First time buyers need help

While perusing the Western Mail, yesterday an interesting article caught my eye. Phil Spencer, heart-throb to millions, has made several very interesting comments on the subject of first time buyers.

Phil claims that first time buyers should be given financial incentives to ensure the recovery of the nation’s struggling housing market.

He suggests that a grant should be introduced for these new purchasers.

Australia already has this in place; they are allocated a grant to help them gain a step on that proverbial property ladder.

The Australian scheme offers a one- off $7,000 payment as an incentive to offset the cost of the country’s 10% Goods and Services tax.

Phil claims that while there are most certainly increased levels of activity, we are not quite out of the woods yet.

Last year as we are all aware, few people were able to purchase property, banks were simply refusing to lend. Raising a deposit is still a huge factor in lack of activity, first time buyers are the industry’s lifeblood, and we need to give them every assistance in obtaining their first property.

Australia giving their first time buyers this grant towards their first home is keeping their property market moving.

Phil was also at the forefront in 2008, when he lobbied to abolish stamp duty for first time buyers looking to purchase homes costing less than £250,000.

Why penalise these already cash strapped buyers?

We may see a change, depending on the outcome of the forthcoming election.

 

 

Home Information Packs

An incredible £657.6 million has been paid out by sellers for controversial Home Information Packs (HIPs) since being introduced in 2007. HIPs have raised over £100 million in revenue for the Treasury.

The latest figures tell us that nearly two million sellers have bought the packs as a compulsory requirement since April two years ago.

The packs were supposed to hurry along the buying process, as they contain all of the property details, searches and an Energy Performance Certificate in one place. Unfortunately much of the documentation in the HIP is out of date on the day that it is produced and hence there is no cost saving as the purchaser needs to renew this documentation, leading to a duplication of costs.

The government has been accused by the Conservatives of stifling the property market with yet more red tape, creating a headache for those wishing to sell their homes, in an already turbulent market.

The Conservatives, should they come to power, have vowed to banish HIPs, except the Energy Performance Certificates.

Grant Shapps, the shadow housing minister, said: 'By imposing a £657.6 million burden on the housing market during the longest and deepest recession in living memory, Labour's short-sighted bureaucratic policy is milking the industry dry. They should have listened to the consumers, the industry and the Conservative Party and scrapped this discredited scheme before it even began.” I couldn’t agree more.

End of stamp duty holiday fails to blight property market

2010 began quite positively for the housing market; valuations on residential property carried out last month were 9% higher than the previous year, despite the removal of the stamp duty holiday.

December and January are traditionally quiet months in the housing market, December was a hub of activity due to transactions trying to complete before the withdrawal of the higher stamp duty threshold. This upward trend continued into January.

During the downturn, many homeowners who wanted to move delayed their purchase decisions. As confidence continues to come back to the housing market, this is translated into much higher levels of activity among existing homeowners and buy-to-let investors.

Tips for getting a mortgage

Before you start the application process, you'll need a thorough understanding of the mortgage market.

1. Do your research

Reading up on key mortgage terms might not sound like much fun but you're unlikely to get the best if you don't know the difference between a fixed rate mortgage and a tracker. If you're a first-time buyer, you might want to get informal advice from friends and family who have bought their own homes. Bear in mind, however, these people are unlikely to be qualified financial advisers and you shouldn't rely too heavily on their advice.

2. Consult an independent mortgage broker

A specialist broker can answer any questions about the mortgage process, help you hunt down the best deal and warn you about hidden loopholes.

3. Put money in the bank

The credit crunch brought an end to the carefree days of 100% mortgages when people didn't even need to put down a deposit to buy their property. These days, potential homeowners will need a sizeable lump sum before they can buy.
It is vital that you scrimp and save as much as you can to build a deposit nest egg. You could set up a direct debit to make sure that a portion of your salary goes into a separate savings account each month. Remember to choose an account with a competitive interest rate to make the most of your money.

4. Raid the Bank of Mum and Dad

Despite their best efforts, plenty of people are only able to get onto the property ladder by accepting help from their parents. If you are having trouble getting your deposit together, discuss your options with any family members who might be willing to help. However, you should always consider the impact this arrangement will have on your relationship.

5. Find the right property at the right price

Tennis courts and acres of land might be features of your dream house but most of us need to make compromises to find a property that suits our bank balance. You're unlikely to get a mortgage on a home worth £500,000 if you're earning £20,000 a year!
You should also think carefully about any other factors that affect property value. For example, being within the catchment area of a good school causes house prices to rocket. Even if you're not planning to start a family, it's a good idea to visit the Ofsted website to research local schools.
Alternatively, high crime rates can cause prices to plummet. To find more information on crime in your area, you should check out the Neighbourhood Statistics website.

6. Check your credit rating

Before you approach a potential lender, you will need a clear understanding of any factors that could damage your chances of getting a mortgage.
The best way to do this is by checking your credit rating with one of the UK's three credit referencing agencies .If your credit score is low, don't panic. There are a number of steps you can take to improve your result. You can increase your score just by registering on the electoral roll and making sure you pay your bills by the due date each month.

7. Look out for loopholes

It's an old chestnut but if something looks too good to be true, it probably is. When applying for a mortgage deal, you need to go through the details with a fine tooth comb and make sure you're aware of the terms and conditions.
Just imagine you take out a deal with an initial low rate of interest. It might seem like a bargain at first but what happens when the introductory rate expires? You could end up with an uncompetitive rate or having to pay a hefty penalty if you leave your lender.
Again, seeking advice from an independent mortgage broker should help you avoid these pitfalls.

8. Boost your equity

If you already have a mortgage, now could be the right time to remortgage as competition heats up on the mortgage market.
If you are considering remortgaging your property, you'll get a more competitive deal if you have a high amount of equity in your home (the difference between the market value of your property and how much is left to pay on the mortgage).
There are simple steps you can take to build up your equity such as overpaying your mortgage each month. However, remember to make sure your lender won't penalise you for this. Alternatively, you could increase the value of your property with home improvements.

9. Shop around

As with any financial product, you should never accept the first deal you're offered. You're much more likely to find a mortgage that suits you by approaching a range of lenders. One of the easiest ways to compare available deals is by using an online price comparison site.
Yet again, don't forget to speak to an independent mortgage broker before taking any drastic action.

Time for lease extensions

If you own a flat built during the 1960’6 up to the 80’s with a 99 year lease, you may well find that selling or mortgaging is quite difficult. Leases under 70 years can be hard to sell, especially in today’s unsettled economic times.Mortgage lenders are reluctant to lend on flats with short leases, as they do not return enough security. Several lenders have increased their minimum lease term requirements; the unexpired term is now 80 years or less, the premium payable may be much higher. It is now advisable for leasehold owners of flats with short leases to exercise their right to extend it. This will make selling the flat easier.The law states that 50% of the amount by which the property increases following the lease extension, needs to be paid as part of the compensation to the freeholder. An example of this is, a lease extension of £250,000 flat, with 81 years remaining on the lease, may pay a premium between £3,000 and £6,000, but to extend a lease for a property with 65 years unexpired, the premium could leap to between £19,000 and £24,000.

 

Gazumping is on the Increase

 

 

We have noticed that gazumping has returned to the Welsh housing market. An estate agent friend of mine has told of this being a weekly occurrence driven by a shortfall of homes and static housing supply.
Whilst  some will see this as welcome  sign of a re-emerging buoyant market in Wales, individual buyers face the upset of losing out on a home to a higher bidder or having to increase their original bid. My friend told me of two cases in their branch.
In the first case, the seller’s had agreed an offer of £499, 00 but then went on to accept a higher bid in the region of £505,000.
In the second, a price of £390,000 was initially agreed before a new offer came in at £405,000, forcing the original purchaser to increase his offer by £15,000 to secure the house. A very upsetting time for the purchaser, as this was the only property to tick all the boxes.