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Sharon Bloxam

Sharon Bloxam

Sharon Bloxam has not set their biography yet

Posted by on in News

b2ap3_thumbnail_stamp-duty_20160224-092158_1.jpgFrom 1 April 2016, anyone who buys additional property, including buy-to-lets and second homes will have to pay an extra 3% of the purchase price in stamp duty. The question is will this have a negative impact on the property market as a whole?

With Buy-to Let investors competing at the lower end of the property market with first time buyers, they may be feeling penalised by the Conservative government with this increase on top of the July 2015 budget  announcement of the tapered reduction in Buy-to let mortgage relief for higher rate tax payers.

After all the Buy-to Let investor provides valuable high quality much needed housing yet the government appears to be determined to make purchasing property for the rental market less of an appealing option.

For example, anyone buying a £250,000 second home or buy to let before April pays stamp duty of £2,500. This is based on paying zero per cent on the first £125,000 of the property value and 2 per cent on the portion between £125,001 and £250,000. But from April, landlords will have to pay 3 per cent for the first £125,000 and 5 per cent instead of 2 per cent on the amount between £125,001 and £250,000, meaning that they will have to pay £10,000 in total.

However, according to Rightmove stats if an investor were to purchase a property £125,000 meaning an additional £3,750 in tax becomes payable. An investor would expect capital growth in 2016 to be similar to that of 2015 (6.2% according to Rightmove) and an income of about 5.38% (Rightmove). So an investor would expect to see a return of around 11.5%.

The additional stamp duty burden should therefore take a little over 3 months to compensate for so quite possibly not impacting on the Buy-to-let market after all.

While affordable new housing is desperately needed, the Buy-to -Let sector will remain a popular sector providing affordable housing, and many savers will continue to invest their capital in rental property.

 

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At what age do we think about saving for a first home?

With the new help to buy ISA , anyone from the age of 16 can start building a deposit for their future home purchase. You can earn up to 4% interest tax-free and then the state will add 25% free cash, and it could be £1,000s, on top of what you save.

Even with all the hype about the new personal savings allowance, if you're a first-time buyer, putting your cash in a Help to Buy ISA before thinking about any other savings is a no brainer. So at the point you use the ISA to buy your first home, all the money you have put in and the interest will have 25% added to it, with two exceptions:

You need to have at least £1,600 saved to get the bonus (so you'd get £400 extra).

The most you'll get the bonus on is £12,000 (so a £3,000 bonus). If you have more than that you can still use the ISA to save, you just won't get more than £3,000 on top.

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Photographs are the first impression; we all know you can’t get a second first impression!

 

With today’s economy we are always on the hunt for cheaper prices and offers, but will it always pay off? Pictures can really sell a property which is why we invest time and money into guaranteeing that you as potential customers get the best possible chance of selling. Some agents still charge extraordinary prices for photos yet produce poor quality images. Kerb appeal is essential so achieving a full frontal picture of your property is the first step to getting it right.

Looking at some of the pictures posted by internet based agents below its clear to see a picture tells a thousand words. So it really does pay to use an agent who will make sure you have cleared your breakfast pots from the sink as well as removing your laundry from the bedroom floor before your property is photographed will make the world of difference.

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How easy are online estate agents to use?

Our sister company Oaktree Mortgages had cause recently to contact one of the well know online estate agents, who advertise greatly on the TV stressing how easy their service is to use and how much it will save a client. How wrong can they be!

A landlord client had asked Oaktree Mortgages to submit an offer for him on a property he wished to add to his portfolio as he was out of the country. Easy you would think, a simple phone call would do the trick so it wouldn’t take much time out of a busy day.

Surprise Surprise Cilla! – After a 10 minute wait to get through on the phone, they were advised that they couldn’t make an offer over the phone it had to be done online. Do they really want to sell this property?

Problem number 2 – Having been directed to the relevant part of their website and advised all that they had to do was to submit the offer online the adviser hung up. The website gave no indication of how to register as a new user and it certainly wasn’t letting them in!

So this time they used web chat to save time waiting on the phone, as they are clearly busy. This took them even longer than a phone call to get through. The operator still couldn’t log them on and Oaktree are now waiting for a call from one of the online agents “property professionals”. I would not hold my breath as one property adviser covers the whole of the East Midlands. So much for your local property expert.

Given this experience so far I am not impressed with the level of service in terms of helpfulness or speed of response. Not being able to make an offer over the phone seems simply daft. Clearly the company has reduced the level of customer service and automated it to make a profit. Personally I would rather pay a little more and get a better service from a local agent who does know the local market, who can take an offer over the phone and who can adapt to the inevitable problems that arise during any house sale.  

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House prices on the rise

September 2015 has seen a 0.5% growth in UK house prices, with an annual growth increase of 3.8%.

This is a significant change as the growth had slowed slightly in August 2015 with the monthly change at 0.3% (seasonally adjusted) and annual change at 3.2%.

Robert Gardner, Chief Economist at Nationwide said of the figures:

“UK house prices increased by 0.5% in September, with the annual pace of house price growth picking up modestly to 3.8%, from 3.2% in August. The data in recent months provides some encouragement that the pace of house price increases may be stabilising close to the pace of earnings growth. However, the risk remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability. Indeed, in recent months surveyors have reported historically low levels of properties for sale and increased new buyer enquiries. Therefore it is unsurprising that most surveyors expect a pickup in house price growth in the months ahead.”

London house prices also continue to grow, causing the gap between London and the rest of the UK to rise to an all time high, with the average price being £443,339 compared to the average price of a home in the East Midlands of £160,525 over the last 12 months.

There is still a shortage of property, particularly at the lower end of the market and demand remains strong from first time buyers and landlords. Now is still a good time to move house as interest rates remain low. There are some very low 5 year fixed rates available and demand for property remains strong.

Source: Nationwide. www.nationwide.co.uk/hpi

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Are Interest Rates Set to Rise?

All members of the Monetary Policy Committee voted to hold Bank Rate at 0.5% at the most recent meeting.

However the MPC revealed that for a number of members, the balance of risks to medium-term inflation relative to the 2% target was becoming more skewed to the upside at the current level of Bank Rate. For these members, the uncertainty caused by recent developments in Greece was a very material factor in their decisions: absent that uncertainty, the decision between holding Bank Rate at its current level versus a small increase was becoming more finely balanced.

There was a range of views among Committee members on the significance and scale of the news regarding domestic costs, external price pressures and the balance between them. It was evident that domestic cost growth was recovering. But there were questions regarding: whether the increase in wages relative to productivity would be sustained in light of the risks to global and UK activity emanating from developments overseas; and whether or not increases in domestic costs were occurring sufficiently rapidly to offset the probable drag on CPI from the appreciation of sterling and so return inflation to the target within two years.

For most members, even before accounting for the recent increase in uncertainty in the external environment, the current stance of monetary policy remained appropriate to balance the risks of inflation around the target in the medium term.

Chris Whittaker, Director of our sister company Oaktree Mortgages Ltd commented:

"Although the committee voted unanimously against a rise, it is inevitable that interest rates will rise- it is just a question of when. MPC Members have hinted that they are likely to ramp up the pressure to change the base rate in the remainder of the year, as inflation and the wider economy are projected to gain momentum in the coming months."

"The fact that rates have stayed the same for six years may have driven many borrowers into complacency when it comes to seeking the best deal for them. Someone on their lenders SVR with a £150,000 loan and a 40% deposit, for example, could save over £4,000 per year. The savings are even greater the bigger the loan, so savings are there to be had across the whole market. It’s crucial that people with mortgages discuss the options with their mortgage broker so that they can make the most of record low rates and effectively give themselves a pay rise."

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Is Buy to Let better than stocks and shares?

More investors are opting for property rather than stocks and shares to fund their retirement, according to new research by Nationwide Building Society.

Over two million people are now private landlords, up by 600,000 since the financial crash, as house prices have increased by almost 260% over the past 24 years.

Over the last 15 years, property has given investors excellent returns and since 1991 returns from the FTSE All-Share only narrowly beat those from property.

Many landlords, use their property portfolio as part of their pension provision and in many cases it was their only pension fund.

Many people still prefer property as a sensible way of saving for the future because, unlike pensions, with bricks and mortar your money isn't locked away until you reach the age of 55.

Excellent rental yields and capital growth from buy-to-let is appealing to any investor who is concerned about the volatility of the stock market. 

In 2000, less than 2% of mortgages in Britain were buy-to-let and now there are 900 BTL mortgages available, accounting for 15% of all home loans. 

Despite the additional costs in property such as buying fees, maintenance and void periods, the asset growth and rental income is still very attractive for investors concerned about the volatility of stock markets.

However, as with any investment, there are no guarantees, so investors should be aware of the potential pitfalls.

If you would like to know more about the opportunities available in purchasing a buy to let property give our director, Chris Whittaker a call or drop him an email. Chris is a landlord in his own right, runs an independent mortgage business which specialises in providing finance for buy to let properties and also runs an agency which manages residential property throughout Leicestershire, South Nottinghamshire and parts of Lincolnshire. Chris will ensure you have the facts – warts and all.

You can get in touch by phone: 01664 563481 or by using our contact form by clicking here!

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Japanese knotweed

Homeowners could be stung with fines of up to £2,500 if they allow invasive plants such as Japanese knotweed or giant hogweed to spread from their properties under anti-social behaviour legislation.

The Home Office has published a briefing document on the reform of anti-social behaviour powers, which normally control drunkenness, drug taking and objectionable conduct.

The legislation will target plants which can cause illness, threaten biodiversity or even damage property.

According to a Home Office briefing document: 'Japanese knotweed, for example can grow through tarmac and can cause structural damage to property, whilst giant hogweed can cause harm to human health.

 

WHAT IS JAPANESE KNOTWEED?

Japanese knotweed - which has the scientific name fallopia japonica - was introduced into Britain by the Victorians. Incredibly invasive, it can grow four inches (ten centimetres) in a day from April to October and a tiny root can establish itself as a plant in just ten days.

Apparently solid structures such as tarmac and flooring in houses are no barrier to its growth and the weed also creates a risk of flooding if leaves clog waterways.

Knotweed is recognised by its shovel-shaped leaves, bamboo-like stem and white flowers produced in autumn.

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Not every sale is straight forward, for example we had a vendor wanting to sell their property but not wanting to move until the following year! We of course accepted the challenge and sold the property within a few months to a buyer who fell in love with the property and was willing to wait to complete the purchase.

Another example was when one of our landlords, who had just recently tenanted their property, was forced to sell due to unforeseen circumstances.  We managed to sell the property within a week to another investment buyer with the sitting tenant.

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Halfway House….a beautiful one of a kind property, over 100 years old…and unfortunately with age, there can be problems. First listed for sale in March 2013 with Hancock’s this house has been sold five times in the last two years, 13 different offers put forward with a staggering difference of 40k! However, (unlucky for some,) the 13th offer was accepted and now the property has finally exchanged and completes this month. We have never stopped working on achieving a sale for the vendor at the very best price, and thankfully she has never given up on us due to our constant efforts.

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We recently sold a property within 24 hours of going to market. After sending the property live, we secured 2 viewings the next day. Both were very positive viewings, and on my return to the office I received a message on my desk with an offer for the full amount, just half an hour after they had seen the property! Being a first time buyer with no chain will hopefully give a quick conveyance process.