How Brexit Has Made Homeowners Turn to Quick House Sales
After three years of political back-and-forth, misinformation and numerous allegations of corruption, the UK is due to leave the EU on October 31. However, amid all the confusion and turmoil, it appears that homeowners are likely to be bearing the brunt of the economic damage for years to come.
What exactly is Brexit?
Brexit. A word that has only entered the lexicon in recent years, but whose consequences have propelled it to the forefront of the British collective conscious. But what exactly is Brexit?
Contrary to popular opinion, the anti-European sentiment held by many of those who voted to leave can trace its origins as far back as the years following the Second World War, as the more learned members of the British public found themselves becoming weary of the multinational financial, defences and trade organisations that had been set up to centralise power such as the European Union, North Atlantic Treaty Organization (NATO) and the International Monetary Fund (IMF)1.
For many Brits, this centralisation of power meant losing sovereignty and the ability for the UK to make its own rules.
The rise of such organisations was also paralleled by a rise in immigration over the latter half of the twentieth century as increased globalism saw many educated individuals seek employment in more developed countries than their own in the quest for a higher quality of life.
While most young people in Britain today enjoy a secular multicultural social scene, just fifty years prior, most of the British population had barely been exposed to immigrants of different races and cultures. Unsurprisingly, this provided all the ingredients for a rise in nationalist, bigoted styles of thought – especially in areas with low standards of education amongst the working classes. Furthermore, as the rise of immigration and the European Union coincided with one another, it was very easy for Brits to blame the latter for the former.
In reality, the rise of immigration was a direct result of increased political and business agreements between countries as well as cheaper travel options and the need for a larger workforce to help re-build the country and its economy once the war was over.2
By time the 1990s arrived, the British industrial and political landscape had changed massively. The closing of coal mines and the movement of jobs abroad that had previously provided work within the poorer areas of Britain saw a rise of anti-establishmentarianism become embedded in the minds of those who struggled in poverty.
As time passed, it became clear to many that the country had become London-centric, with many other areas left to continue their decline3. And as politicians and other wealthy investors centred their businesses around the capital, a new form of political figure began to emerge, happy to exploit those who failed to understand the relationship between the EU and the UK.
It was during this time that anti-EU politician and grass-roots campaign leader Nigel Farage began to see his profile gain inertia as he marketed himself to less affluent areas as ‘a people’s man’ who is less tied to the elite than the opposing politicians against whom he was competing.
Farage campaigned with others who shared his viewpoint -including the late Sir James Goldsmith – in an effort to direct public attention towards the growing issue of direct immigration within the Eurozone from less economically resilient countries who had recently joined the EU, while also drawing attention to the troubled economies of southern European countries such as Spain4.
During the early 2000s, the idea of leaving the EU began to really gain traction amongst those who felt disenfranchised by the European and British elites who they believed benefited from EU membership at the expense of those lower down on the social ladder.
This growing belief, coupled with multiple Parliamentary scandals, a paralysing economic depression and additional political pressure from the growing anti-EU sentiment within the various parties led to the fulfilment of a promise made by then-Prime Minister David Cameron to hold a referendum vote on EU membership 23 June 2016.
In the months leading up to the referendum, the public found themselves inundated with media campaigns and political rhetoric, with one in six Brits admitting that the divisive nature of the matter had created rifts between families and friends.5
When the results were announced, many were surprised to learn that the Leave campaign had been victorious – winning 52% of the counted votes. A large number of analysts believe that this was due to a lack of engagement with the referendum by pro-remain constituents, combined with a constant stream of misinformation by the Leave campaign that led to the historic decision.6
While the referendum was by no means legally-binding, the government felt obliged to begin the preparations to leave the European Union – much to the ire of the 48% who voted to remain.
Due to the political and economic fallout that grew in intensity over the next three years, as well as the failure by the Tory party to negotiate a trade deal with the EU before the deadline passed on March 31st, an extension for negotiations was granted until 31 October 2019.
In June 2019, Prime Minister Theresa May announced that she would be stepping down from her role, forcing a Tory leadership contest whose winner will be responsible for the continued Tory efforts to take the UK out of European Union.
How has Brexit affected the economy?
Since 2016, the UK economy has seen its growth rate stall. By 2018, first quarter reports by Reuters showed that the economy was between 1-1.5 per cent smaller than it would have been if the Brexit vote had failed. Although many analysts cite an estimated GDP fall of 2.5 per cent – placing it second to last in the G7 economy rankings, just above Italy7.
The UK has, however, enjoyed a huge drop in the rate of unemployment, hitting its lowest level since the 1970s. Unfortunately, those within the work and pensions sector admit that this has been heavily influenced by the increase of ‘zero-hour’ contracts whereby an individual can ‘technically’ be counted as employed, but without a contract that stipulates a minimum number of working hours per week8. This lack of dependable income has forced many Brits to seek second, or even third jobs to cover their monthly outgoings.
Wage growth has also slowed significantly as inflation grew way above the 2 per cent target set by the Bank of England7. This devaluation in currency cannot be entirely blamed on Brexit, as inflation has outgrown wages for decades, with younger generations finding it increasingly hard to build up their savings. However, the inflation rises have forced many households to extend their lines of credit from lenders merely to cover month-to-month expenses9. The economic impact of Brexit, nevertheless, has led the household sector into a net financial deficit for the first time since 19887
As many Brits are probably aware, much of the economic downfall has been centred in and around the capital. Since the days of Thatcher, the UK has positioned itself as a financial powerhouse, with London serving as a middleman between the US and European trade. Unfortunately, many of the multi-national companies, banks, and potential investors perceive Brexit to be a huge mistake that may affect their bottom line if the UK leaves the EU. This has led to numerous organisations re-structuring and moving their operations from London into the Republic of Ireland as well as mainland Europe to avoid the possibility of unwelcome tariffs.
With a lack of employment opportunities within these organisations, the capital has become a less attractive proposition for younger people who have recently graduated, while also forcing many established homeowners in London to find employment elsewhere.
Many companies – both national and international – have also moved their headquarters out of the capital, choosing to move north where land-rent is much cheaper. This increase of investment into cities that had previously been considered ‘secondary’ to London began to turn the commercial property market upside-down as northern towns started to flourish at the expense of the South.
The capital is also finding itself starved of investment, with the Bank of England admitting that before the referendum took place, they expected the economy to grow by 13 per cent between 2016 and 2018. As a result of the leave vote, however, investment in the UK grew by only 2 per cent in total, including a fall of 0.2 per cent between 2017 and 20187.
The signs that Brexit may well spell further disaster are also worryingly clear, with UK stocks becoming a less attractive investment within the FTSE250 in the US, falling by 0.3 per cent (an increase of 12 per cent in Sterling) – a figure that is dwarfed by other developed economies who have seen investment rise by 26 per cent7.
How has Brexit affected house sales and the housing market?
The British house market is entirely sustained by consumer confidence in the economy. Thanks to the fall in GDP, Brits are generally earning less than they would have if the Brexit vote was for remain. Since the vote, house price rises have started to falter, forcing many potential sellers to consider waiting until after the dust has settled before making any plans.
While employment is at its highest level for over 40 years, the continued effects of rapid inflation; the proliferation of zero-hour contracts and the static but overly expensive house prices thanks to years of growth in value have left a large percentage of individuals from Generation X, the Millennial generation, and Generation Z with very little chance of ever owning a home of their own. This has led to an increase in rental properties, and consequently, and increase in rental fees as landlords exploit the situation for further profit10. This hike in rental fees also swallows much more of the income from those within these generations – preventing them from building up savings.
For homeowners in the capital, the effects of Brexit have been startling, with a £40bn drop in property value increases between 2018 and 2019 according to recent data released by London-based agent Savills11.
“Given the extent to which London is [currently] priced relative to the rest of the country,” said Lucian Cook, director of residential research at Savills in July 2019, “the extent to which it had pulled away from the rest — the Brexit vote may well have been the catalyst for a shift in the market.”
It isn’t all doom and gloom, however, as thanks to the closing of the north-south divide in property values thanks to the aforementioned re-distribution of investment from the south to the north, the total value of housing stock across the UK has still increased by £243bn since 201611.
Unfortunately for the UK government, this increase is mainly a result of property value increases across Scotland and Wales7 – countries who have both expressed an interest in leaving the United Kingdom in the event of a no-deal Brexit.
What options do homeowners have amid Brexit?
While a large proportion of homeowners can sit back and watch the Brexit saga play-out, there are, unfortunately, many who will have no choice but to sell while the market is stagnant.
Employees who have been made redundant in the capital, for example, have found themselves needing to move cities to find another job. And as much of their equity is tied into their house, they need to sell their house in order to buy another.
While some individuals choose to commute, the increase in prices for train fares has made this an increasingly undesirable option.
Why are homeowners trying to sell before the Brexit deadline?
Those who own a property that they have considered selling for several years are now finding themselves between a rock and a hard place. As of mid-2019, the UK property market lies in favour of buyers12. So why are they so desperate to sell before the Brexit deadline?
The answer, it seems, is very simple. Fear.
Homeowners have seen the decrease in market activity in the years since the Brexit vote, as well as the falling sold house prices that have so far been concentrated in the south of England. For many of these individuals, they have already acknowledged that they have lost profit on their homes, but the fear that their home could lose even more value if the UK leaves the EU on 31 October encourages them to play their hand early.
This situation is not helped by the amount of misinformation being spread by the less-reputable members of the leave campaign, who believe that even an independent analyst’s estimate that the UK will be “worse-off” once Brexit is finalised is all part of a propaganda campaign by the UK and EU elite they refer to as ‘Project Fear’.
In reality, there is no easy answer to the question ‘Should I sell my house before Brexit?” as, in truth, those within the industry can only make educated guesses that often need revising thanks to the repeated changes in government policies and legislation related to the October deadline.
Luckily, there are always ways to sell a house – even in a stagnant market. And if the value is presently higher than it will be in the event of a no-deal Brexit, many homeowners believe that it is worth it.
So, how can these homeowners sell?
- They can choose to sell the traditional way via a high-street agent who is likely to have common knowledge of the area but will take a percentage of the agreed sale price.
- They can enlist the help of online estate agents, who offer flat-rate fees to lure customers away from their competitors. Although certain companies such as Zoopla and Purplebricks have been caught numerous times transgressing the guidelines set out by the Advertising Standards Authority in relation to false marketing claims as well as failing to disclose additional fees to their customers
- They can try to sell the house themselves privately, although this approach rarely leads to a profit comparable to that negotiated by a professional agent.
It is important to draw attention to the fact that although these methods will – more than likely – guarantee a sale, it is ultimately the strength of the market that governs the value of their home. This means that if they wish to sell their house within a short-time frame, they will most likely have to accept a purchase offer much lower than they anticipated.
Is there a faster way to sell a house?
There are always options for a homeowner if they wish to sell their house fast – no matter the location, situation or quality of construction – and this is via the use of private house buying companies who have the resources to purchase a home outright for cash. This method has increased in popularity over the last ten years as the need to move to a new house in pursuit of higher earnings has become a priority for a growing number of households.
Other options include the use of an auction, where a property can be placed on a ticket and bid for by prospective owners. Auctions are often used by property developers and landlords to find bargains that they can profit from by either ‘flipping’ the house, or by placing tenants inside once it is renovated.
While some sellers report excellent experiences within the auction world – there are yet more who are unable to sell for their reserve price, forcing them to either accept a substantially lower amount than they hoped – or withdrawing their property from the auction, whilst still being obliged to pay the auctioneer’s fees.
How will the property market react once Brexit is passed?
As mentioned earlier, the condition of the housing market – as well as the UK economy – once the Brexit deadline passes is not an estimate many experts are prepared to make publicly with making a disclaimer. There have been claims that the UK could face its greatest economic recession since the Second World War if it were to leave the EU with, or without, a deal as negotiations to arrange trade deals with other countries appear to be weakening13.
One thing that all analysts all agree upon, however, is that if Article 50 were to be withdrawn and Brexit cancelled, the British Pound would likely rise in value significantly amongst the other developed nations. Echoing this sentiment are the many international corporations that are still in the process of drawing up plans to withdraw and re-locate from the UK, stating that they may be willing to reverse their decision to leave.
Are you looking to sell your home before the Brexit deadline? 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.
Sources and references:
1Friedman, G. (2016). 3 Reasons Brits Voted For Brexit. Available: https://www.forbes.com/sites/johnmauldin/2016/07/05/3-reasons-brits-voted-for-brexit/. Last accessed 9 July 2019.
2Yeo, C. (2017). Freedom of movement didn’t start with the EU – it’s the norm for Britain. Available: https://www.newstatesman.com/politics/staggers/2017/05/freedom-movement-didnt-start-eu-its-norm-britain. Last accessed 10 July 2019.
3The Economist. 2012. The Great Divide. [ONLINE] Available at: https://www.economist.com/britain/2012/09/15/the-great-divide. [Accessed 9 July 2019].
4Carter, Neil; Evans, Mark; Alderman, Keith; Gorham, Simon (1998). “Europe, Goldsmith and the Referendum Party”. Parliamentary Affairs. 51 (3). pp. 470–485.
5Mischke, J. (2019). Brexit has made Brits ‘angrier’ and ‘deeply divided’: survey. Available: https://www.politico.eu/article/brexit-has-made-brits-angrier-and-deeply-divided-survey-referendum/. Last accessed 9th July 2019.
6Cassidy, J. (2016). Why the Remain Campaign Lost the Brexit Vote. Available: Why the Remain Campaign Lost the Brexit Vote. Last accessed 9 July 2019.
7Giles, C. Fray, K. (2018). The UK economy since the Brexit vote — in 6 charts. Available: https://www.ft.com/content/cf51e840-7147-11e7-93ff-99f383b09ff9. Last accessed 9 Jul 2019.
8Trotman, A. (2015). Zero-hours contracts ‘save UK from eurozone levels of unemployment’. Available: https://www.telegraph.co.uk/finance/jobs/11435789/Zero-hours-contracts-save-UK-from-eurozone-levels-of-unemployment.html. Last accessed 9 July 2019.
9Burroughs, C. (2019). Companies are fleeing the UK no matter what happens with Brexit. Here’s all the damage that’s already been done. Available: https://www.businessinsider.com/brexit-damaged-city-of-london-2018-11?r=US&IR=T. Last accessed 9 July 2019.
10White, A. (2019). Renting in London forecast: Brexit uncertainty set to push average rents up faster than house prices by 2023. Available: https://www.homesandproperty.co.uk/property-news/renting/renting-london-forecast-brexit-uncertainty-will-push-rents-up-faster-than-house-prices-by-2023-a126901.html. Last accessed 9 July 2019.
11Pickford, J. (2019). London property values down £40bn in past year. Available: https://www.ft.com/content/3f105808-9e62-11e9-b8ce-8b459ed04726. Last accessed 9th July 2019.
12Collinson, P. (2019). UK house prices likely to keep falling for another six months. Available: https://www.theguardian.com/money/2019/apr/11/uk-house-prices-likely-to-keep-falling-for-another-six-months. Last accessed 9 July 2019.
13Chu, B. (2018). Brexit: UK could suffer devastating recession and worst economic slump since Second World War with ‘disorderly’ exit, Bank of England warns. Available: https://www.independent.co.uk/news/business/news/brexit-no-deal-latest-bank-of-england-warning-recession-financial-crisis-a8656561.html. Last accessed 9 July 2019.
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.
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.
Older individuals are now choosing to rent in their retirement
A rising number of retired Brits are finding that due to the increasing price of property across the UK, it makes more sense for them to rent luxury retirement apartments instead of buying them.
When the media discusses the idea of ‘Generation Rent’, it often conjures up images of millennials and members of ‘Generation Z’ becoming trapped in rented accommodation due to the inability to find the money to place a deposit on a house of their own.
However, in recent years a new trend has emerged in the world of rental properties, and that is the increasing number of older individuals choosing to rent instead of buying a place to retire.
Many baby boomers were lucky enough to have spent their working life at a time within the 20th century where wage levels and sold house prices increased at a similar rate. As a result, the investments they made and savings they gathered earlier in life have, for the majority, afforded them a comfortable retirement without having to rely on a state pension.
This level of financial comfort, however, is still not enough for them to afford their dream homes near the sea – so they are choosing to lease rental apartments long-term as an alternative.
While this may seem a little odd considering that most younger individuals can’t afford any home, let alone a dream house on the coast, there appear to be a number of advantages for those who choose a rental retirement.
Firstly, many of the new ‘hotel quality’ luxury apartments offer their clients 24-hour security, along with communal areas that offer restaurants, club rooms, salons and gyms – facilities most of us could only dream of. Even more impressive is the fact that all utilities, maintenance fees, and the on-site concierge service are all included in the monthly rental cost.
There is, unfortunately, a down side as a result of this trend for those looking to sell their house fast. The rising number of baby boomers who are choosing to rent instead of buy, are slowly but surely, reducing the number of prospective buyers in the market with the necessary financial reserves to buy – the knock-on effect of which is that vendors’ homes are losing value and are relying on only the younger generations to buy their homes. But as we are all aware, many younger people are struggling to keep their proverbial heads above the water to merely sustain an average quality of life.
So, what can these vendors do if they wish to sell? An increasing number of sellers are discovering that they do not necessarily have to rely on a private buyer to move on with their lives, and can instead call on the services of National Homebuyers, who will happily provide a competitive quote for their home, along with the promise of a quick completion.
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.
Can a landlord sell a house during a lease?
The sale of a rented home can easily become a confusing affair, so it’s always important to understand the legal rights of both the tenant and landlord.
So, you’ve just found out that your landlord wants to sell the house you’re renting. While there’s no reason to panic, it’s always useful to know the status of your rights as a tenant during the sale.
Can the landlord sell the house I’m renting?
As a privately-owned property, a landlord is entitled to sell their house, as long as they complete the process in the correct legal manner. They may wish to sell the house fast due to an increase in sold house prices in the surrounding area, or simply because they do not wish to be a landlord anymore.
Can a house be sold with tenants in situ?
If a landlord is selling a house that is mid-way through a fixed term lease, then they are within their rights to do so. While a tenant may be anxious regarding a new landlord, they are not entitled to have any input into the sales process as they do not hold any equity in the property. The tenant does, however, have a number of rights in regard to their tenancy agreement.
What are my rights if my landlord decides to sell?
If a landlord is selling a house, the tenant has rights enshrined in law to protect them. Once a property has been leased out to a tenant for a fixed term, that legal interest must persist for the full agreed length, regardless of the property’s owner. This means that when the incoming landlord takes ownership of the house, it is against the law for them to evict the tenant while the lease period is still active.
Furthermore, the tenant is still entitled to his/her privacy in accordance with the Landlord and Tenant Act 1985. This means that unless there is an emergency, the tenant is fully permitted to refuse entry to anyone related to the sale – including the prospective buyer. The tenant is even allowed to refuse entry to the landlord themselves, even if a 24 hour notice is provided.
If a new landlord takes ownership of a leased property, then he is obliged to perform all the duties set forth in the tenancy agreement signed by his predecessor, including repairs and maintenance within a reasonable time of notification.
Moreover, if the new landlord fails to comply with these regulatory minimum standards, then they are in breach of contract and the tenant can not only withhold rental payments, but also report the landlord to the courts for prosecution.
A tenant cannot legally be evicted until the fixed term has ended – unless they have breached the tenancy agreement. While rare, there are stories of landlords using section 8 and 21 legal loopholes to force tenants out of their homes during a fixed term lease, so it is important for anyone who lives in a rental property to gain a comprehensive understanding of the lease before they sign it.
How much notice does your landlord need to give when selling a house?
Under Section 3 of the Landlord and Tenant Act 1985, the new landlord is required to notify the tenant that the property has changed hands. However, the tenants are not entitled to know when the property has been offered up for sale, the value of the house, or even whether the property has been sold until two months after the sale is completed. The prior landlord may inform the tenant as a courtesy that they intend to sell the house, but they are not obliged to do so.
Looking to sell your rental 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.
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.
Councils under fire for banking unspent public funds
A number of councils across the UK have found themselves at the centre of a fresh scandal thanks to the discovery of large amounts of public cash meant for spending on infrastructure residing untouched in their bank accounts.
When the Town & Country Planning Act came into force in 1990, there was a minor piece of legislation included known as Section 106, which allowed councils to take vast sums of money from private contractors in exchange for planning permission within the boundaries established by the local planning authority. These Section 106 Agreements were often open to interpretation as a result of the lack of specificity, and so these were amended and clarified in 2010 to ensure that the system could not be exploited through previously known loopholes.
The key point of Section 106 agreements however, were to ensure that the money earnt by councils would be re-introduced back into the local economy in the form of affordable housing, and various infrastructure maintenance.
Worryingly, reports have emerged that a number of councils have collectively been hoarding over £375m in cash donated as a part of these agreements, with one council – Labour’s Southwark constituency – holding a shocking £52.6m alone.
Many of the councils implicated in the scandal have claimed that the money itself has already been earmarked for various schemes – but journalists looking into the matter have found that over 60% of that money is yet to be designated for use within potential projects.
“It is deeply concerning that councils in England and Wales are sitting on a pot worth hundreds of millions specifically earmarked for affordable housing,” said James Prestwich, Head of Policy at the National Housing Federation.
“This reconfirms our view that affordable housing should be delivered within new developments, rather than developers simply funding its delivery elsewhere. This would guarantee that affordable housing will be built alongside other homes within the same development, rather than the money getting lost in the long, bureaucratic process of allocating it for housing elsewhere.”
The issue of unspent public cash residing in private banks appears to be the latest in a long line of faux pas by local governments in relation to their control of housebuilding companies. As recently as this year, a number of prominent constructors including Barrett, Tayler Whimpey and Persimmon have been accused of purchasing land for housing, then holding back on development in an effort to keep sold house prices high.
This continued drive to push up house prices may seem great for those who own, but if they need to sell their house fast, they may find that prices have risen to a point where their asking price is outside the realms of affordability for many potential buyers.
Can’t sell 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.
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.
New ban on letting agents charging fees to tenants
In his Autumn statement, the UK Chancellor of the Exchequer Philip Hammond announced a ban on letting agents charging fees to tenants. Letting fees – which are already banned in Scotland – are supposed to cover a range of administration, including reference, credit, and immigration checks.
Mr. Hammond said shifting the cost to landlords will save 4.8 million households hundreds of pounds. The move could encourage competition as landlords will be able to shop around for the cheapest agent. In the Autumn statement lettings agents in England will be banned from charging fees to tenants “as soon as possible”.
David Cox, managing director of the Association of Residential Letting Agents (Arla), said:
“A ban on letting agent fees is a draconian measure, and will have a profoundly negative impact on the rental market. It will be the fourth assault on the sector in just over a year and do little to help cash-poor renters save enough to get on the housing ladder. This decision is a crowd-pleaser, which will not help renters in the long-term. All of the implications need to be taken into account.”
However, this change will potentially help households who now rent from a private landlords. According to the Association of Residential Letting Agents, the average letting agent fee averages £202. Citizens Advice, the charity, puts the average higher at £337 and reckons they have risen 60% in five years. Shelter says such fees can reach £500 in some cases.
“We have seen these fees spiral, often to hundreds of pounds,”
Mr. Hammond said.
“Letting agents are currently able to charge unregulated fees to tenants. We’ve seen these fees spiral, despite attempts to regulate them, often to hundreds of pounds. This is wrong. Landlords appoint letting agents and landlords should meet those fees. ”
Mr. Hammond also announced plans to increase the construction of affordable homes. According to the Local Government Association, It is estimated that at least 4 million people of working age in England will require affordable housing by 2024.
Hammond promised that £1.4bn will be provided to target the building of new affordable homes, and a £2.3bn housing infrastructure fund will be provided to deliver infrastructure for new homes. This investment is expected to help build 40,000 new homes and would allow providers more flexibility to offer people lower rents.
UK Regions Where Property Rents Rose Quickest During 2015
The HomeLet Rental Index report shows where rents saw the biggest rises in 2015. The report revealed that Brighton, Bristol, Edinburgh and Newcastle saw the biggest increases in rents throughout 2015.
Highlights of the HomeLet Rental Index revealed that:
- When London is excluded, the average UK rental value was £739pcm – this is 4.9% higher than the same period last year (£704pcm).
- Average rental values have increased in ten out of twelve regions in the UK, compared to the same period last year.
- The North West (-5.1%) and Northern Ireland (-0.6%) have seen a continued reduction in rental values over the last four months.
- Average rents for new tenancies in London are 8% higher than the same period last year.
- Rents in London are now 106% higher than the rest of the UK.
UK regional breakdown of rents
Below is the UK regional breakdown of rent amounts. All these rental amounts are an average taken over the three months preceding the date shown.
|Region||Average rent 3 months to December 2015||Average rent 3 months to November 2015||Monthly
|Average rent 3 months to December 2014||Annual variation|
|Yorks & Humbs||£623.00||£626.00||-0.50%||£604.00||3.10%|
|UK ex Greater London||£739.00||£743.00||-0.60%||£704.00||4.90%|
#Source – HomeLet Rental Index
To find out more about the UK private rented sector and to read the full report click here – HomeLet Rental Index Property Report
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