The election and the housing market

As usual, I have just read David Smiths article in the Sunday Times. The election is snapping at our heels, we are moments away from potentially having a new government in power, a hung parliament or indeed the ‘same olds’ remaining exactly where they are.

What will the election mean for housing? Inevitably, the big picture matters most: whether we get a hung parliament and what that means for the pound and mortgage rates. Housing policy also matters, but it has so far been the poor relation. The resounding housing pledges of past elections are missing from a campaign in which the only excitement has been Vince Cable’s proposed 1% mansion tax on £2m-plus houses, which will limit the Liberal Democrat surge in Mayfair.

Also missing, according to the industry, are answers to the biggest questions facing housing over the next few years. The Council of Mortgage Lenders (CML) has been through the three main party manifestos and found policies it likes, but its big worry is in an area none of the parties appears to have ideas about: how fill a £300 billion mortgage funding gap during the next parliament.

While the Tories talk about "less reliance on unstable wholesale funding" as a long-term ambition, the shorter-term problem will arise when lenders are weaned off emergency official support and have to roll over their borrowings in the markets. The danger, says the CML, is of a prolonged mortgage famine. Perhaps they will lower their lending criteria on mortgage approvals to pay back their borrowings and begin to take advantage of the inexpensive money that is now available to them on the money markets.

Housing supply, according to the Home Builders Federation, is another problem. The industry body says the shortfall amounts to almost 1m homes and is rising because of very low building levels. At current rates, it warns, every home in the country will have to last for 1,100 years before replacement.

If, as the Office for National Statistics suggests, Britain’s population will hit 70m in the next 20 years, we will require many more houses. Gordon Brown’s pledge, made in 2007, of 3m new homes by 2020 appears to have been quietly ditched and does not appear in Labour’s manifesto.

The Tories’ promised shake-up of planning, meanwhile, giving local people a greater say in permitting new developments, is seen by builders as a "nimbys’ charter", hardened up by a manifesto pledge to allow referendums on local issues if 5% of people sign up. That could include blocking new developments. Even worse, some say, will be the Lib Dems’ proposal to slap Vat on new housing.

So the post-election housing landscape looks to be one with limited supplies of both mortgages and new houses. There is symmetry in that. It does not, however, make for a very healthy housing market.

The election and the housing market

As usual, I have just read David Smiths article in the Sunday Times. The election is snapping at our heels, we are moments away from potentially having a new government in power, a hung parliament or indeed the ‘same olds’ remaining exactly where they are.

What will the election mean for housing? Inevitably, the big picture matters most: whether we get a hung parliament and what that means for the pound and mortgage rates. Housing policy also matters, but it has so far been the poor relation. The resounding housing pledges of past elections are missing from a campaign in which the only excitement has been Vince Cable’s proposed 1% mansion tax on £2m-plus houses, which will limit the Liberal Democrat surge in Mayfair.

Also missing, according to the industry, are answers to the biggest questions facing housing over the next few years. The Council of Mortgage Lenders (CML) has been through the three main party manifestos and found policies it likes, but its big worry is in an area none of the parties appears to have ideas about: how fill a £300 billion mortgage funding gap during the next parliament.

While the Tories talk about “less reliance on unstable wholesale funding” as a long-term ambition, the shorter-term problem will arise when lenders are weaned off emergency official support and have to roll over their borrowings in the markets. The danger, says the CML, is of a prolonged mortgage famine. Perhaps they will lower their lending criteria on mortgage approvals to pay back their borrowings and begin to take advantage of the inexpensive money that is now available to them on the money markets.

Housing supply, according to the Home Builders Federation, is another problem. The industry body says the shortfall amounts to almost 1m homes and is rising because of very low building levels. At current rates, it warns, every home in the country will have to last for 1,100 years before replacement.

If, as the Office for National Statistics suggests, Britain’s population will hit 70m in the next 20 years, we will require many more houses. Gordon Brown’s pledge, made in 2007, of 3m new homes by 2020 appears to have been quietly ditched and does not appear in Labour’s manifesto.

The Tories’ promised shake-up of planning, meanwhile, giving local people a greater say in permitting new developments, is seen by builders as a “nimbys’ charter”, hardened up by a manifesto pledge to allow referendums on local issues if 5% of people sign up. That could include blocking new developments. Even worse, some say, will be the Lib Dems’ proposal to slap Vat on new housing.

So the post-election housing landscape looks to be one with limited supplies of both mortgages and new houses. There is symmetry in that. It does not, however, make for a very healthy housing market.

Ideas for upgrading your bathroom

My favourite room in the house is my bathroom. I am positively possessive in the extreme when it comes to this sanctuary of mine. The end of the day comes, and all I can think about is soaking in my supersize tub, aromatic aromas fill the air, dimmed lights and the soft flickering of calming candles.

Of course this has not always been the case, not so long ago; I was ever so slightly hunched up in a delightful ‘avocado’ coloured bath. The flooring was very interesting brown shag pile, complete with faded stained patches, green and yellow wallpaper completed this retro scene.

A bathroom, can with a little planning turn into that much needed haven, a place to escape from all the hustle and bustle of modern day living. Not only will you enjoy this restoration project but will add value to your property at the same time.

Here are eight tips for upgrading and updating this vital space.

1. If you have a coloured suite, it really is time for it to go.

White is the preferred choice for most homebuyers - it's clean, light and space-enhancing. And with the right colour accents, accessories and bathroom products, it doesn't have to be boring.

2. Planning the layout of your bathroom is a must.

If the layout works for you now, don't change it. Re-plumbing a bathroom is the most expensive thing you can do.

That said, if the layout doesn't work for you, and then work with a plumber to look at how it can be redesigned. If you are thinking about moving the bathroom into another room, then consider where the waste pipes would need to go and how much of the garden would need to be dug up if you had to relocate the soil pipe and drains.

Anything is possible at a price, but think carefully about how the work will interrupt your lifestyle and whether or not the payoff will be worth it. It's possible your dream bathroom can be achieved without a major overhaul. Don't spend unnecessary money on the location - that way you'll have more to spend on the details.

3. Small spaces can be made to work with the right pieces of furniture.

Corner basins and even toilets are available, but consider who will be using the room and how often. Avoid replacing a bath with just a shower, even if you rarely take a bath yourself. A change like this has the potential to impact your sale price. The word 'bathroom' has a little clue in its name - keep the bath in there!

4. Your choice of bathtub is an important one.

It shouldn't be taken lightly if you plan to use this newfound space for relaxing. There are a number of great spa tubs available so you can get the benefit of a spa treatment in the comfort of your own home. If you've ever had a Jacuzzi bath, you'll always want one.

Try to avoid corner baths where possible. They can be good for small awkward spaces, but they can also affect the resale value of your home.

5. Install a power shower to add maximum value to the space.

Choose one with an adjustable head so you can change the pressure. A high blast can be great for relieving aching shoulders.

6.If space allows, 'his and hers' double vanity basins are fantastic, and a much sought after bathroom feature. Bowl basins which sit on a wooden stand are the hallmark of an inspirational bathroom.

7. Take time to consider your fittings.

Chrome is very popular in modern bathrooms, and good quality fixtures can set off even the most basic of bathroom suites. Your strategy might be to save money on the suite, but finish it with high quality fixtures. This approach works very well on low to mid-range budgets.

8. Be careful when choosing flooring and tiles.

If you can afford to tile the whole room you might want to consider installing a wet room. Taking this approach you'll end up with a very streamlined space, but remember - there won't be any 'dry' areas in there.

 

Housing affordability

It would appear that none of the parties have made housing affordability a priority within their manifestos. All those young people in rented, have no say if they are suddenly kicked out with only a months notice. Stamp-duty relief is considered to be the answer, but do first time buyers agree?

There is a definite lack of first time buyers at the moment, the lowest it has been for 20 years. This low has coincided with the stamp duty holiday on properties costing up to £ 175,000, which doesn’t look too promising for the latest holiday on properties up to £250,000. Stamp duty may not be the real fly in the ointment.

Banks, as is well highlighted are still not helping the situation. Those who actually manage to pass through the harrowing credit checks, must then choose between a 25% deposit or the eye wateringly high rates.

Part-buy part-rent schemes are welcomed by first time buyers, but there needs to be greater market choice and stronger guarantees. At the moment funding is only on new- builds and the selling process is quite complex.

What really needs to be dealt with is ‘affordability’. The quantity of homes being built needs to increase, the credit given to developers needs to be readily accessible and planning needs to be simplified.

It would be bad news politically for any party to announce that they were to pop the property bubble. Homeowners are always watchful of what each party will bring to the table with regard to the housing market; they want to hear that their major asset is going to rise in value.

First time buyers can only hope that more decisive action will be taken with regard to planning, mortgages, development and expansion of shared ownership. Not too much to ask from a new government.

Tips on how to sell your property

Springtime is the best time to sell a house, so spend the early months of the year preparing. Agents are saying it will be better to get your house on the market before election fever gets a grip and slows everything down.

GET THE VALUATION RIGHT - This is the absolute Holy Grail. Valuations from agents fluctuate wildly. It is probably best to get at least three and to select an agent who pitches in the middle. It can be very confusing. Some prices are exactly where they were 18 months ago and some are considerably down, there does not seem to be any particular logic to it, as some properties attract considerable attention while others hang around not selling. Listen to what the market is telling you. As a general rule, if your property came to the market in the last quarter of 2009 and you haven’t received any offers, it’s clear that you need to reduce the price.”

BE CONFIDENT - Remember there is a huge shortage of good houses for sale at the moment. The National Association of Estate Agents reports that on average there are five buyers for every house. You only have to catch one.

CHECK BUYER FINANCE - Insist on a financial reference from buyers to confirm they have the necessary funds to complete the purchase Beware of so-called “cash buyer”. Many buyers are under the illusion that just because they do not have anything to sell it makes them cash buyers and you may find that they are actually taking out a mortgage

PRESENTATION IS ALL - Clean it, paint it, fix it and ruthlessly remove clutter, think about first impressions. Don’t paint your front door neon yellow, it may not be to everyone’s taste.

GET THE PAPERWORK SORTED - Help your buyer’s move quickly once they have made their minds up. Speak to your solicitor or licensed conveyancer well in advance. That way, key information can be with their solicitors or licensed conveyancer within 24 hours of an offer being accepted. Also, get your lawyer to prepare a draft contract before a buyer is found, so you are in a position to exchange within 10 days.

MAXIMISE THE POTENTIAL -Think positive, you can add value to your property by obtaining planning consent for a loft extension or rear extension, then it may be worthwhile having the drawings done and getting the consent in place. This will appeal to buyers who would be keen to do work but are concerned about whether they would get consent. Obtaining consents with the right architect on board isn’t vastly costly and could add a lot of value.

CONSIDER SELLING QUIETLY -Off-market or under-the-counter sales are becoming popular among the country house set – so, for a top price and posh brokering, take the quiet route

YOU CAN ALWAYS LET -The drop in rental values is now over and prices are inching upwards again, renewed confidence in the high-finance world of corporate lets is already being felt as big family houses in leafy roads are being snapped up again.

Repaying your mortgage early, always read the small print!

One quarter of all borrowers are taking the opportunity to pay down their mortgage while interest rates are low, according to a survey. But homeowners are being warned to check the small print of their loans.

If mortgage interest is recalculated only once a year then borrowers will not get the full benefit immediately of any monthly overpayments.

They should also remember that they will not usually be able to get the cash back from an overpayment if they need it in an emergency.

Most lenders allow overpayments of up to ten per cent of capital each year without penalty, but policies vary. Stroud and Swindon Building Society, for example, permits overpayments of up to 25 per cent per year of the outstanding mortgage balance, while Nationwide accepts up to an extra £500 a month penalty free.

HSBC accepts up to a 20 per cent overpayment on a borrower's monthly payment.

Lloyds TSB has doubled the level of mortgage overpayments it allows each year from ten per cent to 20 per cent of the outstanding mortgage balance.

This applies on all variable-rate deals with any of its loan brands --Cheltenham & Gloucester, Halifax and BM Solutions. Borrowers with fixed-rate deals can overpay only up to ten per cent.

On a 25-year repayment mortgage of £100,000 at 3.5 per cent interest, overpaying by just £50 a month would reduce the mortgage term by three years and six months and save more than £14,000.

Most banks and building societies calculate mortgage interest daily. It means any overpayment will immediately go towards reducing your debt - and subsequently the amount of interest you pay.

However, some lenders still recalculate interest annually, including a number of building societies such as Leeds and National Counties. It is a good idea to speak to your mortgage provider before making an overpayment.

National Counties says it can recalculate interest immediately after a capital repayment has been made, but borrowers need to request it.

Borrowers will not usually be able to get back any money they use to reduce their mortgage debt unless they have a flexible or offset mortgage. For this reason it is important not to use money you might need later or leave yourself with no savings.

With some mortgage rates now at record lows it may be the case that some borrowers would earn a better return on their cash in a high interest savings account than on the potential mortgage interest savings from overpaying - so do your sums.

Those who want to retain access to their savings but still want to use them to reduce their overall borrowing should consider-deals where savings are offset against the mortgage debt, so you pay interest only on the overall balance.

Expect to pay a slightly higher interest rate for this flexibility. But borrowers retain control over their money and can access savings at any time. Among the major providers of offset mortgages are First Direct, Yorkshire Building Society and Woolwich.

First Direct has a two-year fixed-rate offset at 3.29 per cent for those with at least a 25 per cent deposit. Yorkshire Building Society has a five-year fix at 4.79 per cent.