What are the costs of selling a home?
What are the costs of selling a home?
For those who have little experience in selling a house, learning about the additional costs that are often associated with the process can turn the situation into a cost-prohibitive nightmare. But what are the costs of selling a home?
What costs are involved with selling a home?
There are three main costs that most vendors will find themselves being responsible for before a sale can take place.
Of course, depending on the circumstances there are likely to be other charges that are entirely dependent upon your situation but nearly all sellers will find themselves enlisting the services of the following:
An estate agent will be the first port of call for many sellers, acting as a hub of information in an effort to guide you through the house-selling process2. While estate agents tend not to be thought of very highly by many – due to the publicity surrounding the immoral behaviour of a small percentage of agents who try to make a quick buck – the majority of agents are trustworthy individuals who specialise in helping venders sell their home fast in their chosen area3.
While there are numerous national agencies who offer ‘region-specific’ representatives who are marketed as experts, it can often be very hard to prove the credentials of these individuals- whereas most local independent agents have managed to stay in business over the years due to a strong reputation and repeated recommendations within the local community2.
Estate agents are used by over 95% of sellers2 and are – more often than not – paid by the seller as a percentage of the selling fee, usually between 0.75% and 2.5% (plus VAT), but usually around 1.5% (plus VAT) 1. So, for a £150,000 house, the fee would be £2,250.
This system works well for agents and sellers alike as the less valuable a house is, the cheaper the estate agent fee. This approach is made all the more intriguing thanks to the prevalence of agents today who will only charge a vender if an actual sale is achieved1.
Of course, no buyer in their right mind would consider buying a house unless they had access to the full legal details of the house. This is why buyers will always find themselves contacting a solicitor or conveyancer, who are able to carry out searches for legal documentation that will help them to buy with confidence4.
As a seller, however, you will also need to pay legal fees to a legal representative to make sure that there the sale is carried out in the correct manner5. Conveyancing, however, is an extremely competitive sector and there have, in recent years, been a rising number of complaints from consumers regarding both the level of honesty and quality of service provided by less reputable firms1.
An independent property expert is likely to advise you to contact an independent solicitor or conveyancer directly, not to solely rely on the advice of a lender or estate agents5. While it is a grey area from a legal perspective, there are many examples of companies providing kickbacks to one another in an effort to corner the market6.
Once hired, a solicitor or conveyancer will guide you through the following documentation once you have accepted an offer on your home:
- The TA6 form that will detail all an information that could affect the value of the property in the future including contact details, boundaries, disputes, complaints, proposed developments and existing utility access7.
- The preparation of information related to the status of the title-deed – i.e. whether it is freehold or leasehold. If your home is leasehold, however, be prepared to pay a higher fee due to the extra administrative work. This information is included in either a TA7 or TA9 form7.
- The TA10 form will detail what is and what isn’t included in a sale. This can include fixed appliances such as ovens and fridges7.
- The TA13 form details everything related to the finalisation of the transaction including a declaration that the buyer will not inherit any claims for liability, and when the contracts will be signed, and the keys handed over7.
As mentioned earlier, it is often a good idea to hire and pay for independent conveyancer fees for this service, likely to be in the region of £500 – £1000 (inclusive of VAT) 1.
One of the most important figures to identify while attempting to sell a house is the most suitable asking price. While many estate agents will be able to provide you a ballpark estimate, this figure can be heavily affected by features that may only be obvious to a chartered surveyor.
Ignoring the advice of a surveyor and prioritising your estate agent’s estimate is never a good idea as estate agents may overstate the value of your home in order to gain your business, making your home harder to sell and costing your more in the long run.
A chartered surveyor uses various methods of arrive upon an asking price that is reasonable given the current market conditions. It is somewhat unsurprising therefore that there are occasions when a seller is upset that their home has not increased in value as they expected8.
The methods employed by a surveyor will include, but are not limited to:
- Evaluating nearby sold house prices by comparing the house with similar properties in the same area that have recently sold9.
- A structural report that will relay any information that could affect the value of the home. These can include the presence of dampness, structural movement and subsidence, as well as the condition of the roof and its supporting structure9.
- The study of maintenance and upkeep that has been invested in the property9.
- The value of, and quality of an extension9.
It is also important to state that a surveyor is not responsible for unidentified faults that are inaccessible. A quality surveyor of experience, however, is likely to mention possible issues that could be present based on the other information they have gathered.
Luckily for a seller, the cost of a valuation is much less than the costs of a Homebuyers Report – which is likely to be commissioned by a potential buyer1.
While certain independent surveyors will provide a fixed fee valuation, most jobs will be quoted for based on the value of the property – so expect to pay anything between £150 for a smaller home, up to £1,500 for a larger equivalent1.
Who pays stamp duty when selling a house?
Thankfully, stamp duty is not a cost that is attributed to the seller. Stamp duty is effectively a tax on the preparation of documents related to a house sale and is only relevant for a buyer who is buying a house worth more that £125,00010.
Is there any tax to pay when selling a home?
The necessity of a tax payment is entirely down to the situation of the individual who is selling.
The only tax that may need paying – other than VAT for employed services – is Capital Gains tax, and is a tax imposed on the rise in value of your house during your time of ownership11. This tax is not payable if the following applies to you:
- The house being sold is the only home you own, and it has been your main residence since your purchased it11.
- It has not been split and let out (this does not include a lodger, or roommate) 11.
- It has not been used solely as business premises11.
- The entire grounds (including all buildings) are less than 5,000m2 in area11.
- It was bought solely to be flipped for financial gains in the short-term and not a residence11.
If these conditions do not apply to you, then you can enjoy Private Residence Relief and there is no charge11.
What are the other costs involved with selling a home?
Rather annoyingly – as many with experience of selling will be aware – there can be smaller costs that the seller is liable for, and these can often add up:
Energy Performance Certificate fees
An Energy Performance Certificate is a small survey that focuses on the environmental impact of your home. Brought into law on 1st August 200712, an EPC is carried out by an individual known as a Domestic Energy Assessor who uses software to give a house a score out of 100 based on its construction type, heating systems, loft and wall insulation, secondary heating appliances and glazing standards12.
When these certificates were introduced, a survey was likely to cost in the region of £120 (plus VAT), but as many estate agents have an individual on staff with the qualifications to perform the survey, the cost can often be as low as £30 to £40, and a generous agent will likely waive the fee. It is also worth noting that if an EPC has been performed in the preceding ten years, and there have been no structural changes that would affect its environmental impact for better or worse, then an EPC is not required12.
A seller can often be forgiven for forgetting to include the cost of removals into the house-selling equation as the focus required to obtain a sale makes the need to physically move your belongings a distant second priority.
Luckily, removal companies are a dime a dozen and tend to be experts at moving large items at high speeds with no damage. While you may occasionally hear about an individual hiring a van for the day and employing a few friends to help them out – for the sake of avoiding stress, most people will hire specialists.
Of course, the cost associated with removals varies on the amount of time needed to shift all your possessions. If you travel light, you will find yourself paying a little as £250, but if you plan on bringing your extensive collection of 1800s oak furniture., however, you could find yourself paying as much as £4,000 to £5,0001 – or sometimes even more.
If you have an existing mortgage, the chances are high that your lender will hope to keep your custom by allowing you to switch your mortgage to your new house with minimal stress. If you have found a more competitive quote for a mortgage from another lender on your new house, on the other hand, you will most likely find yourselves having to pay your original lender a mortgage exit fee13. This charge can often be contested but is predominantly in the region of £50 – £3001 depending on the small print in your original mortgage contract.
General cleaning fees
You didn’t think someone would buy your house without a little tidy-up, did you? As with so many purchases, the first taste is in the eye, and a messy home can often deter even the most enthusiastic buyer.
Yes, you can hire a team of cleaners for the day – and no-one will judge you if you do – but if you’re willing to put in a little elbow-grease, this is one part of a house sale that you can save money on.
So, how much does it really cost to sell a house in the UK?
Ultimately, the process of a house sale can be more expensive than many of us are led to believe. It is for this reason that so many sellers are so stubborn to listen to an agent advise them to lower their asking price – every penny counts.
There are, of course, many ways to avoid these costs – such as selling a house directly yourself instead of enlisting the services of an agent, or even carrying out removals and cleaning services themselves. But for the sake of ease, many vendors will pay for these services merely to avoid the accompanying stress – and the stress of needing to sell, especially when time is of the essence can often be too much to bear.
If you do need to sell your home in a short time frame, however, it is important to know the alternative ways available to you, and one of the fastest growing options for those who do not have the time to engage in the traditional house selling process is via the use of house buying companies such as National Homebuyers.
House-buying companies do not need to rely on lenders like an average buyer, and use their capital to purchase your home for cash directly, with many transactions completed within two weeks from the first point of contact, meaning that there is no waiting around for viewings, no charges for valuations or estate agents, and more importantly – a fast house sale.
House-buying companies are also a great option for those who simply can not sell their home due to construction or location-based issues, helping those who have struggled to find a buyer in the past.
Would you prefer to avoid the costs associated with selling a home? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property before it’s too late.
1 Brazg, G. (2018). Complete Guide: The Cost of Selling a House. Available: https://www.theadvisory.co.uk/house-selling/cost-of-selling-a-house/. Last accessed 10th Nov 2019.
2 Woollsey, N. (2018). How to choose an estate agent. Available: https://moneyfacts.co.uk/mortgages/guides/how-to-choose-an-estate-agent/. Last accessed 10th Nov 2019.
3 Cheek, N. (2011). Are estate agents really that bad? Available: https://conversation.which.co.uk/money/estate-agents-bad-trust/. Last accessed 10th Nov 2019.
4 What Mortgage. (2018). Top five tips for choosing your conveyancer. Available: https://www.whatmortgage.co.uk/feature/top-five-tips-choosing-conveyancer/. Last accessed 10th Nov 2019.
5 Anon. (2015). Conveyancing process explained for sellers. Available: https://hoa.org.uk/advice/guides-for-homeowners/i-am-selling/conveyancing-made-simple-for-sellers/. Last accessed 10th Nov 2019.
6 Kirkman, W. (2018). Is your property lawyer getting a kickback? New rules force conveyancers to disclose referral fees. Available: https://www.thisismoney.co.uk/money/mortgageshome/article-6218909/Solicitors-referred-estate-agents-arent-telling-clients-paid-recommended.html. Last accessed 10th Nov 2019.
7 Cheung, C. (2019). Conveyancing. Available: https://www.which.co.uk/money/mortgages-and-property/first-time-buyers/buying-a-home/conveyancing-ag3rw2q052kz. Last accessed 10th Nov 2019.
8 RICS. (2019). The myth of ‘down valuation’ – does it truly exist?. Available: https://www.ricsfirms.com/glossary/the-myth-of-down-valuation-does-it-truly-exist/. Last accessed 10th Nov 2019.
9 McNulty, F. (2018). Legal Q&A: How does a surveyor value a property? Available: https://www.homesandproperty.co.uk/property-news/legal-qa/how-does-a-surveyor-value-a-property-a122566.html. Last accessed 10th Nov 2019.
10 Admin. (2019). Stamp Duty: The basics. Available: https://www.postoffice.co.uk/mortgages/stamp-duty. Last accessed 10th Nov 2019.
11 Government. (2019). Private Residence Relief – Capital Gains Tax when you sell your home. Available: https://www.gov.uk/tax-sell-home. Last accessed 10th Nov 2019.
12 Government. (2019). Buying or selling your home – Energy Performance Certificates. Available: https://www.gov.uk/buy-sell-your-home/energy-performance-certificates. Last accessed 10th Nov 2019
13 Maundrell, H. (2018). Can you reclaim your mortgage exit fees? Available: https://www.money.co.uk/guides/can-you-reclaim-your-mortgage-exit-fees.htm. Last accessed 10th Nov 2019.
What Does a Recession Mean for House Prices?
With rumours growing over recent months surrounding the possibility of another severe recession taking place sometime in the near future, many homeowners are asking how this could affect the value of their home.
What is a recession?
If you have lived through the eighties, nineties and noughties – it’s more than likely that you will have been experienced the consequences of a recession. But what exactly is a recession?
In the UK, a recession takes place when the economy experiences two consecutive months of negative growth¹. Negative growth is when the GDP – or gross domestic product – falls over a six-month phase¹.
Using this definition, it can be shown that over the last 70 years, there have been six clear recessions that have had a negative effect on the UK economy – 1974, 1975, 1980, 1981, 1991 and 2008².
A recession itself can be short-term, but its effects can certainly be felt for years after, especially in areas of moderate to severe deprivation. However, the way a recession affects certain industries often depends on the time during which it occurs.
During the Great Depression in the 1930s, for example, it was recent introduction of the gold standard that caused the most suffering, putting a strain on many financial institutions, and ultimately leading to the UK leaving the gold standard in 1931³.
In the 1970s, the political fallout of the Yom Kippur War led to an embargo on oil products from wealthy Arab nations, almost quadrupling the cost of fuel overnight and leading to many companies in industries that were reliant on a steady flow of the resource to collapse within weeks.⁴
The latest recession that took place in the UK was the 2008 ‘Great Recession’ as a result of the sub-prime mortgage crisis by banks on both sides of the Atlantic and is considered the worst financial crisis since the Second World War. During this time, the unemployment rose by a shocking 8.3%, and manufacturing output fell by 7% – the worst statistics since 1994⁵.
It was during this time, however, that many financial banks and lenders found themselves needing to be bailed out by the government, leaving those who had borrowed money from these lenders for purchases such as housing mortgages in dire straits6.
How does a recession affect property?
The effect that a recession has on property is often dependent on the rate of inflation leading up to the crisis itself.
In the decade leading up to the most the financial crisis, the value of sold house prices grew sharply creating a bubble that enticed many investors and homeowners to place themselves in position of unnecessary risk – buoyed by the confidence of the lenders who were willing to grant those without a sizeable deposit up to 95%-100% contracts7.
For those who bought their homes closer to the turn of the century, the profit they had made through sky-rocketing inflation counter-balanced the fall in house prices that occurred as a result of the crisis. Unfortunately, many who had only bought within the short period of time leading up to the recession – especially those who took high-risk mortgages – found themselves in negative equity with high interest repayments they could not afford.
Is a recession a good time to sell a house?
Whether or not selling a house during a recession is a good idea is very dependent on your situation. If you live in a wealthier area such London, then it is more than likely that the value will recover quite quickly once the recession is over. If, however, you live in an area that is less in-demand by buyers, the likelihood is that you could be waiting more than a decade for values to return to normal.
For example, as late as September 2018, while average properties are now 17% above where they were pre-crisis, regional differences paint a different picture. In the capital prices were over 40% higher than they were before the financial crisis, but in Northern Ireland house values were still 40% lower than they were before the recession8. For many people, they would rather lose money on their house than wait another 15 years to sell at a profit.
There will always be certain buildings that demand a premium price and are likely to weather the storm of a financial crises, but these tend to be either listed, or include unique selling points that attract wealthy buyers.
How to sell a house during a recession?
If you need to sell a home fast at a time when the vast majority of the population are struggling to cover their monthly costs – and by proxy cannot save for a deposit that would be accepted by a lender – finding a buyer can be a very difficult task. This is especially true when taking into account that the number of mortgages being approved in 2018 were still 40% lower in volume than before the 2008 crisis.8
Luckily, however, there are alternatives that many potential sellers tend to overlook.
By examining the rate of values as they fall, it’s not hard to see that waiting can often reduce your potential profit further – particularly if you live in a low-income area. In situations such as these, it is advised to sell as soon as possible, as once the recession is over there is no guarantee that your home’s value will recover in the short-term – even to the price that you manage to sell it for during a failing market.
There are, thankfully, companies who keep track of the property market and are willing to buy your house directly, for cash. The benefit of companies such as these is that they revolve around the idea of completing purchase in a much shorter space of time than a normal sale – which is great news if you are a seller and can not afford to wait around.
Furthermore, house-buying companies such as National Homebuyers will buy a house in any condition or situation, providing you with capital that can be used immediately, allowing you to capitalise on the purchasing opportunities available during a weak market, such as the possibility of buying a brand new home for a bargain-basement price from a house-building company who are desperate to shift their portfolio.
How will the housing market look in the next recession?
As of Q3 2019, fears have been growing rapidly regarding the possibility of another recession – partly fuelled by the fears of a stilted economy once the UK leaves the EU as planned9.
Even in a health economy, the ability of younger generations in the modern age to be able to afford their own home – even considering the large number of schemes put forward by the government over the last ten years – is a lost cause for the majority10.
Many analysts believe that the next recession will punish Millennials further11. While this may not seem to be an issue for many older homeowners who wish to sell, it is important to remember that the search for a willing buyer will be exponentially harder if the pool of potential buyers continues to decrease.
This means that many older homeowners who wish to downsize – trading their expensive larger houses for smaller, more affordable ones – may find the process extremely tricky, heavily affecting the status of their wealth into retirement.
It is, at this point, impossible to say how the housing market will look after the next recession. With so many variables in the air, even respected analysts are finding themselves at odds with one another. But as many economists have pointed out, the outlook would be a lot less bleak if the decision to leave the EU is reversed12.
Are you looking to sell your home due to worries about recession? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property before it’s too late.
¹BBC (Anon) (2008) Q&A: What is a recession? Available: http://news.bbc.co.uk/1/hi/business/7495340.stm. Last accessed 10th Sept. 2019.
²Office for National Statistics. (2013). UK GDP since 1955. Available: https://www.theguardian.com/news/datablog/2009/nov/25/gdp-uk-1948-growth-economy. Last accessed 10th Sept 2019.
³Pettinger, T. (2017). The UK economy in the 1930s. Available: https://www.economicshelp.org/blog/7483/economics/the-uk-economy-in-the-1930s/. Last accessed 10th Sept. 2019.
⁴Smith, Charles D. (2006), Palestine and the Arab–Israeli Conflict, New York: Bedford, p329.
⁵Leaker, D. (2015). LFS: ILO unemployment rate: Great Britain: All: %: SA. Available: https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment/timeseries/ycno/lms. Last accessed 10th Sept 2019.
6Morrison, C. (2018). How the global financial crisis hit the UK housing market. Available: https://www.independent.co.uk/news/business/analysis-and-features/global-financial-crisis-lehman-brothers-property-house-prices-uk-housing-market-a8538176.html. Last accessed 10th Sept 2019.
7Chu, B. (2018). Financial crisis 2008: How Lehman Brothers helped cause ‘the worst financial crisis in history’. Available: https://www.independent.co.uk/news/business/analysis-and-features/financial-crisis-2008-why-lehman-brothers-what-happened-10-years-anniversary-a8531581.html. Last accessed 10th Sept 2019.
8Bruce, A. (2018). Britain’s lasting scars from the financial crisis. Available: https://uk.reuters.com/article/uk-britain-economy-crisis-graphic/britains-lastin-scars-from-the-financial-crisis-idUKKCN1LX0FY. Last accessed 10th Sept 2019.
9Sentance, A & Blanchflower, D. (2019). Recession looms for Britain – two experts on the economic outlook. Available: https://www.theguardian.com/business/2019/aug/28/recession-looms-for-brexit-britain-two-experts-on-the-economic-outlook. Last accessed 10th Sept 2019.
10Inman, P. (2015). Young people in UK increasingly giving up on owning a home – Halifax survey. Available: https://www.theguardian.com/money/2015/apr/07/young-people-uk-increasingly-giving-up-owning-home-halifax-survey. Last accessed 10th Sept. 2019.
11Lowrey, A. (2019). The Next Recession Will Destroy Millennials. Available: https://www.theatlantic.com/ideas/archive/2019/08/millennials-are-screwed-recession/596728/. Last accessed 10th Sept 2019.
12Clark, E. (2019). What will Brexit mean for house prices? Available: https://www.which.co.uk/news/2019/09/what-will-brexit-mean-for-house-prices/. Last accessed 10th Sept 2019.
Estate agencies under fire for turning a blind eye to crime
Despite a strong belief that the estate agency industry is heavily regulated, the lack of oversight by many unregistered agents has forced the government to hand out fines to tackle the growing problem of money laundering.
While estate agents are hardly regarded as the most trustworthy of professionals by consumers and industry experts alike, large numbers of vendors who are looking to sell their home fast are often more than happy to hire an agency – with little research of their own – in the hopes of securing high sold house prices.
Unlike many financial businesses which require a prolonged vetting process designed to rout out applicants who could be considered morally flexible, anyone can set up an estate agency business with little more than a registration with HMRC and a redress scheme – potentially allowing anyone to become an estate agenct.
While this is not a massive issue in itself, these loose set of rules allow criminals to launder money gained through wrongdoing via real estate investment. An obvious example of this is the mass-purchasing of central London residences by Russian Oligarchs in an attempt to safeguard their finances.
The government introduced regulations and fines many years ago in order to curb the exploitation of agencies who fail to probe suspicious clients, and to prevent housing values being falsely inflated. And as a result of fifty spot-checks carried out by HMRC this year, so far there have been a worrying number of agencies hit with financial penalties for failing to register with, or for not adhering to the HMRC money-laundering regulatory scheme. The most high-profile of which has been Countrywide, who were last month hit with a fine of £215,000.
“Criminals who seek to use this country as a place to launder money should be in no doubt that they have nowhere to hide,” said Ben Wallace, Minister for National Security and Economic Crime.
Estate agents are a crucial line of defence against them and that’s why they’re under a legal – and moral – obligation to file a report when they spot something amiss. It’s wrong to think of money laundering as a victimless crime. Those with dirty cash to clean don’t just sit on it – they reinvest it in serious organised crime, from drug importation to child sexual exploitation, human trafficking and even terrorism.”
So how does this affect the average consumer? For buyers, as long as they have no nefarious plans for illegal investment then they need not worry as the regulations are there to help those who stay on the right side of the law. For sellers on the other hand, a failure to deal with a reputable estate agency who are willing to protect their interests can lead to a number of complications further down the line. For example, sellers who discover that their home has been purchased through money laundering schemes may find themselves out-of-pocket as money seized by the authorities can leave the status of the sold property in limbo as legal issues are resolved – a process that can take years.
Is it any wonder then that companies such as National Homebuyers are finding themselves inundated with vendors looking for fast house sales via a reputable company who can complete on a purchase in as little as two weeks?
Prefer to avoid estate agents? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.
Are buy-to-let properties a good investment?
For many years, landlords have reaped the rewards of property investment – but are the same opportunities for profit available to those looking to start a buy-to-let investment today?
How do buy to let properties work?
The buy-to-let system allows an investor to purchase a property with the sole intent of profiting from a tenant who pays a monthly fee in exchange for residence or use of the building.
The logic behind such a purchase is that the monthly mortgage repayments the owner of the property needs to make to their lender is less than the fee they receive from the tenant themselves.
Can you get a mortgage for buy-to-let properties?
Similar to a normal residential mortgage, buy-to-let mortgages can legally be applied for at any number of lenders. However, in an effort to prevent the wealthy from simply buying up every available house in the country, the associated fees are often much higher.
Lenders also tend to be stricter with investors during the application process for a buy-to-let mortgage as opposed to a residential mortgage. For example, with a residential mortgage it is common for deposits to fall as low as five per cent, with certain banks often requiring no deposit at all in exchange for higher repayment fees; whereas a buy-to-let application will require a deposit of anywhere between 20-40% of the total value of the property.
Furthermore, the application itself will require the investor to have a better credit rating than if they were applying for a standard residential mortgage, and it is extremely unlikely that a lender would consider an applicant who earns less than £25,000 per year.
There are also age limits on buy-to-let investments. A lender is unlikely to offer a buy-to-let mortgage to an individual who will be over the age of 70-75 once the repayments would be completed.
Are buy to let mortgages a good idea?
In theory, buy-to-let investments are a great idea – especially at a time when rental payments are higher than ever due to a mass shortage of affordable housing for first-time buyers. However, the geographical area in which a buy-to-let investment is made can heavily affect the profit margin potential, and an application can be refused if the projected monthly rental income is less than 25-30% higher than the monthly mortgage repayment.
A buy-to-let property has historically been an excellent way to provide a pension for a landlord once they retire from their work-life – and as time passes, the house can be re-mortgaged or re-evaluated by the lender in order to provide an even greater profit for the owner.
However, it is worth noting that both Capital Gains tax, as well as basic income tax will push the investor into a higher tax bracket, and this can severely limit the aforementioned profit. It is therefore advisable for an investor to provide as higher deposit as possible, to maximise their annual earnings during repayments.
Is it worth buying to let?
Whether a buy-to-let investment is a good idea entirely depends on how savvy the landlord is with regard to personal finance.
Some landlords purchase homes, only to find that they encounter a period where they cannot find a tenant and as a result, cannot afford the necessary repayments during that time. This can often lead to repossession and the loss of the deposit regardless of potential sold house prices.
It’s also important to remember that the profit made from the tenants can not necessarily be spent as soon as it is earnt, as most buy-to-let mortgages are ‘interest-only’. This means that while a landlord only pays for the interest on the property from month-to-month, when they reach the end of their borrowing term, they are expected to pay off the property in full.
Another key point is that a buy-to-let investor can not necessarily sell their house fast to repay the mortgage, as if housing values fall and the investor finds themselves in negative equity, they would still be responsible for the outstanding payments to their lender even after they have offset the money gained from the sale of their property against their debts.
Are you looking to sell your home fast? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.
How to avoid repossession of your home
While many consider it a personal dream to own a home, the dream can quickly turn into a nightmare if you are unable to keep up with the repayments. In this article, we’re going to look at the repossession process, and how to avoid it.
How does a house repossession work?
The term ‘house repossession’ can strike fear into the heart of the bravest of homeowners. After spending years saving for a deposit due to high housing values, it is always undeniably heart-breaking to learn that you have to start again from nothing. However, house repossession laws are there to protect the interests of the mortgage lender as a result of your inability to cover the monthly fees you agreed to pay.
To be fair to lenders, they are often more than willing to give you several opportunities to clear your arrears over several months, and will only allow the courts to get involved if it becomes obvious that you have no intention of paying, or are unable to afford the repayments at any point in the near future.
What happens when your house is repossessed?
All lenders must follow a pre-determined set of rules to before initiating court action. In normal circumstances, a lender will contact you if you miss a payment in order to learn why you have done so. More often than not, if it is simply a case that you have lost your job, or have had an unexpected payment leave your bank account high and dry, they will happily adjust the amount you pay over the proceeding months until the arrears are cleared.
If, however, you have missed multiple payments, the lender may apply for a court order to commence repossession proceedings. If a judge considers their reasoning just, then the courts will schedule a hearing during which the aforementioned judge will hear both sides of the story and decide whether you can keep your home, or if the lender has sufficient reason to repossess your home.
During the hearing, it is entirely possible that you can stop the house repossession. This is, however, up to the discretion of the judge.
How to prevent the repossession of your home?
You are always entitled to discuss the situation with a legal advisor prior to the court date in an effort to prevent repossession, and there are three possible outcomes with which the judge may help you in accordance with house repossession laws:
- They could rule in your favour, allowing you to continue living in your home without risk of further prosecution.
- The case could be adjourned, providing you with more time to prepare before returning to court.
- The judge may issue a suspended possession order which allows you to stay in your home – provided you adhere to the conditions set forth within the order.
Can house repossessions be stopped?
Many people who are facing repossession will take the opportunity to sell their home as fast as possible in order to make the necessary repayments, and still recover a portion of the deposit that they originally paid the lender in order the buy the home. One of the ways to accomplish this that is growing in popularity is to utilise the services of a house-buying company such as National Homebuyers.
Since National Homebuyers are able to complete a sale in as little as two weeks from first point of contact, you can rest assured that you will be able to sell the home and repay the lender before being removed by a bailiff.
Other methods used to avoid a house repossession are as follows:
- Renting the property out to tenants can be a godsend, as rental payments are almost always more than the monthly mortgage repayments you originally agreed upon. This means that you can move into a separate rented property yourself and cover those costs with your wages, and use all the money earnt from the tenants in the property you own to pay your mortgage, as well as begin to pay back your arrears.
- If you have mortgage repayment insurance, and the reason for which you are unable to make the repayments are covered by the terms and conditions – for example illness, injury or loss of a job through no fault of your own – then your insurance provider will be able to continue making mortgage repayments on your behalf for however long the policy allows.
- Consult the citizen’s advice bureau as to whether you qualify for aid from the government as a result of your situation.
- Simply discuss your situation with the lender before a judge is involved. For many lenders, it is much simpler to work out a repayment plan than to employ house repossession laws and risk losing a case, as well as ending up spending more money in legal fees. Furthermore, in accordance with lending law, a lender must treat you fairly and provide you with ample opportunities to make the necessary repayments.
What happens after a house repossession?
If worst comes to worst, and you do face a house repossession, the following will happen:
- You will be given a set amount of time to vacate the property, and if you do not leave within this time then the courts will send a bailiff to forcibly remove you.
- The lender will take possession of your home, and list it for sale.
- The lender must sell the property in a reasonable amount of time, otherwise they may be seen as trying to capitalise on the situation by taking advantage of rising sold house prices. If you feel that they are doing so, then you are within your rights to complain to the Ombudsman.
- The price at which the property is sold will not necessarily be as much as you would have received yourself if you were to sell it, but the price that the property is sold for will be used to cover the following costs:
- Your outstanding mortgage.
- Any repair or maintenance fees for damage that could prevent a sale.
- The legal costs they incurred from taking you to court.
- The costs involved in the sale of the property such as estate agent fees, solicitor fees, or conveyancing fees.
Looking to sell your home before it is repossessed? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.
The rental trap: 72% say that lottery win is the only way out
A think tank has carried out a survey across England and Wales to mark the launch of the Affordable Housing Commission, the results of which have painted a depressing picture of the UK’s housing crisis.
Chaired by Lord best, the Affordable Housing Commission has been established to find solutions to the problems endured by members of British society who struggle to make ends meet. The survey – carried out by the Smith Institute in collaboration with the Nationwide Foundation charity – has found that 72% of those questioned believe that only a lottery win will help them to finally buy their own property due to rising sold house prices.
Even more worrying is the discovery that 39% of those in rental accommodation are relying on family inheritance to save for a deposit.
“The survey results hammer home the extent of our national affordable housing crisis. This is no longer a problem confined to a few housing hotspots but is recognised as an issue by people of all ages and income levels across every region,” said Lord Best.
“The scale of this challenge demands we stop tinkering and build a consensus around some bold solutions.”
The think-tank performed the survey in order to gain a better insight on the public perception of living costs in today’s economy and found that 64% of the 1400 renters and homeowners questioned believe that the country is undergoing a brutal affordable housing crisis due to rising property values.
The findings are likely to cause further headaches for the current minister for housing Kit Malthouse, who is already under pressure to deliver the new-build homes promised by the Tory government under David Cameron.
Almost half of those quizzed admitted that they had encountered financial difficulties over the past year covering their living costs, and a quarter of all renters stated that they had taken out credit cards just to cover basic amenities. And with the cost of housing still increasing, many in the industry are worried that a vendor hoping to sell their home fast will find it increasingly hard to find a buyer who can afford their asking price.
Agents are therefore advising sellers to be realistic with their asking prices if they are looking for a quick sale, or to contact a house buying company such as National Homebuyers who are always happy to provide a competitive quote.
Need a quick sale? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.
Crisis As New Mortgage Deposits Unaffordable For First Time Buyers
As rental fees continue to rise, the additional costs to tenants is forcing those who may once have been prospective buyers to put their lives on hold as they struggle to find the money for a mortgage deposit.
The issues facing those living in rented accommodation across the UK have been well documented in recent years. But as austerity measures continue for the majority of Brits – despite the promises made in the recent budget – it’s clear that there is no end in sight for the misery felt by millions stuck in the rental trap.
Moreover, there also appears to be a growing divide between different regions of the country in regard to the amount of rent paid by tenants according to a recent study by Your Move.
While certain areas such as London, Wales, and the north east saw a slight fall in rental costs over the last 12 months, the average rent paid by tenants across England and Wales still rose by 2.6% versus the same time last year.
The data released also showed that while the demand by prospective tenants for rental properties has sharply increased, the number of properties available to rent has fallen.
This may be due to the fact individuals are choosing to stay in situ for longer instead of moving house, but analysts believe the more likely explanation is that the changes made to both capital gains tax and stamp duty by the Tory government over the last three years have caused large numbers of landlords to exit the property business and sell their assets in order to take advantage of the continually rising sold house prices.
“To put tenants back in the driving seat, we need more homes available to rent,” said David Cox, chief executive of ARLA Propertymark.
“And the only way this will be achieved is if the Government makes the market more attractive for buy-to-let investors.”
According to the Royal Institution of Chartered Surveyors, rents are due to increase over the next five years by three per cent a year, while housing values are expected to rise by two per cent a year.
Of course, these higher rental costs have a knock-on effect that can affect those who wish to sell their house fast, as renters who are who trying to buy their own home are finding it harder and harder to save the necessary deposit, leaving a smaller pool of buyers and therefore less competition for the availability homes – often leading to lower offers. However, those who need to sell fast can always contact National Homebuyers, who are always happy to offer competitive quotes for any house, regardless of situation or location.
Are you unable to sell? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.
Owning is now cheaper than renting everywhere in the UK
New market research by Santander Mortgages has found that there is now no part of the country where it is cheaper to rent than own.
It is a sad state of affairs when society presents a glass ceiling to those who find themselves stuck in the rent cycle.
For many Brits, purchasing a home of reasonable value and enjoying all the benefits that come along with it is the ultimate dream. Especially the knowledge that the monthly payments you make each month to keep a roof over your head are furthering the equity you hold within that property instead of lining the pockets of a career landlord.
Sadly, however, the reality of the housing market is a far cry from the aforementioned idyllic situation, with the majority of monthly rental payments far exceeding the size of an equivalent monthly mortgage repayment for the same house, and thanks to new research by Santander Mortgages, it has emerged that owning is cheaper than renting no matter where you live in the UK.
The research, released last month has found that owning a home costs, on average, £2,246 less than renting it, saving an average of over £180 per month.
Why is owning cheaper than renting?
While many older Brits fondly remember the glory days where a house could be bought in its entirety for less than three years wages, the overreaching feeling among younger generations is that the age of prosperity is dead and buried, with an individual needing to save for the best part of a decade just to afford a 15% deposit.
Moreover, as sold house prices continue to rise – albeit at a slower rate than previously – the average deposit needed by a first-time buyer has reached an incredible £51,905.
As these figures continue to increase as we head into the future, you would be well within your right to wonder how an individual in a rental property can ever hope to be in a position to buy with such high monthly living expenditures.
The government are clearly aware of the issue, having made Help To Buy ISAs available to all UK residents to boost savings, but the maximum grant of £3,000 pales into insignificance when compared with the size of most deposits.
This is bad news for a huge number of homeowners who are hoping to sell their house fast, as they are likely to find it increasingly difficult to find a buyer with the necessary financial reserves to purchase. And if they are unable to find a buyer, then their only options are to stay-put, or accept an offer way below their asking price.
Another option is to contact National Homebuyers, who can accelerate the house-buying process by making a formal offer in cash.
Buyers can’t afford your asking price? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.
Third of homeowners would not be able to afford their own home today
A new survey has found that a third of British homeowners would be unable to afford their home if they had to re-purchase it today thanks to record value increases.
We often hear about the ever-widening gulf between wages and sold house prices, yet the quantitative data provided rarely illustrates the points in a fashion to which many people can relate. Every so often, however, surveys are carried out that use a more qualitative approach, offering a more straightforward viewpoint from individuals to which we can relate ourselves.
This month, a new survey of 3,000 homeowners by MyJobQuote has provided an interesting perspective held by many in regard to the steep rise in house prices over the past few decades.
In the survey, over a third of those sampled stated that if they would have to re-purchase their own home today, they could not afford to do so. Furthermore, the research found that across the 3,000 homes in question, there had been an average increase in value of over £50,000.
Despite the low-performing economy, house prices have continued to increase in value at an unprecedented rate – with a 2.2% increase in the last year alone. And while this may appear to be great news for those who own, the true value of a home is, in reality, based on how much a prospective buyer is willing to pay for it. And as houses continue to become more and more unaffordable for those who are not already on the property ladder, those looking to sell their house fast should be weary if they opt for a high asking price – unless they are willing to see their house spend a long time on the market.
Interestingly, the Halifax House Price Index has found that the number of those currently living in rented accommodation who are planning to buy their first home appears to have fallen in first half of 2018.
While this may be a result of national insecurity regarding the aftermath of the decision to leave the European Union in March 2019, many social experts believe that the fall in interest may simply be the result of renters already giving up on the dream of one day owning their own home.
“The Halifax numbers confirm other reports of a more general slowdown in market activity, with fewer homes being sold, fewer houses being put on the market, and a decline in consumer confidence,” said Mike Scott, chief property analyst at estate agent Yopa.
“If this slowdown continues for the rest of the year, 2018 will turn out to be the least active year for the housing market since 2013.”
So, what can sellers do if they need to sell but can’t find a buyer? Well, one of the increasingly popular methods to secure a sale in the short-term is to contact a property buying company who can provide a competitive quote, and if the vendor is happy, then a sale can be completed in as little as two weeks.
Can’t find anyone to buy your home? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.
Millennials facing a lifetime of rent
As the gap between house prices and wage increases continues to grow, new research predicts that a growing number of millennials will be renting for the rest of their lives.
If you were to ask the average person on the street what they hope to achieve in life before they turn 40, more often than not the answer would be to own their own home. As many average people are aware, however, this long held dream appears to be ebbing away for all but the lucky few.
The housing crisis first began to rear its ugly head over 20 years ago, when members of Generation X found that sold house prices were increasing at a rate that left wage rates in the dust. In the late nineties, nevertheless, housing could still be considered ‘affordable’ compared to the ever-widening gulf between housing values and personal income that exists today – with the average home costing eight times the average earnings.
Illustrating this point perfectly is a recently released report by the Resolution Foundation who have found that 40% of all millennials are still living in rented accommodation at the age of 30, and a third of all millennials are facing the prospect of living in rented accommodation their entire lives.
Interestingly, the comments sections of news articles relating to the matter on various websitess such as the BBC are often filled with older individuals complaining about millennials, who they believe are spending money on frivolous assets as opposed to amassing savings and starting a family. However, if they were to spend a little time examining the living costs for a young family in today’s world, they may get a more balanced picture of the inequalities suffered by those merely trying to live according to their means.
In the last 15 years alone, the number of families with children living in rented accomodation has risen by 600,000 to a staggering 1.8 million, and with reduced housing benefits due to Tory austerity measures – in an effort to reduce the national debt – combined with a stagnant housing market in the wake of the Brexit referendum, the issue is unlikely to resolve itself anytime soon.
While all pollical parties pledge to make the housing crisis the focal point of their manifestos for the next election, accountancy firm PwC estimates over 7.2 million household will be renting by the year 2025 – up from 5.4m today.
This is not only bad news for young people hoping to buy a home, it is also a nightmare for those who own but are hoping to sell their home fast in the near future as it seems that the further we look into the future, the fewer potential buyers there will be with the necessary financial clout to make an offer within an acceptable range of the asking price.
Looking for a quick sale? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.
Thousands to lose mortgage support benefit from April 2018
As a result of continued efforts by the government to reduce the national debt, many are finding that it is those living in low-income households who are bearing the brunt of the austerity measures.
Since 1948, those who own a house but struggle to keep up with their mortgage payments have always had a lifeline – the Support for Mortgage Interest scheme. Introduced to prevent thousands of low-income households from losing their homes, the SMI has been a godsend for many older people who, today, still rely on it to ensure that they can keep a roof over their heads.
Thanks to favourable interest terms and a strong economy during the 1960s and 1970s, many buyers took the option of an interest-only mortgage rather than a repayment-based equivalent due to the minimal monthly repayments. But what once appeared to be a sensible idea is, today, beginning to look like a bad decision.
The Tories, in an effort to reduce the national debt, have decided that from April 2018, this benefit will be axed – replaced by the opportunity to take out a ‘loan’ from the government that must be paid back upon sale or relinquishment of ownership.
Consequently, many experts have pointed out that those who need the SMI scheme are hardly in a position to afford a further repayment plan on top of their own mortgage – a mortgage they are already having trouble finding the funds for.
Across the UK, there are currently 124,000 individuals who rely on the benefit, with over half of those in retirement age. This situation is partially due to the fact that pension credit is one of the qualifying criteria for the scheme. However, it isn’t just the retired population who are going to be affected, as many people on income support, as well as those on jobseeker’s allowance will also find their safety net removed in four months’ time.
The government have stated that the current status quo is unsustainable, and that because the repayments will not need to be made until the properties in question are sold or passed on to another individual, it will not have a great effect on those who need the loan in the short-term. Unfortunately, many industry experts are worried that thanks to the addition of interest rates to these ‘loans’, the government will be profiting from those who are most at risk of losing their homes.
“The government needs to make sure people have the help and advice they need to decide whether or not to take out a second mortgage to pay for this,” claimed a spokesperson from mutual insurer Royal London.
“But instead, thousands of people are getting letters that miss crucial details such as the interest rate on the mortgage.”
This situation, combined with the government’s plan to remove the ability of those on the Universal Credit scheme from using their benefits as proof of earnings when applying for a mortgage on a home of any value, it appears that those from low-income backgrounds may be forced into renting for life, which will ultimately reduce the number of people who can afford to buy a home from an owner who needs to sell their house fast.
No offers on your home? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.
Mortgage applications affected by Universal Credit scheme
The beleaguered Tory-led benefits scheme known as Universal Credit is again under fire as reports surface that claimants are unable to use their income from benefits as proof of earnings during the house-buying process.
When Tory MP Iain Duncan Smith pushed for a revamp of the country’s benefits system in 2011, many of those already receiving financial aid from the government feared that the motivation behind this potential legislation was a push for further austerity measures to combat the UK’s ever growing fiscal deficit.
Their fears were, however, allayed as the Universal Credit scheme encountered multiple roadblocks on its way to implementation, leading many to believe that the scheme itself may never see the light of day.
The idea itself was sound in theory. Instead of administering different forms of benefit through separate policies, they should be combined into a simple, easy-to-use online system which can be accessed by anyone who needs them. This system would also incorporate incentives to get those without a job back into employment and allow the government to redirect the excess funds back into the UK economy. Unfortunately, after several IT programmes failed to deliver the desired functionality at a loss of over £30m – almost 10% of the entire IT budget – as well as numerous management failures, the Universal Credit system fell behind schedule by almost five years.
In early 2017, the scheme was rolled out in a number of test areas, the feedback from which has, so far, been worryingly negative. The lack of an intuitive online portal has led many of those lacking in IT experience to lose out on vital benefits due to an inability to navigate the site itself – and new reports are emerging that the aforementioned scheme is carrying with it such a stigma, that it is beginning to affect the prospect of a successful mortgage application for a house of any value.
An investigation by the Guardian newspaper has found that various lenders are not willing to accept Universal Credit as proof of earnings during the submission process, leaving many potential house buyers in a state of limbo ahead of its planned full implementation over the next few years.
Many experts have echoed the sentiments of these claimants, stating that there have been enough issues from the relatively small pool of 600,000 citizens upon which Universal Credit is being tested to warrant a suspension of the scheme – and that any plans to widen its application would likely end in disaster.
While certain lenders are willing to incorporate the scheme’s ‘earnings’ into their application process, the path to achieving this is littered with obstacles that prevent it. Moreover, in many cases mortgage applicants have found, mid-process, that the amount they are able to secure has been halved upon the lenders discovering their Universal Credit status, thwarting their plans to become homeowners.
For those who already own a home in areas where Universal Credit is currently implemented, fears are growing that if they need to sell their house fast, the inability of potential buyers to secure the capital they need to purchase will lead to a stagnant market, forcing the seller to reduce their asking price if they wish to complete on a sale in the short-term. While venders do have the option of using house buying companies such as National Homebuyers, who are willing to make substantial cash offers on any home, regardless of location or situation, there are fears that the those living in poverty will end up being deprived of their one chance to buy a home.
Need a quick sale? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.
Rental rates continue to rise as cheap housing remains unaffordable
As rising house prices continue to prevent younger, less wealthy buyers from purchasing, landlords have been capitalising on the situation by acquiring cheaper homes and enjoying consistently rising rental rates.
One of the greatest difficulties experienced by prospective buyers in rented accommodation is the ability to raise the necessary deposit for a mortgage. Unfortunately, thanks to the ever-increasing margin between rising house prices and low wage increases, the finances of many new buyers fail to measure up – and with rising rental fees, they often find themselves trapped in rented accommodation for much longer than expected.
The resulting state of affairs has left potential first-time buyers with no choice but to compete with wealthier landlords and those further up on the property ladder in an effort to secure a ready-built starter home.
During a sale, a vender always intends to make a profit on their house, and consequently there is very little first-time buyers can do to encourage them to accept a lower offer – even if they need to sell their house fast. To salve the situation, the government has made numerous promises to increase the number of new build estates with a pre-determined number of units to be sold as ‘affordable housing’. However, thanks to a weakened economy, the falling value of the pound sterling as well as a shortage of capital, the government have so far failed to live up to their word.
For investors, the rental market is a blessing in its current form. Despite the fact that more homes are available for purchase, the inability of first-time buyers to successfully apply for a mortgage allows landlords to snap up a large amount of available housing – housing which is then renovated before being let to those who had previously hoped to buy.
“Some experts believed the supply of rental properties would fall this year due to economic and political concerns,” said Allison Thompson, managing director at Leaders.
“But this has certainly proved not to be the case. In fact, supply is growing in all regions across the country and high tenant demand for all types of properties means rental prices are also on the up, providing landlords with a golden opportunity to benefit from more people looking for rented accommodation and a booming market that allows them to enjoy a significant return on investment.”
Sadly, government efforts to slow down the house price increases that are preventing a large percentage of the population from gaining a foothold on the property ladder have, so far, failed to provide any form of relief for those stuck in the rental trap, and landlords continue to turn a substantial profit.
However, it isn’t just first-time buyers that are losing out, as vendors across the country are finding it progressively harder to find a buyer for their house and, as a result, end up waiting for months for a reasonable offer that never materialises before lowering their asking price in order to encourage a sale.
Worried that your home won’t sell? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.
Retired sellers hoping to downsize unable to find younger buyers
As the cost of living for younger generations continues to grow, older homeowners who need to downsize are finding themselves unable to find a buyer with the necessary financial resources.
For many millennials, hearing the constant tirade from older generations about how they complain too much and “don’t know the meaning of a hard day’s work” helps to illustrate how little empathy many older people have regarding the cost of living for young people today.
In return, younger people often draw attention to the fact that many baby-boomers enjoyed a care-free existence in a thriving economy – voting for long-term investment gains that benefitted themselves as opposed to long-term stability for future generations. The British youth also feel the lack of sympathy they receive in regard to their inability to save money stems from the fact that many older individuals have never felt the negative impact of this societal shift in their own lives.
However, a growing number of those in retirement age are beginning to see the plight of the youth now that they are choosing to downsize their homes and are failing to find buyers who can afford them.
In many ways, the decrease in the number of UK homeowners is indicative of a country that fails to invest in the areas that need it most. After all, if an economy is powered by the expenditure of its population on goods and services – how is the economy supposed to grow if the majority of residents are only spending their hard-earned cash on rent?
Have things changed that much?
By the time they reached 45, 70% of all baby boomers were registered homeowners – whereas less than half of all millennials are likely to achieve the same. In fact, there has been a 7% drop in the total number of homeowners in the UK since 2003 alone.
With today’s living costs accounting for three times the proportion of earnings needed in the 1960s, and more than double the number of residents living in rented accommodation – the cost of which, incidentally, has risen by 15% in the last six years alone – is it so shocking that younger generations cannot afford the homes that the elderly wish to sell?
Sadly, the bad news doesn’t stop there. Today, the average cost of a deposit is over £32,000, and even if young couples with children are able to save the required amount of money to qualify for a mortgage, they are penalised for having children in the first place, as lenders believe that increasing childcare costs could hamper their ability to meet the required monthly repayments.
So what options are there for older individuals who cannot find a buyer for their home?
If an individual of retirement age needs to sell their house fast due to health issues or would simply prefer to be closer to family, they can consider renting their home out and use the income as a pension. Unfortunately, the majority of people who currently rent are doing so because they can’t afford a home themselves, and as a result, are less likely to be able to afford the rental fees for a large prestigious house.
They can stay put, and hope that in the future the economy will recover to a point that younger generations will have enough disposable income that they could make an offer – but given the current shape of the economy, this is unlikely to happen any time soon.
Luckily, there are house buying companies such as National Homebuyers who are willing to buy any house for cash at competitive prices, regardless of situation or location. And with a sale often completed within seven days, older homeowners are able to downsize without the stress often associated with the traditional selling process.
Hoping to downsize as soon as possible? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.
Lengthier mortgage terms on the rise for potential buyers
As properties become less affordable for prospective buyers, the number of applications for 35-year mortgages are increasing dramatically.
For many first-time buyers in today’s housing market, the ability to secure a mortgage by raising the necessary funds for a deposit is considered a major triumph. However, with ever-increasing prices, the crowning achievement of becoming a homeowner is slowly turning into a pyrrhic victory.
For decades, the longest mortgage term for the majority of buyers stood at 25 years, with many new owners opting for even shorter terms. For those in low paying jobs, however, certain banks began offering potential purchasers the option of a 35-year mortgage in an effort to encourage borrowing and further their profits.
As late as 2006, the percentage of mortgages with 35-year terms still stood at a minimal 13.8%. But by 2016, that number had sky-rocketed to a shocking 30% according to new figures released by the Financial Conduct Authority under the Freedom of Information Act,
Experts within the industry believe that this research reinforces the idea that home ownership is becoming an increasingly exclusive club. And even those who are able to buy are finding themselves at a marked financial disadvantage compared to those who bought a decade previously.
The issue is not just isolated to first-time buyers either. More than seven in ten mortgage brokers have disclosed that there has been a stark increase in demand for 35-year loans in recent years.
On average, the percentage of all mortgages with a 35-year term across the country reached 13.5% in 2016, an increase of 9.7% since 2006.
“The majority of brokers (62%) and lenders (68%) agree that longer term mortgages are an essential option for aspiring homeowners and would argue that this is a response to reality and remains responsible lending,” said Peter Williams, executive director of the Intermediary Mortgage Lenders Association.
“However, this in no way lets the government off the hook in needing to act swiftly to address the housing crisis.”
Due to a lack of new-build homes, high purchase prices and minimal wage growth, these figures suggest that the housing market could ultimately reach a point in the future where it is inaccessible to potential first-time buyers.
This is also bad news for any current homeowners who are looking to sell their house fast, as any reduction in the number of new buyers entering the market limits the likelihood of an efficient sale within a reasonable timeframe, and this subsequent lack of activity could conceivably lead to a weakened economy.
Need to sell? Fast? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.
Bank of mum and dad now covering rent payments
As the affordability of buying a house continues to decrease, new research has shown that younger people are now finding it just as hard to afford rental payments without parental aid.
For years now, parents have been helping their offspring to gain a foothold on the property ladder by helping to pay for the necessary deposit. As a result, the government has come under fire numerous times from both younger generations who would relish the opportunity to buy houses without additional help, and from older generations who find themselves having to work for longer in order to help their children afford the aforementioned down-payment.
However, while many within the property industry have been waiting for wages to go up in order for housing to become more affordable, new figures released by Legal & General have shown that the situation has become even worse – with parental donations now extending to covering their children’s rent.
For those who are still wondering whether they will ever be able to afford a home, the mere fact that it is 2017 and a large number of young people are having to borrow from their parents just to keep a roof over their head must feel nothing short of devastating.
This year alone, the bank of mum and dad have been responsible for £2.3 billion worth of rent payments across the UK, and when this is combined with £6.5 billion they are paying towards their children’s deposits and mortgage repayments, it certainly begs the question, how much worse can it get?
Even for young homeowners who are already on the property ladder, worries are being compounded by the possibility of negative equity if their worst fears are realised once Brexit is completed – making many question the intrinsic value of their house.
“The lack of affordable housing, low wage growth relative to inflation and burdens of student debt mean that many kids can’t even rent somewhere without significant contributions from their family,” said Dan Batterton, a fund manager at Legal & General.
“Parents want to help their kids get on in life, and the bank of mum and dad is a testament to their generosity.”
The greatest issue for the majority of the public is the knock-on effect from this research, as established homeowners who need to sell their house fast are finding that without a vast reduction in their asking prices, they are unable to sell in the desired short time-frame due to a lack of buyers.
With millennials paying on average over £44,000 more in rent by the age of 30 than those in the baby boomer generation, for those looking to escape the rent-trap the light at the end of the tunnel is getting dimmer by the day.
Failing to attract buyers? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.
First homes becoming a distant dream for younger generations
The recent English Housing Survey carried out by the UK government has painted a truly depressing picture for prospective house buyers across the country, as the true scale of rising property prices is revealed.
As younger generations slowly begin to increase their proportion of the UK population, we have begun to see more and more stories regarding the difficult task of securing a first home.
For the last 15 years, many older generations have been quick to designate young people as ‘lazy’ and ‘unwilling to put in the work’ for their inability to afford a property. However, as a growing number of millennials reach the age at which it was once customary to look for a house of their own, reality has started to rear its ugly head.
Once upon a time, buying a home as a single person in their early twenties on an average salary was almost considered a rite of passage. With high wages and low property values, an easily affordable two-bed ‘starter’ home helped first-time buyers to find their feet in an increasingly fast-paced world and help their wealth grow.
Flash-forward a generation, and that same single person on an average salary could not even conceive of such a purchase. In fact, the recent survey carried out on behalf of the government has found that most first-time buyers are in their mid-thirties, and 74% of those individuals have only managed to raise the necessary deposit if they are in a couple and are able to combine their incomes.
In the late 90s, there were on average 922,000 first-time purchases per year – today, that number lies around 675,000. Furthermore, the number of first-time buyers aged 16-24 has dropped by more than half. For older homeowners who need to sell their house fast, this is bad news, as fewer potential buyers are able to enter the market place.
Pulling the trigger?
Of course, with a country currently facing a long period of uncertainty due to the falling value of the pound along with an unclear path through the triggering of Article 50, many younger people are weary of purchasing a home in the next few years due to the off-chance that they will find themselves in negative equity if fears regarding the failing state of the economy continue to be realised.
For the average young person, unless they have managed to find themselves working in a field that pays high wages, the future remains bleak as it becomes clearer that upward social mobility is becoming increasingly unlikely, and taxes continue to be directed towards supporting the pensions of those generations who enjoyed the post-WW2 economic boom.
As always, the answer lies in the construction of more freehold new-build estates, and an economic revolution that provides the opportunity for higher wage growth, not just in the capital but across the whole of the UK.
“Today’s English Housing Survey is a stark reminder of our national housing crisis,” said Debbie Larner from the Chartered Institute of Housing.
“’Affordable housing is increasingly out of reach for millions of people all over the country.”
Can’t find a buyer? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.
Mortgage approvals fall to nine-month low
Mortgage approval figures have fallen for the ninth month in a row, as inflation, rising house prices and wage stagnation continue to blight the housing industry.
Many within the housing industry are at odds with one another with regards to the new figures released by the UK trade body UK Finance.
The report has detailed that as of June, gross mortgage borrowing has continued to rise – 6% higher than the same time in 2016 – but the number of mortgage approvals have slipped for the ninth month in a row.
With low interest rates, mortgage providers are currently offering excellent deals on fixed-rate deals, and these packages have been designed to tempt potential homebuyers into pulling the trigger while the market seems buoyant.
However, the stark difference between the increase in total mortgage borrowing and decrease in mortgage approvals have given experts much cause for concern.
Representatives from various lenders have been quick to thank the ‘resilient’ housing market for the increase in money borrowed. They are, however, failing to realise the dangers of a reduction in the number of transactions and what this could mean for the industry in the future.
The economic squeeze
With the outcome of Brexit hanging over the heads of the British population, combined with the high rates of inflation reducing the value of the pound, it seems that for now at least, UK consumers are choosing to bide their time when it comes to large purchases such as homes and cars.
“The fundamentals for house buyers are likely to remain weak over the coming months with consumers’ purchasing power continuing to be squeezed by inflation running higher than earnings growth,” said Howard Archer, chief economic advisor for EY Item Club.
“It is also very possible that the labour market will increasingly falter despite its current resilience.”
Moreover, it’s not just the total mortgage borrowing rates that have increased, as credit card borrowing has also increased by 5.5% over the past year.
These divisive figures make it clear from a macro perspective that a large proportion of the British public are being forced to borrow money for purchases that just ten years ago could be afforded through everyday savings.
But what about those who wish to sell their house fast?
In the near future at least, current homeowners are finding themselves having to stay-put unless the move is unavoidable.
With falling levels of mortgage approvals and ever-increasing house prices in a world where wages are failing to match up, those who need to sell may have to prepare themselves for a long wait as the pool of available buyers continues to dry up.
Need a quick house sale? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.
Number of hopeful first-time buyers living with parents is on the rise
With no other option, potential buyers from younger generations have found themselves having to move back into their parents’ homes to generate the necessary income for a deposit.
There’s no doubt in the current economic climate that it’s tough for those looking to buy their first home. With high prices and low wages, it can sometimes feel like you’re standing at the bottom of a towering mountain with little hope of ever reaching the summit.
The obvious response to this situation for potential buyers is to limit their expenses, and according to new research by Aldermore Bank, many are opting to move back in with their parents to save the necessary cash.
With figures from 2016 showing that 25% of all purchases by UK home buyers now involve the bank of mum and dad to some extent (pumping some £5 billion into the market), it’s clear that young generations are still desperate for help.
The greatest issue, however, is that returning to live with one another once again now that all members of the household are adults means that both parties have to deal with a negative fallout from both a financial and emotional standpoint, and therein lies the problem.
For the children, now adults, having to move back into their parent’s homes has left them experiencing feelings of failure and self-resentment, while their parents have to deal with increasing demands on their household budget, and an inability to enjoy their later years the way they had planned.
Many families have found that the new living arrangements have created a decline in life satisfaction and a damaged emotional bond between parent and child.
The extra costs alone add up to an average of £4,996 for mum and dad per year, and this is hampering their ability to realistically save enough for their pension in later life.
“Our report reveals just how difficult this can be to navigate, with a real impact not just on parent’s finances but also on the relationship with their children and their own ability to save,” said Charles McDowell, commercial director for mortgages at Aldermore.
“Furthermore, as parents are less able to save for their retirement, more people will require help to unlock the value held within their property in later life. This is an intergenerational problem that goes beyond the simple view of the Bank of Mum and Dad.”
Industry experts believe that without a substantial investment into the housing industry for new-builds or the appointment of a new housing minister who truly understands the scale of the problem, the crisis will not only affect younger generations, but also those who are looking to sell their house fast in order to downsize during old age.
Worried about being able to sell? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.