February

Join in with craft activities to create your own Antarctic adventure.

Click here to read Family Fun and Crafts.

What you need to know about the 95% mortgage guarantee scheme

A new mortgage guarantee scheme was announced this spring, with the goal being to help first-time buyers and aspiring home movers purchase a home with a smaller deposit.

The initiative, which will be available for new mortgages up to 31st December 2022, is intended to increase the availability of mortgages on new or existing properties for those with small deposits. 

This comes after a plummet in 95% mortgages made available last year, as lenders lost confidence in the UK's financial stability due to the pandemic.

How will it work?

It is based on the Help to Buy mortgage guarantee scheme that ran from October 2013 to December 2016, which backed mortgages for 104,736 purchases – 2.7% of all those in the UK.

The average property bought through the scheme was worth £159,170, compared to an average UK house price of £223,000.

In terms of restrictions with the latest initiative, only first-time buyers or those moving homes are eligible to apply, not those wishing to buy second homes or buy-to-let properties.

First-time buyers and home-movers form a vital cog in the economy and housing market, so government support will play a crucial role in restoring the balance.

To get assistance on your mortgage needs, get in touch today, or browse our latest properties to see what's available in your area.

How much hidden equity is in your home?

It has been reported that almost half of homeowners are undervaluing their homes, including some cases where the properties were worth nearly £50,000 more than they realised.

Zoopla reports that only three in ten people have an accurate idea of how much their home is worth, with 45% undervaluing and 25% overvaluing.*

Nearly one in ten homeowners whose property was worth more than expected found that it was valued at over £100,000 more, with 40% located in the London and South East regions.

This means that more than one million UK properties could be hiding six figures of hidden equity – unbeknown to the owners.

What benefits are there for homeowners?

It is reported that the benefits from hidden equity have meant:

- 81% could improve their lifestyle

- 50% were able to move to a better property

- 18% between 55-64 were able to retire sooner than expected

- 13% could upgrade their car

- 13% went on more holidays

- 8% were able to help get family and children on the property ladder

Seven out of ten homeowners would have made different financial decisions if they had been aware of their hidden equity.

What could this mean for you?

You may be in for a surprise if you check the current value of your home.

There are huge benefits to knowing how much your home is worth, particularly if you’re thinking of selling, as the value could influence the type of property or location you move to.

Gráinne Gilmore, head of research at Zoopla, explained: "the effects of the pandemic over the last 12 months have been felt in the housing market, with many households reassessing how and where they want to live.

"There is soaring buyer demand but this is not currently being matched by homes being listed for sale. Homeowners considering a move could be in pole position in their local market if they offer their property for sale, and could be set to unlock hidden equity."

If you’re looking to sell your property or would like to get your property valued, please contact us today.

*Zoopla’s Hidden Equity Survey is based on research among 2,000 UK homeowners who have had their home valued by an estate agent in the past three years.

Majority of transactions since May 2020 backed by mortgages

Aside from the market boost provided by the extended stamp duty holiday, it's clear that the property market is seeing high levels of activity due to the continued low rates of borrowing for mortgages.

Since the market reopened in May 2020, mortgages fuelled 70% of property transactions in the UK.*

Whilst the stamp duty savings have been a tremendous help to many, the ability to secure finance at a much lower rate of interest than previously before has brought a massive boost to market sentiment.

Recent data showed that 270,785 of the 387,667 properties sold have seen the buyer backed by a mortgage, however, there are some regional differences.

- In London, 80% of all sales came from homebuyers with a mortgage

- For the East of England and the West Midlands, this accounted for 72% of sales

- In the South East and East Midlands it was 71%

- The South West had the most cash buyers, with just 64% buying via a mortgage

Some lenders around the UK have started tightening their belts with their lending criteria, potentially making it harder for those with a less secure financial background to be accepted.

But this isn’t likely to impact the ratio of mortgage-financed buyers in regard to those buying with cash.

The new mortgage guarantee scheme has also added incentive to more and more people enquiring about mortgages.

Encouraging lenders to offer 95% mortgages by taking on some of the risks involved, the government's scheme has proven successful so far, with over 78 fixed-rate 95% deals available right now, compared to five at the beginning of March.

If you would like more information, please get in touch today.

*Enness Global Mortgages

Tenant demand continued to rise at the start of the year

The number of prospective tenants registering with agents rose for the third consecutive month in March, as many homebuyers either chose to delay their purchase plans or decided to rent in between their next house sale and purchase.

According to the latest Private Rented Sector report, there were 84 tenants per branch in March compared to 82 in February, with the West Midlands recording the highest number of new tenants per branch, seeing an average of 157.*

At the same time, the number of properties managed per agent fell from 195 in February to 193 in March, with reduced rental stock making rental properties even more valuable.

The West Midlands had the highest number of properties managed with a figure of 260.

Mark Hayward, chief Policy Advisor at Propertymark, said: “this report demonstrates that the rental market continues to show no sign of slowing down.

“Agents have continued to support landlords and their tenants throughout the ongoing COVID-19 difficulties, and it is essential that tenancies are maintained wherever possible to ensure rent keeps flowing.”

Do you need our expert guidance managing your property investments and tenancies?

Talk to us today to learn more about our fully-managed packages for landlords.

*ARLA Propertymark

Norwich Community Choir

Tuesday 25th February

A friendly local choir for anyone who loves singing.

Click here to read Norwich Community Choir .

Our guide on 'gazumping' and how to avoid it happening to you.

If you’re looking for a new home, or are looking for your first home, then “gazumping” may be a term that you aren’t particularly familiar with. Essentially, gazumping is when you have had an offer accepted by a seller, and are in the midst of the buying process, when another buyer comes along and offers a higher price, effectively stealing (or gazumping) the sale.

Over the period between January 2016 and October 2018, analysis by TwentyCi found that 16% of buyers were gazumped. In the current property market, where demand for properties is high, gazumping continues to be prevalent, and the research found that Sheffield is the area with the highest level – with 35% of buyers out-bid at the last moment.

Phil Spencer, TV presenter and co-founder of Move iQ, said: “For anyone who thought gazumping vanished with the runaway price rises of a few years ago, our findings will come as a reality check.

“Gazumping is alive and well, and still causing heartache for tens of thousands of buyers across England and Wales.

“Britain’s fragmented property market is throwing up huge regional extremes. In hotspots where prices are still rising fast, sellers can be tempted to go back on their word to a buyer if they get a better offer elsewhere.

“Meanwhile, in slow markets, the lack of homes for sale can lead sellers to leave would-be buyers in the lurch if they get a last-minute offer from someone else.

If you want to avoid the spectre of being gazumped, then having all of your buying processes in place before making an offer will help. These involve having a mortgage in principle in place, a conveyancing solicitor and a surveyor in mind; all will help to avoid long periods of waiting which offer the opportunity to others to make a higher offer. When you make your offer on a property, you could also ask as a condition of the offer that the property be taken off the market immediately which will then protect you from other prospective offers.

Britain’s Gazumping Hotspots

Sheffield – 35%
Madistone – 32%
Cambridge – 28%
Birmingham – 26%
Manchester – 25%

The importance of realistic asking prices

Recent analysis from comparison site Zoopla has shown the benefits that are reaped when a property is priced correctly rather than over-ambitiously, with overvalued properties taking up to two months longer to sell.

In addition to a longer sale period for properties which are overvalued, the research also found that by dropping the price in order to attract buyers, these properties also achieve an average asking price of £12,000 less than their more accurately valued counterparts.

“Our research highlights the importance of accurate pricing and reveals the areas where there is the healthiest alignment between a seller’s expectations and what a buyer is willing to pay for a property,” said Charlie Bryant, managing director of Zoopla.

“When a home is valued too ambitiously at the start, or simply overpriced, the sales process can be derailed. Homes can languish on the market for much longer than they should and the vendor loses control of the sale, often leading to price reductions,” he pointed out.

“Agents in Salford, Driffield and Dronfield stood out in our report in aligning their vendor expectations with the realities of the market, and what a potential buyer is willing to pay for that particular house, in that particular location.

“The English and Welsh average sold price, which amounts to 96.3% of the asking price, indicates a market realism, and moreover a market that is transacting good values, despite wider macro-economic and political concerns,” he added.

This research shows the important part which an estate agent plays in those initial meetings, with an over-valuation extremely attractive at first, but damaging in the long-run. If you are thinking of selling your property, then complete your own research so that you can have open and honest conversations with your agent in order to list at a realistic value.

Tips on selling as the days get shorter

As the days get shorter, it is more important than ever to present your property in an appealing manner if you are going to attract potential buyers. With that in mind, we have put together some season-specific advice to help you find a buyer…

Let in the light
Never is it more important in the year to keep your rooms bright and airy than during the change between seasons. This is because of how quickly the levels of light fluctuate, turning your lovely property into a less-appealing version of itself, with dark rooms and corners. To avoid this, use uplighters to brighten up your rooms during viewings – this type of lighting can be easily placed into corners or areas which may appear darker. Furthermore, blinds and curtains should be drawn back to allow plenty of natural light and don’t forget to turn any lights on in cupboards etc. to create multiple sources of brightness.

Keep paths clear
During this time of year, leaves may start to fall from the trees leaving debris around your property. Ensure that your kerb appeal is kept to its maximum by clearing away any errand plants and debris from your property, especially on the path to your front door where potential buyers will most certainly be surveying. If you have the time, consider tidying up your flower beds and removing and shrubbery which may not be looking quite as lovely as during the summer months.

Clean, clean and clean again
Of course, presenting your property in a clean and tidy state is a given, but it’s also worth considering any other areas that you can spruce up in order to maximise the available light. Clean your windows regularly to ensure that they sparkle for prospective buyers and let in as much natural light as possible (this will also help with the aforementioned kerb appeal). Clean your front door so that it looks at its best – many of us will have white UPVC doors to match double glazed windows, and if this is the case then use some bleach to rejuvenate it.

Increase the pressure
You want your property to seem cosy and inviting, and the drop in temperature gives you the perfect chance to make your home comfortable and welcoming. Turn the thermostat up so that during viewings your property is warm and incentivises viewers to really take their time looking around before they brave the cold weather once more. If you have a fireplace, think about lighting it up or at the very least light some candles.

Government announces reforms to planning and Help-to-Buy

Housing secretary James Brokenshire has recently unveiled his plans to introduce new quality controls on housebuilders, whilst also implementing new legislation to try to prevent developers from selling houses on a leasehold basis through Help-to-Buy.

“We have long recognised that we have a responsibility to confront unfairness in the leasehold market,” commented Brokenshire. “Last year we consulted on proposals including the leasehold house ban and ground rent reduction.

“Today I can confirm we will go ahead with our original plan to reduce ground rents on future leases to zero, as opposed to a cap of £10 per year.

“And we will legislate to ensure that in the future save for the most exceptional circumstances all new house will be sold on a freehold basis. We are committed to taking bold action to reform the sector and will be pressing ahead as soon as parliamentary time allows helping us delivery our promise to make the home buying and selling process quicker, cheaper and easier.”

The housing secretary’s plans aim to help future homeowners in purchasing their first properties in a more timely and cheaper manner. These plans go hand-in-hand with the government’s pledge to deliver 300,000 new homes a year by 2020. According to the plans, if a buyer is sold a leasehold home then they will be able to get their freehold at no extra cost.

The Help-to-Buy scheme has been a flagship system that has been fundamental in first-time buyers entering the market since April 2013. From 2013 to 2018 the number of new-build property sales has increased from 61,537 to 104,245 – which can be largely apportioned to Help-to-Buy, with 38% of all new-build sales supported by the scheme.

Addams Family Musical

Thursday 27 February - Saturday 29th February

At the Jane Austen College, Norwich

Click here to read Addams Family Musical.