Where is the property market going?

Speculating about the property market has always been a popular pastime for the press, but over the last few years it has reached fever pitch. As is standard, the reporting is consistently negative (forecasting property price crashes must be classed as a bit of light relief if you spend your day theorising about SARs , global warming , and swine flu).

A common them amongst property stories is that they also tend to focus on property prices instead of volume of transactions - the two are linked but in relation to the economy it’s the volume that is the most important. Although prices are very important to first time buyers, they are largely irrelevant to people buying and selling (what you lose/gain on one side you gain/lose on the other).

The number of properties sold affects a lot of people though.

The media property price horror stories in 2008 effectively put the brakes on the property market – plummeting the number of overall transactions from previous averages of around 1.2m – 1.4m a year to around 450,000 in 2008 – less than half (one source for this is http://www.houseprices.uk.net/articles/property_transactions/). When the media convinces everyone that prices are plummeting everyone freezes like rabbits in headlights and doesn’t do anything (however try comparing what they forecasted as a drop - 40%+ - with the actual price falls of around 16% in 2008 and price rises in 2009).

The knock-on effect of this was massive – each property move usually involves everything from electricians, to plumbers, DIY stores, decorators and furniture shops. Halve the number of transactions and you’ll dramatically hit their businesses.

I’m not saying that the media created the recession from nothing - there were fundamental problems in the mortgage and banking markets that needed to be resolved – there needed to be an adjustment. However the media did take a ‘normal’ property price correction (of the kind we saw at the end of 2004) and turn it into a panic-driven near-collapse of the market to levels we haven’t seen in over 50 years.

So if the media caused ( sorry – substantially contributed to) the reduction in volumes, what’s going to happen next? Is this it? Are we going to remain a nation where only about half a million people move a year as opposed to the 1.2-1.4 million a year for the previous decade

I don’t think so.

The first reason for this is the constant level of transactions over the years. When you look back much further than the recent past (using The office for national statistics http://www.statistics.gov.uk/STATBASE/ssdataset.asp?vlnk=7339 you can check the figures all the way back to 1961) you can see that the levels of transactions in recent years aren’t some sort of hyped-up blip brought about by greedy estate agents – they are the normal sort of levels. We haven’t dipped below a million transactions since 1974, and haven’t been as low as 450,000 since before these records began. (Just to avoid breaking up the flow I’ve copied a summary of the figures onto the bottom of this article)

Why do people actually move house?
My second reason for saying that we’re not going to stay at these levels lies in why people actually move property in the first place – here’s a list taken from http://www.articlesbase.com/moving-and-relocating-articles/the-moving-process-why-do-people-move--1789577.html The article is American but the issues mentioned are pretty universal. Anyway, here’s the list:-

1. Home is too small
2. Downsizing
3. Aging systems and decor
4. Purchase a new build
5. New home build wasn't as expected
6. Change in family circumstances
7. Retirement
8. Moving closer to elderly parents
9. Seniors moving to retirement homes and nursing homes
10. Health Reasons
11. Neighbourhood changes
12. Commute to work
13. Corporate transfer
14. Renovating and Flipping
15. Cashing out
16. Financial Stress
17. Difficult Neighbours

Can you see ‘property price changes’ on that list? Me neither. In fact if you look down the list, every factor mentioned involves real factors close to people’s hearts – changes to their day to day life as opposed to abstract worries set out by the media.

Are these factors going to go away?

I don’t think so.

All of these life-changing things are continuing to occur within people’s lives. They will have caused many of them to move home already – but from the overall statistics there are a hell of a lot of people out there would have moved in the last couple of years but for some reason they haven’t (perhaps not helped by scare stories in the media). Their desire to move hasn’t gone away and sooner or later they will be coming back into the market.

So whilst the press and media speculation can cause problems (major ones this time) in the housing market, they can’t take away people’s desire to move property

But isn’t it impossible to get a mortgage these days?
If you don’t bother looking then yes it’s unlikely you’ll find anything. However, a minute on google will throw up a good selection of deals. The best (i.e. cheapest) deals are available to those who can put down 25%- 35%, but for instance I’ve just seen HSBC bank offering a 4.99% tracker mortgage with no arrangement fee and they will lend up to 90% of the purchase price.

Some people will say 4.99% is a high rate but 18 months ago a rate like that would have been seen as dirt cheap by the whole market. So don’t believe the hype and actually find out yourself what you can get. You can try the search engines or an IFA (Independent Financial Adviser). I’ve had good results through one called Town and Country mortgages

This is nothing to do with me - I don’t work in the property industry -
Actually it probably has. If you put half a million property transactions back into the market, the knock-on effect on all the peripheral services (I’ve listed them above – electricians, plumbers, DIY etc) is massive, and will help us to start to pull out of recession more quickly – which should be good for most people.

All we have to do now is to stop reading the papers….


Statistics – number of property transactions in millions in England and Wales – 1961 – 2002
(Source: Inland Revenue)

1961 0.90
1962 0.86
1963 0.94
1964 1.04
1965 0.96
1966 0.92
1967 0.98
1968 1.05
1969 1.01
1970 1.10
1971 1.20
1972 1.34
1973 1.24
1974 0.97
1975 1.17
1976 1.19
1977 1.24
1978 1.37
1979 1.31
1980 1.27
1981 1.35
1982 1.54
1983 1.67
1984 1.76
1985 1.74
1986 1.80
1987 1.94
1988 2.15
1989 1.58
1990 1.40
1991 1.31
1992 1.14
1993 1.20
1994 1.27
1995 1.14
1996 1.24
1997 1.44
1998 1.35
1999 1.47
2000 1.43
2001 1.46
2002 1.59

Labels: Conveyancing, moving property, Property, property buying, Property Market, Property Prices

posted by Sladey @ 11:16 0 Comments Links to this post

DIY conveyancing – is it worth it?

Doing the conveyancing yourself is something that comes up every so often – moreso when people are looking to save as much money as possible (like when you’re in a recession!). With more and more information available online these days it will probably cross peoples minds as to whether they could do it themselves.

So can you do it yourself?

The short answer is Yes – there’s nothing legally to stop you from doing your own conveyancing.

As usual though, the short answer really isn’t much help. There are plenty of real reasons why going DIY in the world of conveyancing is not a good idea. I’ve obviously got to come clean and make sure you know that our firm specialises in conveyancing so I could be accused of being biased. I’m trying to be as unbiased as I can here but you can judge for yourself by reading the article.

So having said you can do this yourself, why would you want to?

Saving Loads of money
Hmmm – not sure on that one. If you get a conveyancing quote from our site you can see how much money we’re making on this. When conveyancing happens, especially on a purchase, there are a number of things that are paid to different parties. People who talk in pubs about paying their solicitors thousands for their property conveyancing sometimes don’t realise that most of the money is passed on to other parties. Stamp duty can cost a fortune – you’ve also got the cost of searches, and land Registry fees and so on. I’ve just run off a quote for a purchase at 280K and our fee came to less than 7% of the total costs of purchase (Stamp duty’s the killer). If you do the property conveyancing yourself then you’ve still got to pay all this stuff out. The only bit you’d save is what the solicitor would get as their fee.

Making sure the job is done properly
There’s two sides to this – firstly giving your job the attention it deserves, and secondly technical knowledge on how to do property conveyancing.

On the first point you’d think that your solicitor should be doing the job properly every time. Well yes they should, but people sometimes have bad experiences with their solicitor and the next time around think that they could do a better job themselves. In terms of giving prompt attention this may be true, in that your case would be the only case you have on, and you will make sure you respond to everything promptly – things that your last solicitor might have let you down on. Bear in mind though that property conveyancing usually involves chains of transactions and it always has to move at the pace of the slowest party.

On the second point, you’ve really got to learn everything from scratch. So as an example if you are buying and searches are included in the HIP (Home Information Pack), will you know how to interpret the results of those searches? Will you know if they are out of date, and what to do if they are? If you need to order fresh searches do you know what form to use? If potential problems are revealed by the search then do you know what to do in relation to them? You might be able to find answers to these questions, but it will take you some time. Your solicitor should be dealing with these questions every day and know exactly what to do next in every case.

If you’re thinking of doing it yourself because of a poor experience with your previous solicitor then I would suggest a more practical answer is to choose a better one next time.

How important is this to you
Here I’m talking about the house purchase or sale itself. For most people buying or selling property is the largest financial transaction that they will ever be involved in. It’s therefore important to get it right, as the consequences of getting it wrong could be so serious (see below on this). Now many times the property conveyancing transaction will go through without a hitch – there are no problems in the title deeds, no problems with the searches, nothing revealed in the sellers property information forms and so on. It’s great when that happens. I don’t know what percentage of our jobs are just like that – I’d guess perhaps 30%. On the other 70% there is something to sort out. With something that important do you want to take a gamble over £500 or so?

I don’t care – I’m definitely going to do this
That’s fine – it’s a free country. The next question to ask then is whether or not a mortgage is involved.

Buying with a mortgage
If you’re using a mortgage to help buy a property then the mortgage company will insist that you have a solicitor acting on their behalf. If you’re using a solicitor anyway then they will normally act on behalf of the mortgage company as well. They might make an extra charge for this to you (often called the mortgage administration fee) as extra work is involved. If you’re doing it yourself the mortgage company will insist that a solicitor acts for them. That solicitor will make a charge for doing this work and will expect you to pay these legal fees. The chances are that these will be as much as (or more) than if you’d instructed a solicitor yourself. You also won’t have any choice over which solicitor is chosen.

Selling where there is currently a mortgage on the property
This also causes problems. On the day of completion the buyers solicitor will want to make sure that if they send you the money then it is going to be used to pay off the existing mortgage first – they are negligent if they don’t make sure this happens. When Solicitors are involved they rely on the undertaking (promise) by the other party to do this. They can rely on that promise because if a solicitor breaches his promise he (or she) can potentially be struck off, and any loss arising from that would be covered by their insurance company. You could instruct a solicitor to just act for you in taking the money and paying off the mortgage. Their fees for this will need to be big enough to justify them opening a file and taking on the risk – they’ll probably want to know a bit more about the situation before just saying ‘yes’ (we’re paranoid about money laundering now as well). Alternatively the buyers solicitor might agree to do this themselves, but again they may want to make a charge for this. Again this might be a higher charge to encourage you to use a solicitor yourself – by acting on your own you are involving them in extra work that they can’t charge for otherwise.

How hard can it be – it’s only a little flat!
Every property conveyancing transaction has the capacity to throw up problems that need to be dealt with – some relatively straightforward, some incredibly serious. However there are certain sorts of transactions which are by their nature complicated. Leasehold, Shared Ownership, Commonhold, Unregistered, and new build properties are all to be avoided like the plague! OK so perhaps that’s slightly overstating it, but the work involved on these sort of transactions can be 2 or 3 times the amount involved on a ‘normal’ freehold purchase. Most solicitors will make an extra charge for some or all of these situations because of the extra work involved.

As an example new build properties contain a lot of deeds because the builder has to set up and create rights for water, sewage, electricity, gas, roads and so on – these all involve long and complicated deeds which can be a nightmare to try and understand. We don’t make an extra charge for these because often when we do a good job on one we start getting referrals on other parts of the site. When you deal with other plots on the same development it takes far less time to go through everything because you’ve already had to do it for the first plot. This is a business decision that we can take in the hope of doing a few plots; if it’s your only transaction then it can be a nightmare.

Practice on a deed of gift – pitfalls!
I’ve seen it suggested that you can practice on a easier transaction to see how things go and heard a straightforward deed of gift mentioned as an example. Whilst the mechanics of a deed of gift can be quite straightforward, even with such a straightforward transaction you actually need to bear in mind the rules on bankruptcy. If the person who is receiving the property sells it in the next 5 years then there is the potential that it could snatched back off them by a trustee in bankruptcy – they have the potential to rewrite any transactions at an undervalue in the previous 5 years which includes deeds of gift (and if they decide that the transaction was done to put the asset out of the way of creditors then there is no limit to how far back they can go). A declaration of insolvency by the seller should help with this, but I just mention that it’s an example of something perceived as straightforward can actually be more complicated than you think.

When things go wrong - Negligence and Insurance
This is probably the biggest reason for not doing it yourself. If you make a mistake there is the potential for you to be sued OR be stuck with a property that is effectively unsaleable (or both!). All solicitors need to have professional indemnity insurance which means that if their negligence causes a loss to the other party then they can be sued and the insurance company would pay if they couldn’t.

Summary – is it worth doing then?
If you’ve read this far then you should know what conclusion I’ve come to – the risks are potentially huge, the time commitment can vary from 30 hours (average time for a lay person to do this) to unlimited (if problems occur), and the financial savings aren’t great. So although you can do it yourself I wouldn’t recommend it.

Labels: Conveyancing, DIY Conveyancing, Do your own conveyancing

posted by Sladey @ 12:53 0 Comments Links to this post

Bath Property Market

The property market in Bath seems to be reflecting that of most of the rest of the country with an overall slight rise over the whole of 2009, with falls in the early months being offset by rises in the later month.

There was a flurry of last minute activity in December as buyers sought to get in under the wire before stamp duty returned to properties in the 125,000 to 175000 price bracket, as well as taking final advantage of the 15% VAT rate before it returned to the ‘normal’ (!) 17.5% rate in January 2010.

This flurry in activity follows reports from local agents that towards the end of 2009 the commercial property market also started to show real signs of recovery. Property consultant King Sturge said the number of deals in the city, during November combined with an overall increase in the level of enquiries, suggest that confidence is increasing. Victoria Bayley of King Sturge said: "We have been encouraged by the general level of enquiries."

This positive view of the market is reflected in the return to the market of builders including Melksham-based Ashford Homes who will be building five two-bedroomed maisonettes, a two-bedroomed townhouse and eight two-bedroomed flats on the site of a derelict convenience store in the new year.

David Halewood, partner at selling agent Colston & Colston, said: " This is a clear indication that the development market is moving again.

"I believe this is one of the first and certainly one of the biggest sales of an apartment scheme in the region since the downturn.

"Bath has not suffered as badly as other areas and we hope this will give confidence to other developers who have withdrawn from the market.

"We are finding that a number of the volume housebuilders are now actively seeking land having re-secured their funding sources after a period of turmoil."

Bath Building Society
The city’s own Bath Building Society has always taken a cautious approach to mortgage lending and this has proved to be a wise choice in the difficult trading conditions in the property market over the last two years.

Looking forward however the society said it had "an optimistic but cautious" view of the future.

"Diversification into property letting has also been helpful as the rental market has held up relatively well in comparison with the house purchase market."

Property Prices

Across the UK, the Nationwide house price survey revealed that the average change in property prices in 2009 was a 3.4 per cent rise, with the average figure for the south west 3.8 per cent.

House prices rose in all regions except Northern Ireland during the fourth quarter of the year, with southern regions continuing to experience stronger growth than northern areas, and London seeing the biggest increases.

Wiltshire saw a three per cent rise in average prices, with a seven per cent rise in South Gloucestershire.

The Million Pound property

Following consistent price rises over the last 30 years, more than 200 houses worth more than £1 million have been sold in the Bath area in the last 14 years.

The BA postcode zone was the 31st busiest out of the country's 104 such regions when it came to property deals at the higher end of the market, according to a survey by HSBC.

HSBC’s analysis of Land Registry figures also revealed that the average house being sold in the postcode zone rose in value from £65,432 in 1995 to £206,889 this year - an increase of 216 per cent.

There were a total of 224 £1 million-plus sales over the 14 years.

In Bath, Savills associate director Luke Brady said the £1 million-plus market was looking healthy.

"That market is the strongest it has been since the height of the market which is put at autumn 2007," he said.

He said overseas and London investors had returned to the Bath property scene.

"It's an awful lot easier selling a £1 million-plus property in November 2009 than it was in November 2008."

Click if you want an instant Bath Conveyancing quote

Labels: Bath, Conveyancing, Property Market, Property Prices

posted by Sladey @ 14:46 0 Comments Links to this post

Who owns your boundaries?

Boundaries and who owns them can be surprisingly important to us brits – people want to know which boundary is their to maintain when they are buying the property, and if a fence blows down people can get very concerned about whose duty it is to repair it.

People often have the impression that “you always own the boundary on the left” or the right, or whatever. In actual fact when it comes to boundaries there is no ‘normal position – you could end up owning all or none of your boundaries or any combination in between.

So this blog aims to set out what the legal position is, and offer some helpful suggestions on what to do if you find yourself in disagreement with your neighbours over the boundary.

Look at the Title Deeds
If you want to find out who is meant to maintain a particular boundary then the best place to start is with the deeds. There may well be a clause in one of the deeds that states that you must maintain a particular boundary. When the deeds talk about this they usually identify the boundary you need to maintain by marking it (or them) with an inwards “T” on the plan in the deeds, like on this example below.



For most people their deeds will now be registered at the Land Registry which means you can obtain a copy of them quickly and cheaply online. (You can usually also get a copy from your mortgage company but they will charge for this – sometimes as much as £50! Also the solicitor who acted when you purchased may well have a copy on their file – you should be able to get this from them for free – but there may be a slight delay if they have to dig it out of their archive)

To get a copy of the title deeds go to the Land Registry. At the time of writing it will cost you £4 for a copy of the main parts of the deeds, and another £4 for a copy of the filed plan

What am I looking for?
It’s difficuult to explain what’s in your deeds as they do vary quite a bit – as I’m writing this I have don’t know if you live in a brand new property that was registered last year, or a 300-year old property that was registered 60 years ago. However there are certain rules as to how deeds are registered so I’ll deal with those.

The registered title deeds are contained in up to 3 parts:-
1. There are the main part of the deeds (which contains the property register – description of the property, the proprietorship register – who owns it, and the charges register – who’s got a mortgage on it). There may be something in the charges register about the boundaries – something along the lines of “the buyer covenants to maintain the boundaries marked with an inward “T” on the attached plan”.

2. Secondly you’ve got the ‘filed plan’ – there is a filed plan for every registered property and it shows the whole property. This plan is drawn up by the Land Registry when they first register the title deeds.

3. Thirdly you may or may not have ‘other documents’ – more often than not this is a copy of the transfer deed from when the property was first sold – for example the builder selling to the first buyer. This deed is usually attached because it contains quite a few conditions (builder like to put conditions on the properties they are selling), and it’s easier for the Land registry to attach a copy to the title deeds rather than copy out the long deed and decide which bits need to be included. The bad news is that your information on boundaries is often contained within these attached deeds. I say bad news because you also have to pay the land registry for a copy of this other document. At the time of writing this will usually cost another £4.

If you have got this extra deed then you need to look through it – but I’m afraid it may well be pretty confusing. There will usually be some sort of plan contained within it – this plan will have been drawn up by whoever drew up the deed itself – often the original builder’s solicitors. What you’re looking for is something like “the buyer covenants to maintain the boundaries marked with an inward “T” on the attached plan”. Looking at the attached plan should hopefully show you which boundaries you are meant to maintain.

What if there’s no mention of boundaries in my deeds?
To be absolutely certain you’d need to check your neighbours’ title deeds as well – it may not say anything in yours but your neighbours might have a clause saying they have to maintain certain boundaries that divide you and them.
If it says nothing in any of the title deeds then the standard position is that the boundary should be maintained jointly by both neighbours.

I’ve found the T marks! I have the answer!
Slow down! This is a good starting point, but we still have a way to go before being able to say you have the definite answer. It would still be wise to check your neighbours’ deeds as well – they might also have a T Mark – which again would imply you should maintain it jointly (or it may mean that the first person to have the condition imposed was right, and the second time it was a mistake – that’s too complex a position to discuss here, but see below where I talk about the real world).

The more likely problem is the actual location of a boundary. Say for example you want to replace a fence – but the boundary is stated to belong to your neighbour. It’s blown down and your neighbour has disappeared (maybe your neighbour just blew away in the storm). If you put your new fence just a centimetre on your own land then it’s your fence as it’s entirely on your own land. You’ve effectively given up about a centimetre of land but if you actually have a life then that shouldn’t really matter (should it?). The problem comes 10 years down the line when two new people are living either side of the fence. The people on the ‘neighbour’ side can see in their deeds it’s down to them to maintain it. The people on ‘your’ side know from you that the fence has been moved and it’s on their land. Here we’ve got the makings of a boundary dispute


Boundary Disputes – the important stuff
Boundary disputes are awful. They have the capacity to ruin your life and can drive some people to desperate measures. My advice is that they should be avoided at all costs. I know that sounds a bit daft coming from a lawyer but it really is the best advice you’ll get.

Why are they so bad? Well unless you live on a large country estate the chances are that you’ll come into regular contact with your neighbours – you will depend on each other for certain niceties – where you park your car, collecting balls off each others land, consideration for each other concerning noisy kids, loud music etc.

If you have a boundary dispute then all too often I’ve seen each of these areas become a battle ground, with each side using every available opportunity to wind up the other party. Your home should be a haven for you – somewhere you can relax. If someone is causing hassle that close to you then it can really get under your skin.

So my advice is that if you can feel a dispute brewing, then you need to STOP! Speak to the neighbours fairly and nicely – find out what their concerns are and tell them what your concerns are. If you can do this socially (over a drink or barbeque) then all the better. You don’t have to fall in love with them but if at all possible you really do want to get along with them.

Perhaps the best way to illustrate this is with an example

My fence has blown down – what to do?
This is a classic example of how and why people are concerned about boundaries. People have different attitudes to blown down fences. Some people can’t wait to put it back up again – it irritates them that their garden look so messy with the fence panel missing; other people view it as a real pain in the backside – another boring job they’ll have to do when they’d rather be out playing football/walking the dog.

You need to speak to your neighbour, but it’s this first approach that can make or break the relationship.

Some examples that should hopefully work:-
“I’m not certain whose boundary it actually is but I’d be happy to sort it out – is that alright with you. If I do sort it out I’ll need to come round onto your land – is that OK?”


If you’d rather be playing football “I’m not sure whose boundary it is but I’m planning on putting it back up – I just can’t do it until next week – is that alright?”

Hopefully either of these approaches will start a dialogue where your neighbour offers to help, contribute towards the cost, or is just grateful that someone is sorting the problem out.

Contrast that with this:-

“Your fence has blown down – I know it’s your responsibility and I’d like to know when you’re going to repair it”


“The fence has blown down – it’s joint responsibility and I want half of the cost from you now – it’s going to cost £250 and I want £125”

“The fence has blown down – it’s joint responsibility… I reckon you should be able to do it for £20 so here’s a tenner – let me know when you’ve done it.”

“The fence has blown down – it belongs to me and I shall be coming onto your land to enforce my right to maintain it”


“The fence has blown down – it’s my boundary and it’s sat on your land – I demand you give it back”

“The fence has blown down – I know it's your fault as I've seen you breathing out heavily in your back garden. I demand you repair it instantly. I've never liked you and your children smell.”

Each of these responses will usually get a defensive or even aggressive response from the neighbour – it may lead to them checking their own deeds, and could eventually lead to a needless dispute. The neighbour may actually have been pleased that you were going to sort out the fence (maybe he’d rather be walking his dog), but because you’ve got his back up he’s now going to try and take legal action to let him sort it himself!

Usually at this stage the phrase “I know my rights” is uttered by someone which is usually a sure sign that it’s all going pear-shaped.

It may seem stupid for a lawyer to be arguing against litigation, but to be honest these are not the sort of cases you generally want – both parties end up spending a lot in legal fees but generally won’t feel they’ve gained anything from the experience – they’ve not got value for money. It’s very rare that either one comes out of it as a happy client.

It’s also worth bearing in mind that neighbour disputes need to be declared when you come to sell your property, and failure to do so is potentially misrepresentation (for which you could be sued). There is a risk that revealing the neighbour dispute could at the very least hold up your conveyancing, and potentially could lose you a buyer. It’s far better to avoid the dispute in the first place.

So to summarise:-
1. You can check yourself at the Land Registry who is meant to maintain which boundary
2. Even though you may find this information it’s not necessarily 100% accurate – things can change over the years (boundaries being moved slightly), and in any event the plans that are used aren't generally fantastically accurate themselves – they are usually to small to measure off with any accuracy
3. Regardless of the legal position, you need to find a workable solution with your neighbours – speak to them nicely and get them involved.

If you’ve followed all the above advice and still have a problem then email our litigation department or leave a comment below

Labels: Boundary Disputes, Fences, Property

posted by Sladey @ 09:53 2 Comments Links to this post

The best first time buyers guide in the world .... ever! (part 3 of 3)

This is the 3rd and last part of the Best First Time Buyers Guide in the world..... ever! In this section we're going to look at what happens when you've finally found somewhere to buy, made your offer and they've accepted it.

Got it! – So you’ve agreed a deal:-

Surely you should be able to relax now – you’ve agreed a deal with the seller so that’s everything sorted then isn’t it? – Isn’t there just a bit of paperwork and everything’s done?

Wrong! - Sorry, but there’s a bit more to it than that. You may have agreed a deal in principal but it’s a fundamental point in English law that neither party is committed to this deal yet (neither party is committed until the point when contracts are exchanged – I’ll explain that later on). So that means that either you or the seller could still pull out without any reason and there’s no comeback on either of you.

Before you have a heart attack please rest assured that most deals will carry on to completion on the terms agreed initially, but I’m afraid you’ve got a while to go before you can relax.

When do I need a solicitor?
Right now! Ideally when you were sorting out the cost of moving property you will have got figures for the conveyancing (Click here for free conveyancing quote). At that stage you would probably have an idea of which solicitor you feel you can work with. Your solicitor’s role in all this is to safeguard your interests when buying the property – they are there to make sure you don’t buy a load of trouble (but if you insist that you’re happy buying a load of trouble then the solicitor will make sure that you do this with your eyes open)

If you’re going to use us then we would recommend instructing us to act at an early stage – even before you’ve decided on the property to buy. As we do no move, no fee, you’ll not lose out by doing this – even if you don’t go ahead. At the point at which the sale is agreed with the seller, the Estate Agent will normally ask for your solicitors details anyway so it’s handy to be able to give them to them.

If you haven’t already instructed your solicitor to act then do it now. They’ll need a fair bit of information about the property – address, price, sellers details, sellers solicitor details, how they can get hold of the HIP on the property, and so on. This will all help them to start the conveyancing

Conveyancing – what’s exactly is it?
Conveyancing is the legal process of passing ownership of a property from the seller to the purchaser. The seller has their own solicitor (it can actually be a solicitor, or a licensed conveyancer, or you can even do it yourself – if you’re mad as a box of frogs that is), and the purchaser has theirs.

As an overview, the seller’s solicitor gathers together a load of information about the property – in order to show that the sellers own it, and that the deeds to the property are all in order with no legal problems. They put this information (together with some other documents called searches) in the Home Information Pack for the property (Click here for our Home Information Pack Beginners Guide).

When a purchaser is found this information is supplied to the purchasers solicitors. They then look through this information and also do some other checking (using things called searches), to make sure that the property is OK for the purchaser to buy. If the purchaser is having a mortgage then the purchasers solicitor will normally act for them as well. Finally the two sets of solicitors sort out the handing over of the money for the property, and registering the purchasers solicitors as the new owner of the property.

I’ve written a guide to conveyancing and included that below

Mortgage – getting that sorted out
Although you’ve previously (hopefully) had an indication of the sort of amount you can borrow, you now have to make a formal application for a mortgage offer. A mortgage offer is a formal document from the mortgage company saying that they will lend you X pounds for the purchase of Y property for Z price. If you’ve used an independent Financial Adviser (or IFA) to advise you on the mortgage to go for then they will normally sort out getting the application submitted. At this stage you’ll normally have to pay the mortgage valuation fee, and possibly an arrangement fee for the mortgage (sometimes the arrangement fee is paid later). You may want to have something more than a basic valuation carried out – have a look at the “Survey – do I need one?” section below in relation to this

When you make your application to the mortgage company they will firstly follow up with your employer to confirm that you do actually earn what you said you did. If you’re self-employed they will normally want to see accounts and may require a report from your accountant (your IFA should be able to advise you on what’s required). They will also request a valuer to carry out the valuation on the property. Once all that information has come in they will do some internal processing and eventually send out a mortgage offer to you and a copy of it to your solicitor.

Survey – do I need one?
I mentioned a mortgage valuation fee above – if you’re buying a property with a mortgage then the mortgage company will insist that at the very least you have a valuation prepared (at your expense). Although you are paying for this report, it is being prepared for the mortgage company, not you (although you can see it). As such, they are basically just reporting on what they consider to be the value of the property, and any obvious defects on the property.

For most properties the valuation will be fine for you as well. However if you’re worried about the state of the property itself then you might want to pay more and go for a more in depth survey. Here you’ve got two options – a Home buyers report and inspection, and a full structural survey.

Home Buyers Report and Inspection:-
This will cost quite a bit more than the valuation but will usually run to 10 sides or more, and will usually make it sound like the property is falling down. They can be useful in giving you a plan of what works you ought to carry out on the property over the coming months and years, including which items are more important/serious. Normally you should be able to direct the surveyor to particular things you might be concerned about to make sure he/she spends enough time looking at them. These reports can be useful but are usually scary to look at – if you’re aware of that before you look at it then it’s not so bad.

Full Structural Survey
If the Home Buyers report and inspection makes the property sound like it’s falling down, the full structural survey can make it sound like it’s already happened! It’s basically like the Home Buyers report on steroids and will go into great detail. For most property purchases this would be overkill.


Guide to conveyancing
This part of the guide is taken from our website – if you want to view it on the website then click here for the conveyancing beginners guide. The version on the website has a jargon-buster built into it which explains in detail all the technical terms used (such as Title Deeds or Searches)

- Step 1 - We will firstly contact the seller's solicitors and ask for details of how we can get hold of the Home Information Pack (or HIP). This contains the local authority and water searches. If the property is in a mining area we'll have to request a mining search as well. Searches are simply a list of questions about the property that are sent to the local council, the water authority and the Coal Authority. When we get a copy of the searches from the HIP we'll have to make sure that the searches are OK for us to use (they have a shelf life of around 6 months and we'll need to make sure they haven't 'expired'. If they have run out then we'll need to request fresh searches). The HIP will also contain a copy of the title deeds. We'll also request the Sellers solicitor to let us have a contract, and questionnaires filled out by the seller.

- Step 2 - The only other thing we will need before we can proceed is a copy of your mortgage offer (if applicable). Once we have all of the relevant documents, we will ask you to sign the contract. If you are just buying then we will ask you to for a deposit as well (you will be told how much is needed), but if you are buying and selling then this will generally not be needed.

- Step 3 - We will go through all the above documents with you (either in the office or by preparing a plain english report for you to read at your leisure) and explain any problems there may be with the property. Once you are satisfied that there are no major problems, then you are ready to exchange contracts.

- Step 4 - Once the purchaser and the seller are ready, a Completion Date (the "moving date") is agreed. We then exchange contracts (this means swapping the contract signed by the seller for one signed by the purchasers - together with a deposit provided by the purchasers). Once contracts are exchanged the contract is binding and neither party can withdraw without incurring massive expense.

- Step 5 - On the Completion Date, we hand over to the seller's solicitor the remainder of the purchase money and in return receive the transfer document and the title deeds.

- Step 6 - We must then within twenty-eight days arrange for the payment of stamp duty (if appropriate) and, within two months of the completion date, apply to register the purchaser's ownership at the Land Registry.

A word about chains
The above 6 steps set out the procedure for one transaction – one seller(s) selling one property to one purchaser(s). What normally happens however is that the sellers are themselves buying on from someone who’s also buying on – and so on until you get someone who’s selling but not buying another property (e.g. they are emigrating, or have already bought their other property or any other reason). This group of transactions is known as a chain.

If there is a chain of transactions, steps 1 to 6 above need to happen for every single person within that chain. The complication comes from the fact that the exchange of contracts bit (which is the first really important step – it’s when everything becomes binding) has to take place for every party in the chain on the same day at the same time – logistically this can be a bit of a nightmare. The other problem is that every party in the chain will have to agree upon the completion (moving) date. Normally this all takes place on the same day – so that in a long chain of 5 or more parties they will all be moving property on the same day.

The hassle of being involved in a chain comes from the fact that each party in the chain will have their own set of priorities and attitudes – one may be in a hurry, one may now be bothered, and one may be unable to move before a certain date (but hasn’t told anyone that yet!). It’s not unusual to see clients to sign contracts and then phone up the chain to see how close we are to exchange, only to find that the person at the top or bottom of the chain has only just started their transaction. Everyone in the chain then has to wait until they’ve caught up before it can go ahead.

As purchasers it’s worth your while trying to find out how long your chain is at the outset, and what stage each party in the chain is at. The Estate Agent should be able to do this at the start – it’s in their interest to know this information as well. It’s good to find this information out as early as possible so you don’t get any nasty surprises later on. There’s nothing wrong if you phone up each of the parties in the chain – if you can all stay in touch throughout the transaction it can help to speed up the process of agreeing dates for moving etc – but don’t agree anything without confirming it with your solicitors first.

At some stage near to completion it’s a good idea to meet the sellers and get them to show you how to work the boiler, thermostats, where the main water stopcock is, main gas tap, main electrical supply switch, and so on. It’s not the end of the world if you can’t do this but it’s nice to know it in advance

After it’s yours – moving in
At the end of the conveyancing process you’ll finally get the keys to your new property. This is a very exciting time (and can also be a bit scary!).

If you weren’t able to go through stuff with the sellers before completion then it’s a good idea to find out straight away where the main shut-off is for the water, gas, and electric – should something go wrong it’s no fun looking for this stuff in the dark with a water or gas leak!

You might want to suggest to the sellers that they redirect their post to their new property – they can do this by telling the local post office – it costs a small amount (can’t remember how much - £30 or so) and lasts for a year I think. It’s worth you mentioning it to them so you’re not continually getting their mail and having to forward it on yourself. This service is useful to them and useful to you.

On the day you move in it’s a good idea to take readings from all the meters and let the suppliers know. The sellers should have done this but it’s easy to forget. You then need to contact them and let them know that you’re taking over the supply – they’ll have their own procedure for switching this to you. You might also want to switch utility suppliers at this stage – it can often save you money. www.moneysavingexpert.co.uk has a good section on this.

You now need to let everyone know your new address. Don’t forget to let the council know as well – you’ll be liable for council tax from the date you move in.

Before unpacking your stuff – put the kettle on and have a nice cup of tea and a biscuit – you’ve earned it. You probably won’t have to do all this again for a few years – the average person moves every 7 years.

I hope this guide has been useful to you – if you’ve got any questions about it by all means pop them onto the form at the bottom of the page and I’ll answer them as soon as I can

Cheers

Mark

Labels: Conveyancing, First Time Buyers, Mortgages

posted by Sladey @ 16:50 0 Comments Links to this post

The best first time buyers guide in the world .... ever! (part 2 of 3)

Part 2 of the guide moves beyond the research and into the reality of actually seeing properties and speaking to people. Once you’ve narrowed down your list of properties then you’ll no doubt want to look round some of them.

Looking around properties

Looking round properties is new territory for most people and can seem a bit weird and awkward at first. Sometimes you’ll just be accompanied by the Estate Agent and the property itself will be empty, but more often than not it will be the seller who shows you round their own home.

Tips for viewing properties
It’s important to bear a few things in mind before you go on these visits.

- You are going to walk around a stranger’s home. Whilst you do need to consider whether or not you want to buy it, be polite. If you do eventually strike a deal with these people your lives will be intertwined with theirs for a very stressful period in each of your lives. You don’t want to irritate them at the start. Also it may be they later have to choose between you and someone else offering the same amount. If you’re the one who laughed at their bathroom suite and pulled a face at the state of the kitchen then it doesn’t take a rocket scientist to work out that they’ll probably prefer the other people.

- Don’t go alone. Although sometimes this is unavoidable, wherever possible take someone else with you. There is the personal safety aspect of course, but I’m thinking more about the ability to discuss the property with someone else when you leave – it’s always useful to discuss your gut feeling together straight afterwards. Who to take with you? If two of you are buying then ideally you should both go and see the property together. If you’re buying alone then a friend or family member would be useful.

- Come back with someone who knows what they are talking about. If you’re interested in a property it’s a good idea to come back with a builder friend, parent, or DIY nut to give you a second opinion. We saw a property we liked and took a builder friend round. He pointed out the roof was rubbish, and the walls were damp – things we had no idea about before speaking to him. A surveyor may spot these things for you later on but it’s a good idea to be able to weed out the bad properties yourself at an early stage without having to pay surveyors

- Photographs – I’ve found it very useful to take my own photos when walking round a property – when thinking back later it can be hard to remember the layout (or even which property it was!) and your own photos can help with this – a camera phone is fine for this. However you must make sure you ask the owners first if they are happy with this and explain why you want to do it– if they aren’t then don’t push it – you’re a guest in their property

- Speak to the estate agent. How long has the property been on the market? Have many people viewed it or not? Has the price been reduced? Have they had any offers yet? In all this be very aware of who you’re speaking to – if you’re in the estate agents office talking to the negotiator he wants to get someone to buy the property. That’s not to say they’ll be lying but just take it into account who they are.

- Speak to the sellers – it’s a good time to ask questions that might help you to get more of a feel for the place. Also from a social viewpoint things can sometimes get a bit stilted and awkward, and having a few questions up your sleeve can help to get them talking about the property. Things I’d normally like to know include:-
o How long have you lived here?
o What are the neighbours like?
o What’s the area like?
o Why are you moving?
o Have you found somewhere else to buy yet?
On asking these questions you are really just trying to find any potential problems – such as that they are moving because the area has gone to the dogs, their neighbours are a nightmare. Again when hearing their answers you’ve got to make a judgement call on it – it all helps you to get an idea of their position.
o Are carpets and curtains included?
Carpets and curtains are one of those things that can cost a lot and (usually) have to be custom-made for the property itself. Whether or not you want to pay anything extra for them is up to you – even if you don’t like them it can be nice to have some sort of covering in the property giving you time to wait until you can afford to replace them with ones that you like. Sellers often over-value what they think they are worth – going on what they paid for them as a base value. If carpets and curtains are not included then it may be worth asking if they’d be prepared to throw them in. It’s one more thing that can be brought into negotiations later on if you’re interested in the property.

(altogether now..) “Fallink in luff again, vot am I to do”
Sometimes you come away from a property and you absolutely love it – this really depends on the sort of person you are – some people fall in love with property and to others it’s just a place to live. I fall into the first category and can easily get carried away. And it’s exactly that – getting ‘carried away’ - that you want to avoid.

When you come away from the property you really need to analyse why you love the property (or if ‘love’ is a bit strong, why you really liked it). When we bought our first property we did this all wrong. Looking back on it we bought the property because the sellers made us a cup of coffee and sat down and talked to us about the property. Seriously that’s why we chose the property. We viewed 2 properties that evening, both 2 up 2 down mid terraces, and in the next streets to each other. The first one was empty and the agent showed us round. It smelled a bit damp (all empty properties will smell a bit damp because they usually haven’t been heated properly), but it had a good sized dining kitchen, and it had central heating. The second one had stone cladding (which we hate – sorry if you’ve got it – it’s just personal opinion) but it was warm (because they’d had the fire on – it didn’t even have central heating) and they made us a cup of coffee. It was also marginally more expensive.
If we’d sat down and analysed what we thought of the two properties in terms of what they had to offer I’ve no doubt we would have bought the first one. But we didn’t and basically bought the second one because of a cup of coffee.

So please learn from our mistake and if you’ve fallen in love with a property, try and analyse why this is so, and make sure you’re buying the best property for you, and not because someone made you a cup of coffee. Viewing on a sunny day can show a property in a great light, and conversely viewing on a damp foggy evening can make many properties seem dreary (especially if they are vacant and lit by bare light bulbs)

How to negotiate on the price
OK so you’ve found a property in your price bracket, in the area you want to buy and you want to make an offer – what do you do next? Well it’s up to you really. There’s nothing to stop you discussing price when you’re in the property with the seller. That really depends on your personality and theirs. If you’re not comfortable going the whole hog and negotiating then you can ask them if they are open to offers on the price. From their response you can get an idea of how low you can go.
Most people do their offers and negotiations through the Estate Agent. There’s no rule that says you have to do this but it’s more comfortable to most people.

In deciding what offer to make you should take into account all the information you’ve gathered so far :-
- what properties are going for in the area (and by the way in relation to this you can actually find out what they actually sold for – not just asking prices – you can try www.houseprices.co.uk www.hometrack.co.uk – both give you the information very quickly – some other sites require registration and jumping through hoops before they tell you. When loking at these make sure you’re comparing like for like though – the property may be in the next street but it could also be twice the size of the one you’re interested in)

- Any work needed on the property – for this you’re going to need a ballpark figure for what you think needs doing, and take that into account in your offer. So you can say, for example “ We know the asking price is £245K but we reckon the damp proof course has failed, a couple of rooms need replastering needs sorting and the roof needs some repairs. Because of all those things we want to offer £235K”. The danger of this approach (linking your requested discount in to specific works) is that the sellers say they can get all the work required done for £4K so if they sort those things out will you increase your offer to £241K. There’s nothing that says you have to link a lower offer in to actual works – you can just offer a lower price.

- The information you already know about the seller – if you know it’s been on the market for a while and that they are selling to move their child to another school and they’ve found the one they want to move into and it’s June and they want to be in the new property before the start of the new school year in September – then they may be desperate to sell – so they may take a lower offer. On the other hand if you know they’ve already had two offers slightly below the asking price which they’ve rejected then you know it’s probably not worth you doing the same.

- What’s included – carpets, curtains etc. If you want them to be included then you’ll need to make that clear when you make the offer – otherwise you can beat the seller down and reach agreement only to find them later coming back and saying they want another 2K for carpets and curtains
- What you can afford. Bear in mind you may well be entering into negotiations here so if the property is at the limit of what you can afford it’s probably wise from your own point of view to be offering less – you can always then increase your offer and still be within your budget. If you start at your maximum then you’ve nowhere to go. If you do this (make the lower offer first) then also psychologically the seller has moved you up a bit. There are no real rules on this – some people come up with a take it or leave it offer and some keep coming back for more (or less!).

There are a couple of points in your favour though:-
1. You’re a first time buyer. You are like gold dust in the property market. Most other people looking round will also have a property to sell and therefore they can’t actually do anything about buying until they have sold their own property. You on the other hand can move as soon as they can.
2. The Estate Agent must communicate any offer you make to the seller – even if it’s a stupid one. So whatever you offer the Estate Agent needs to let them know about it – if the estate agent says ‘I don’t think they’ll go for that’ then that’s fine but they’ve still got to put the offer to the seller to get their instructions

Don’t be afraid of making a stupidly low offer – that’s the advantage of making your offer through the estate agent – it takes the emotion out of it. Even if the seller is insulted by the offer, the estate agent will normally explain to them that even though it’s low it’s still an offer, it’s from a first time buyer, and you may be prepared to increase.

Conversely if you make a stupidly low offer don’t be surprised when they say no. You can always then increase your offer. In the example above of a property where they’ve already rejected 2 offers just below the asking price you’ll probably be wasting your time in doing the same (Never say never though – the other two offers may have been from people who weren’t yet ready to move – you’re a first time buyer).

What happens here really depends on so many things – the attitude of the seller, the marketplace, the particular type of property, the area, and so on. Until you ask the question though, you don’t know the answer – on a property we bought in the early 1990’s the previous buyers had pulled out because of a defective roof (which the seller was having to get sorted out). The sellers had already moved down south because of their job and so were keen to move. We actually didn’t know any of this but made a low offer – which was accepted straight away. If we hadn’t made the offer we wouldn’t have got the property.

At some stage in all this you should eventually get the call saying that the sellers have accepted your offer – you’ve got a deal! So we move onto the next stage. That will be covered in the final part of this blog - part 3, coming next week.

To jump forward to part 3 of the guide, just click here

Labels: Conveyancing, First Time Buyers, Making an offer, Viewing Properties

posted by Sladey @ 10:55 0 Comments Links to this post

The best first time buyers guide in the world... ever! (Part 1 of 3)

If you’re thinking of buyer a house or flat for the first time the whole thing can be a bit scary. There are one or two guides out there but it seems to me that they are all aimed at the job of the person who wrote them – whether that’s an Estate Agent or Conveyancer. When you’re actually buying a house all of these things are important but they are only part of the whole process. So I thought I’d do a guide that tries to pull everything through into one place. Hopefully this will make it a bit more useful. If you have questions arising out of the guide my all means just ask them at the bottom and I’ll respond when I get a chance.

Here I’m only talking about properties in England, Wales or Northern Ireland - Scotland has it’s own legal system which involves a very different process of buying property. Also note that during this guide I may talk about buying a house, but exactly the same applies if you’re buying a flat (actually there are a few differences on the legal side but I think that’s something for another blog on another day).

This is a big guide! So I’ve decided it’s probably best to split the guide into 3 parts – I’ll be doing part 2 next week and part 3 (the final instalment) the week after.

Part 1 deals with your research – before you start looking round properties
Part 2 deals with the process of looking round properties – what to look out for and so on
Part 3 covers what happens when you strike a deal - the process from then until you move into your new home


Research – before you actually start
You can’t just jump in there and start the process off – you need to do a bit of research first, starting with…

1. What can you afford?
Good question – and it’s probably the most important one to answer before you start. Unless you’ve got a shedload of cash hidden away then the likelihood is that you’ll need to get a mortgage. The bad news is that even with a mortgage you’ll probably still need to have a small shedload of cash available.

What exactly is a mortgage?
It’s a loan, normally over a longer period of time than most loans – often over 25 or even 30 years. The other difference to ‘normal’ loans is that a mortgage will be fixed onto the title deeds of your property (they actually just write details of the mortgage onto the title deeds). That means whenever the property is sold then the mortgage must be paid off. It also means that if you stopped paying the mortgage then they could repossess the property and sell it to clear off the loan.

Can I get a mortgage?
In deciding whether to give you a mortgage the bank or building society will basically look at 2 things
1. Can you afford to pay the mortgage?
2. The value of the property

Deciding whether you can pay the mortgage involves looking at your income – they normally use a multiplier on your salary here – so for example they may lend you up to 5 times your annual salary as a mortgage (this multiplier in turn is affected by your credit rating). If there are two of you then they usually have a slightly different formula (e.g. 4 times the joint salary). So if you’re earning £20K a year they’d lend you a maximum of £100K as a mortgage. Don’t take these figures as gospel – they are just examples.

The value of the property is important to the mortgage company because it affects the amount of ‘security’ in the property – they need to be sure that if it ever came down to selling the property to get their money back, that the property would be worth enough to cover the debt. They link this in to the percentage that they are lending.

So for example if they lent £50,000 on a property worth £100,000 then if they eventually had to repossess they wouldn’t have a problem – even if they took a price reduction for a quick sale and sold if to £90,000 then they would get all their money back.

If however they lent the full 100K, and later had to repossess then there is more of a risk of them being out of pocket – they will have legal costs in repossessing the property and also will want to get back the interest they should have been paid. So from the lender’s point of view a 100% mortgage is risky

It’s a bit difficult to advise properly here because I’m writing this in August 2009. The mortgage market has been on a massive roller coaster for the last year, and it’s hard to see how things are going to be going forward.

What’s changed then?
Well if you go back to mid 2008 and earlier – for the previous 30 years or so it was not too hard to get a 100% mortgage. Although 100% mortgages are more risky for the lender, prices have risen so consistently over the last 30 years that if there was a problem, then by the time the property was being repossessed it had gone up in value and there was plenty of money for the mortgage company to be paid from.

During the credit crunch/recession/bank collapse mortgage lenders came under a lot of pressure not to take any risks. Because of this and a whole host of reasons that I don’t fully understand (but about which everyone seems to have an opinion) it’s not as easy to get a mortgage now as it used to be. At the time of writing 100% mortgages have only just started to come back onto the market. Anything I write here any what deals you can and can’t get will be out of date, so the best thing is to get yourself a broker to let you know what you can actually borrow.

An excellent source of information on mortgages generally is www.moneysavingexpert.com – they have quite a big section on mortgages. When I remortgaged a while ago I followed a recommendation on their site for a broker that looks at the whole of the market – I used London & Country (www.lcplc.co.uk) – I phoned someone up and they gave me examples of what I could borrow. I get no incentive for recommending these sites – I just think they’re good.

Personally I’ve found a lot of the online stuff so confusing (they usually have so many conditions and exceptions) that it was easier to speak to a human being and let them tell you what deals they can get you.

One last point on this - Don’t believe the hype. Don’t listen to what you hear in the press - their role is not to tell you whether or not you can get a mortgage, their role is to sell newspapers – nothing more, nothing less. So don’t be put off by press speculation about mortgage availability – speak to someone who knows and find you what you can actually borrow.

So from all that, you should have an idea of what sort of money you can borrow on a mortgage and how much money you will have to chip in towards the purchase price yourself. It's also a good idea to work out what other costs you’ll have to fork out when you buy a property (e.g. conveyancing, stamp duty etc - if you can't wait then click here for an instant conveyancing quote) but I’ll come back to that later – this talk of mortgages is practically sending me to sleep – lets get onto the property itself!

2. Finding the property of your dreams
The good news over the last 10 years is that with the help of the internet it’s got a lot easier to search for properties – you can search within a given area, London borough, price range, whatever. Perhaps the best known of the property portals is www.rightmove.co.uk but there are a fair number of others out there too such as www.primelocation.com and www.home.co.uk

Using these sites helps you check out a whole area quite quickly. However it’s still worth taking a drive around areas you’re interested in – you sometimes get a feel (good or bad) for an area that doesn’t come across on the websites – there could be a scary-looking pub at the bottom of the street - or a wonderful park. It’s also worth driving or walking through at different times of the day (and night).

On the question of where you should buy - although it’s corny it’s still true – the 3 most important factors are Location, Location, and Location (yep – that’s where they got the name for the tv show). Buying in a good location will certainly make it easier when you come to sell. However if a property’s in an excellent location then of course you’ll pay more for it, and it’s sod’s law that the one you really like is just too expensive. You may therefore have to compromise to get a property that contains all you need and in an area you can afford.

Wow, there’s so much out there!
I know whenever I’ve started to look for a property, I’ve found that I get very excited by that massive number of properties available – once you start looking it seems there are loads and loads – you must be able to find something in this lot!

Aaarghhhh! There’s nothing out there!
However when you start looking through you start to realise that this one’s too small, that one’s next to a pub. This one’s got a pokey kitchen, that one smelled funny, and so on. It’s not long before you do an about-face and decide that there’s nothing out there after all. What you’re doing here is narrowing things down – which is very important unless you just want to be viewing properties every day for the next year.

Things you might want to take into account to help narrow down the choice includes
- How many bedrooms
- Does it have central heating? If so – is it fairly recently installed?
- Does it have double glazing?
- What’s the kitchen like?
- What’s the bathroom like?
- How big is the garden?
- Is there a garage/off street parking?

Now it may be that because of your price range and where you want to buy some of these things are non-starters. But things like the number of bedrooms is pretty crucial and should help you to weed out a lot of properties quite quickly.

What sort of property should you look for?
Most first time buyers will be buying a smaller, cheaper property. If you’re in London this will almost certainly be a flat, (most of London is divided into flats) and if you’re in other parts of the country flats will still be something to consider because they are generally cheaper than properties. Most first time buyers will either be buying a new or newish flat, maisonette, or town property, or an older mid-terrace property or flat.

New properties
A number of builders have gone into the market of selling starter homes – building developments of flats, town-houses and maisonettes. These can often look very attractive as you can normally move in with no work to do.

Pro’s and cons of a newer property:-
- extras are often included in the price such as dishwasher, washing machines. Whilst these are useful they can sometimes be used as justification for a slightly higher price. The only reason I mention this is that if you have to sell the property again quite quickly then it might not fetch what you thought – when you’re coming to sell yourself then things like the washing machines etc will generally be ignored
- Don’t forget you’re buying from someone whose job it is to sell you the property (as opposed to buying from a private seller – an ‘amateur’. That’s not necessarily a problem – just bear it in mind)
- You will normally get a 10 year guarantee on the property from the date they are built
- The rooms in newer properties can be smaller than on older properties
- Insulation in newer properties can be a lot better than on older properties
- You usually have no work to do – you can just move in
- The property has no ‘character’
- People generally love them or hate them

Older properties
As a starter home you’re probably usually looking at mid terraced properties – from around 100 years ago. Usually solidly built but at that time builders paid little attention paid to damp proofing so this has often been a problem over the years. However an injection damp proof course usually sorts sorts this out and most mid terraces should have one.

Pros and cons of an older property:-
- You’re more likely to have to do stuff to an older property (again though the previous owner may have sorted all this out)
- They can have character
- Insulation etc will not normally be very good (but can be remedied quite cheaply)
- Double glazing – they won’t necessarily have this
- Again people love them or hate them

Finally in terms of the value of properties on the same street, a good piece of advice is to try and buy the worst property on the street – it will be pulled up in value by the better properties; conversely a spanking property on a shabby street will never achieve it’s potential value.

What about a fixer-upper?
Usually when you’re looking round you’ll find something that would normally be out of your price range because it ‘requires modernisation’ – a fixer-upper. Now you don’t need me to tell you whether it’s within your abilities to do DIY work on a property – personally it’s something I really enjoy, but if you’re taking on something like this:-
- Go in with your eyes open – get estimates for all the work required
- This WILL cause hassle with your mortgage – especially if you’re having a high percentage mortgage – they will often make a retention (hold back part of the mortgage money) until key works have been done – you’ll then have to come to an arrangement with the seller on getting some of the work done between exchange of contracts and completion OR borrow extra money to tide you over until the work has been done
- If you’re planning on doing the work yourself you need to make sure you can comply with any statutory requirements (planning regulations, building regulations etc), but also make sure you’ll have the time – fixing up a property yourself is rewarding but very tiring. It’s no use having a lovely property and a broken marriage!
- If you have the patience, skill and time, it can mean that you get into a nicer property than you thought you could

3. Is it the right time to buy?
It’s stick my neck out time! I would say that YES! this is about as good a time as you’re going to get to buy a property. Prices are on the rise once again. Interest rates are at an all time low. Although mortgage deals are nowhere near as good as they used to be when compared to the bank of England base rate, in terms of the actual rate you’d be paying they’re still pretty good.

As an example a couple of years ago the bank of England base rate was 5.75% At that time you could get mortgages with special introductory periods of below the base rate – Cheltenham & Gloucester were doing a 2-year tracker deal at 4.74%

Currently the bank of England base rate is 0.5% One of the best trackers you can get (today) is from RBS/NatWest – at 2.89% which is 2.39% over base.

Now if you focus on comparison with the base rate it looks awful – you used to get a deal below base and now the best you can get is way over base. However what actually matters to you is the amount you’re paying out. 2 years ago you’d have been paying out 4.74% - now you’d be paying out 2.89% - that's about £150 a month less!

So even if the banks aren’t offering great deals when compared to the base rate, the actual rates you can get now are actually pretty damn good!

In terms of property prices we’ve seen these consistently increase each month for the last few months. As conveyancers we’ve noticed this in terms of the volumes of people moving property. The low point for us was the 6 months leading up to January 2009 – from February the number of people moving has gradually risen.

It’s impossible to say how quickly prices will rise from here on in, but I do believe they are only going one way now for the foreseeable future and that is upwards. Just my opinion.

4. Cost of buying a property (legal fees stamp duty etc)
Part of working out what property you can afford is working out the total costs of buying. Here are some of the things you should take into account:-
- Mortgage administration fee – many mortgage companies charge this – it’s basically a fee for saying yes. They charge it because they can. It can be anywhere from a few hundred pounds to a few thousand but should be made clear to you at the outset of arranging your mortgage
- Mortgage valuation fee – This is the mortgage company getting a valuation on the property – you have to pay for this – it’s normally a few hundred pounds. See note below on Surveys
- Conveyancing fees – this is where we come in – Click here for an instant conveyancing quote. This quote will also include things we need to pay to other people on your behalf (such as Stamp Duty, Land Registry Fees, and additional searches)
- Moving costs – are you going to use a removal company, hire a van, or borrow your dad’s car?

5. HIPs and Energy Performance Certificates
Every property being sold now should have a Home Information Pack (usually called a HIP) prepared on it and available for you to look at. It’s worth checking this out now as any HIP prepared after the 6th April 2009 will include a questionnaire filled out by the sellers – useful to read through this before you look round the property as it can give you a bit of background information. The HIP will also include an energy performance certificate (known as an EPC) – this basically produces an energy rating for the property.

At the time I’m writing this (August 2009) this information is largely irrelevant – other than that if the property is inefficient it will cost more to heat than one that is more efficient. However, in view of the importance of all green issues politically, I think it can only be a matter of time before we start to see tax implications for inefficient properties – so for example if your property is very inefficient you may pay more in local government tax. It’s not relevant yet, but it may become a factor in the future. Having said that, even if your property is inefficient you will be able to take steps to help it (such as more insulation, energy-efficient light bulbs and so on).

If you want a quote for providing you with a HIP, then click here for a free HIP quote.

That’s it for now. Next time we’ll deal with the process of looking round properties, and making an offer to buy one.

Cheers

Mark

To skip on to part 2 of the guide just click here

Labels: Beginners Guides, Conveyancing, First Time Buyers, Mortgages

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