UK Property Market

A Guide for First Time Home Buyers in the UK

In case you are thinking of buying your first home in the UK, and are confused whether to buy a house that has been lived-in or a brand new house, then this article is for you.

Supporters of buying already lived in homes cite the fact that these homes are usually in good locations near the city centre. They also have a comfortable and homely feel to them. Some of these homes may also have a historic value. Additionally, convenient shopping centres are located near these established homes, so one can even go out for shopping expeditions instead of just depending on the internet as in certain cases the quality of products cannot be ascertained such as buying jewellery online.

There is also the prospect of a major appreciation in their price later on, as prices of houses in a good location usually appreciate exponentially in the future.

People not in favour of buying “used” homes cite the reasons of repairs and outdated fittings in the house. They also feel that the construction of these has not been carried out according to modern architectural practices. They feel that buying a new and modern home is a better bet for first time home owners. The architecture and finish of these homes is compliant with the latest designs. The fittings are also usually cutting-edge and carry with them a warranty as well.

The disadvantage of new homes could be that they might be a bit cold and bare to first live in. As they are usually located in new, upcoming neighbourhoods, there may be very few neighbours too! Another disadvantage would be that most of them are usually located a fair distance from the city centres of most British cities.

When objectively assessing the best choice for first time home owners in the UK, there is no one correct choice. In conclusion, both “used” and new homes do fulfil the basic function they were designed for i.e. to provide a shelter for its inhabitants.

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Owning a second home in the UK

Many people in the UK who have a sufficiently high income have often thought of the prospect of owning a second home. These second homes have usually been bought outside the UK, in countries like France and Spain. The primary function of a second home is that of a vacation home, or a home which can be sold at a later date (at a higher price) to gain profit.

However, more and more people are looking to buy their second home property in the UK itself. The reasons for the change in outlook include a realisation of the hassle of travel involved overseas, and also the increasingly unfavourable foreign exchange rate. Moreover, Capital Gains Tax, an important consideration when buying a second home, has not risen as much as expected. This has spurred sales of second homes as many UK residents also see it as a tax benefit.

Another benefit of owning a second home in the UK is the convenience of giving it on rent easily. Often, in foreign countries, it is difficult for UK citizens or residents to find tenants and also monitor their usage of the house. With rents being very high in the UK, it is a win-win situation for the UK second home owners, who choose to give their second home on rent.

It is not difficult for second home owners to find a tenant. If the house is located in a university town, students are sure to make enquiries about renting rooms in it or the house itself. One can also advertise the house through email marketing or online advertisements. Working professionals usually rent homes which are near their place of work, so if the house is near a commercial area, it is sure to attract the attention of these professionals.

In conclusion, buying a second home is highly recommended for its many benefits in the future.

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UK Property Rentals for Students

Every year, thousands of students from around the world go to study in the UK. These students study for undergraduate, postgraduate or doctorate courses. It is important to note that each student has different requirements when it comes to accommodation in the UK, and many students choose to rent a property together in groups. The rooms in the property are shared amongst the group.

This method of renting UK property is often more economical for students than renting rooms in university halls of residences. For example, in a big city like London, renting a house on average costs £20,000 which makes it more expensive than villa rentals in Florida. Even if 4 students can share a house, their rent works out to £5000 a year as individuals. In London, this figure can go up to £1000 a month if an individual student attempts to rent out a room in a house or flat.

Before renting a house in the UK, students should make sure that they are aware of the particular expenses which are covered in their tenancy agreement with the landlord. They must also do research on the area in which they are renting a house, to check its safety record, nearby amenities and transportation links with the main areas of the city. A thorough inspection of the property is recommended, rather than just a quick tour. Students should also check whether they are exempt from paying council tax in the area the house is located. This can be checked from the local housing council’s website or office.

In conclusion, if proper research has been done on the area, nothing should deter students from renting an entire housing property. This will save them money and give them a sense of independence as well. It will also provide them a greater understanding of how the UK housing property market works.

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UK Housing Property Market Trends

The UK housing property market is a mature market, with established controls in place. However, with the recent global economic crisis, prices of houses in the UK have been falling since July 2007. There was a minor rise of 6.4% in house prices in 2010, but in 2011, house prices are again expected to fall.

The fall in house property prices has been due to the lack of credit being extended by banks and financial institutions to individuals. This has resulted in individuals not being able to secure mortgages to buy homes. In effect, the demand for houses has gone down because of the high cost of securing a mortgage to buy a house.

The fall in demand for housing has also been partly due to the house price to earnings ratio, which has reached its peak. Simply explained, this means that the price of a house in relation to a person’s income is still very high. Thus, the ordinary person wanting to buy a house for the first time on an average salary will find it very difficult, buying a house is definitely not the same as purchasing pantone mini mugs.

Another UK housing property market trend is that people will tend not to buy houses when the prices are low, and are projected to go lower. This is because in the mind of the ordinary investor, the feeling is that an investment in such housing is unlikely to yield a profit.

UK unemployment rates, especially youth unemployment, are at very high levels (19.6% in 2010) so these potential first time house buyers cannot afford to buy houses. This is another dampener for the housing property market.

Finally, higher interest rates are another reason for the increase in mortgage rates, and consequently a decrease in housing prices. A brighter future in the housing market will only be possible once the recession ends.

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Reasons for the UK Property Price Collapse

People often wonder why UK property prices largely collapsed after July 2007. There are a number of reasons for this collapse, but the most important one which set the ball rolling was the subprime crisis in the United States of America. This subprime crisis triggered the economic recession globally, and in turn affected the UK property market as well.

Important financial institutions such as Northern Rock collapsed and had to be taken over by the government, and many other banks too had to be bailed out. These institutions had earlier given credit to people for buying homes without any major conditions. The boom in housing prior to July 2007 was fuelled with the lack of credit checks and easy availability of credit. When the providers of this easy credit i.e. most UK banks and financial institutions, could not recover payments from their creditors, the property collapse began.

This price collapse was further established when banks adopted a more conservative approach to giving credit to potential home owners. This triggered a rise in the mortgage rates, which deterred people from buying houses. It should be noted that most buyers require the help of a mortgage to buy a house.

The year 2010 was an exception, as house prices actually rose by 6.4%. The job market also recovered to an extent and various surveys involving HR software also confirms this. However, the general trend of the house price collapse in the UK continues, with experts warning that 2011 will be one of the toughest years for the housing market. A fall of 1.7% in house prices is expected in 2011.

Finally, it has also been seen that housing prices also depend on the overall sentiment of the people towards the economy in general, which is currently low. Experts predict that housing prices will pick up and stabilise only after a sustained recovery from the UK economic recession.

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New UK Government Tax Proposals Targets Holiday Homes

The global economic downturn which started in the middle of 2008 continues to depress economic growth in the United Kingdom and, as a consequence, income from established tax sources has been reduced. In its quest for increased tax revenues from the private sector the UK Government, in announcing it emergency budget on June 22 2010, announced that it is investigating new targets for taxation.

Chief among these new proposals is that it seems the owners of holiday rental properties will lose some of their tax breaks if they do not comply with the new guidelines proposed. To date, the law stated that such furnished rental accommodations only needed to be available for letting for a period of 140 days each year and, out of those 140 days, the property only had actually to be rented out for a maximum of 70 days. Under the new proposals, in order to continue to qualify for tax benefits, owners of such properties will need them to be available to be rented out for 210 days each tax year, while the number of days that they have to be actually occupied by renters rises to 105 days.

The upshot is that if the owners of such holiday rental accommodations do not comply with the new guidelines for their holiday lets in the UK or the European Economic Community, they will have reduced holiday time for their personal use. They will also not be able to offset certain expenses related to such properties (such as interest on mortgages and maintenance costs) against income from other sources at the owner’s top income tax rate. A Capital Gains Tax benefit of 10% will be lost, as will the deferral of Capital Gains Tax for reinvestment in similar holiday rental properties and the ability to transfer such properties, and the Pantone Mugs therein possibly, by way of a gift to family members.

It is to be noted that to date these recommendations are still proposals and have not yet been put into law.

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How to find a good letting agent?

Finding a good letting agent can be just as difficult as finding some good dance fabrics ( I am in the process and still not giving up). It is always good if you can choose a letting agent who is a member of a professional organisation. This would give you a fair understanding of the code of practice of your agent, as they are bound by certain rules by the organisation they represent. Since any bad practice could spoil their brand name, they would think twice before they make a bad move. It would be the best if you have someone who has been dealing with a specific letting agent and can recommend the same to you. This way you can save yourself from some of the hassle. Having said that, never stop looking for a better letting agent after you talk to the first one, you just might find a better one than the recommended person. Recommendation should only strengthen your final decision. A good agent is the one who is capable of giving you great advice and will also keep you informed of both the good and the bad happenings on the property.

Every letting agent would have various options on offer. It’s for you to decide what you would like to get for yourself. There are mainly two services; one is to get the tenant for you and the other where the letting will manage the whole term of rental agreement for you, from the beginning to the end. Most of the letting agents will provide you both of these services. All you need to do is to understand the various terms and condition each agent will provide. In case if you are planning to deal with a letting agency who have the policy of “no let no fee”, then it’s always good to get more than one agency, just to increase the chances of letting your property. Always keep in mind that those agents who charge low fees might not necessarily be the best ones. At the end of the day they are over there to make money out of you. You can also tell your letting agent the kind of tenants that you are looking for in detail, just to avoid any future problems. I am not sure if this would be effective in case if there are not many tenants available for your property.

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£500 Energy Savings Could Cost You Thousands

High street lender Halifax is offering the unusual incentive of £500 towards your energy bills if you take out a mortgage with them. The deal applies to both first time mortgage buyers as well as those customers looking for a remortgage deal but the problem is that while the incentive is a headline grabber and instantly looks attractive as people are hammered with massive energy bills, the reality is that Halifax mortgages rarely feature in the best buy tables.
Clammering for that £500 saving may end up costing you thousands over the life of the loan or hundreds in the first couple of years alone (even after taking that £500 incentive into consideration). This isn’t the only aspect of the mortgage that you should consider.
When you’re shopping around for a mortgage, whether it’s your first or you’re remortgaging for the fifth time you need to be sure that you’re getting the best deal. This may not sound as easy when buying a mortgage as it might when you’re buying a timesheet software package or a holiday to Gran Canaria but it is important.
Don’t just look at the incentives on offer or simply consider the interest rate. Look at any fees that are associated with the loan, which are typically higher if it provides a reduced rate over the first year or two. Consider how long it is before you can get out of the agreement and factor in how much you will pay over the lifetime of the mortgage and in the first year and two years. Do calculate these figures including incentives because this will help you determine the best value mortgage for your money. Without doing this, though, you could cost yourself thousands of pounds simply to save £500 on your electricity bill.

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Maximizing profits in recession

There are many factors that affect the rental market. These are the factors that can make a lot of rental property owners worried or relaxed. I was just browsing through secondary teaching jobs and I all the time came over a lot of rental ads.

The construction market has seen a big slump due to the financial meltdown as people are finding it hard to find spare money for construction. This is true for property sellers as well, as people don’t have enough money to buy new house. While the younger generation and first time buyers struggle to buy a house, the business for rental property owners is booming, as more and more people are looking to rental properties and for longer periods rather than buying one, due to lack of funds.

The rental property owners can also benefit from higher interest rates as this would make it difficult for people to buy homes and look for rental option, also this would make many landlords who are unable to pay high mortgage rates to sell their homes. And over all, higher interest rate can bring in an increase in the rental prices.

Demand and supply has a big impact on the rental market. If the number of rental properties exceed than the number of properties needed, then it will surely pull down the rental prices. This is why it is always good to acquire a property when the demand is higher. Demand can also fluctuate during the course of the year, so if you are planning to buy a property to rent it out later, then you might have a small advantage if you buy when the demand is low. Anticipation is a key here; properties can also be acquired on the basis of future possibility of demand. This can be highly profitable if you are able to acquire a property at a very low price and use it for rental purposes in future when the demand is high. A notable feature over here is that your purchase can also trigger price raising in the rental property of that area, and can also attract other buyers resulting in the increase of value for your property altogether.

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Benefits of Remortgage

There are many benefits of re mortgaging. This is a process where you can change your mortgage while not moving from your home. It basically involves switching your mortgage to another lender, where you can find a better deal or it can be used to get some extra money for home improvement. While you have the option of changing the lender, you can also re mortgage with the same lender provided your lender has options of re mortgage. The rate of mortgage would be decided on your personal financial status.

Benefit of re mortgaging can be in the form of a better interest rate and can also result in reduced monthly payments. It also gives you the comfort of consolidating all your existing loan payments into one payment.

A friend of mine has recently remortgaged his house, and the next thing he did was to buy a car. I was surprised when I came to know that he got the remortgage done just to get some extra money to buy a car. This is when I realised I could also do it to get some extra money for home improvement. One of the problems that I face with mortgage is that I completely get lost when the advisor explains me the deal. The moment I see numbers, they become like little devils on the paper. But thankfully my wife who is also looking for a locum doctor job is good with numbers, so I take her along. In case you face the same problem you can also do what I did, or just bring all the calculation home and go through them again by yourself and then get back to the advisor if you get stuck or find a different result. This way you can also avoid the element of surprise when it comes to the payment amount or even with length of mortgage.

Remortgages can also be used to pay off your credit card bills. This is something that I am sure many people would need help with. As we know the interest rates on credit cards are very high and many people are barely able to pay the interest or the minimum amount payable every month. Even after paying the minimum amount every month, the mammoth bill would still not come down, which is basically due to the high interest rate that banks charge. However with remortgage you can pay off the bill all at once and then pay the mortgage amount with a lower interest rate. As per me this surely is the major highlight of remortgage. Those who have a huge credit card bill can surely relate to this.

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