Is now a good time to buy a property? : Opinion

There were two significant influences on the housing market in 2016: stamp duty and the EU referendum result. Unfortunately, both have led to many contradictory stories regarding property prices and the 2017 outlook.

Following the decision to leave the EU there has been a lot of uncertainty in the UK housing market. Despite this uncertainty; house prices in the U.K have continued to grow. (Zoopla price data has revealed that the average property in the UK is currently worth £299,764.)

Paul and I have recently put one of our properties up for sale, and as a result I personally believe now is a good time to buy a property as there are plenty BMV (Below Market Value) deals available. It took me about 8 hours to sell my flat in 2015, I was inundated with offers in a matter of hours after carrying out an open house. Selling this property feels a lot different; offers and general interest have been much slower than they have been in the past.

I've listed some observations/personal opinions below:

• Recently, I have noticed that some properties have been on Rightmove and Zoopla for over 6 months. (A potential sign that the seller is probably getting desperate and will take a cheeky offer)

• I’ve also noticed a trend of property prices being reduced over the past two/three months, I get the impression that prospective buyers are being cautious and waiting to see what happens to the property market before buying ... Use this uncertainty to your advantage.

• I think this is a great opportunity to take advantage of seller’s uncertainty. If a property has been on the market for a long time I'd suggest putting in a BMV bid. Just because a property says £350,000 does not mean you can't offer £300,000. (Trust me it has worked for me)

• Nobody wants to buy a property and see a property crash three months later and likewise nobody wants to sell a property to then see that prices have risen three months later. This is the risk you take with property, however as a buyer this just highlights why it is important to buy BMV, that way if the market does crash at least you (hopefully) wouldn't have lost too much equity if any.

• The Office for National Statistics (ONS) have said that the typical property cost 7.6 times average annual earnings of employees in England and Wales. Considering that lenders do not tend to lend more than 5 times a salary; property prices are getting out of reach for many, maybe now is a good time to buy before prices become even more unaffordable. 

• JLL has forecast that house price growth will be "subdued" and largely flat until 2019, with a slowdown in the number of new homes built. If this is the case then it can be argued that now is a good time to buy seeing as price growth is set to be minimal. On the other hand it can be argued that there’s no rush to get on the ladder as prices aren’t forecast to rise. Personally I’d aim to get on the ladder whilst prices are fairly stable.

• Many property experts argue that falling prices at the top end of the market and a slowdown among the rest has been caused primarily by changes to the stamp duty system, rather than Brexit. I believe this to be true. Figures by the Council of Mortgage Lenders (CML) showed would-be landlords borrowed £800m to buy new homes in January, down from £1.4bn the year before, and £900m in December. It seems there’s currently less landlords to compete with which can only be a good thing.

• I believe the slowdown in the property market we are now seeing is a price correction after the un-savvy investors rushed to buy before the stamp duty changes were implemented, this spike in activity led to many people purchasing property over the odds.

• Recent reports have claimed that 10 would-be buyers chase each home for sale in England and Wales. Whilst this may be true for some areas, I do not believe it is true for every area. It’s worth identifying areas with low demand. London is not the be all and end all!

• Interest rates are at a record low level. The average new mortgage loan in January 2017 came with an interest rate of just 2.05%, down from 2.49% a year ago and compared to 5.34% a decade ago. Now’s a great opportunity to find a mortgage with a low interest rate.  

In conclusion, you don't need to wait for a property crash for you to get on the property ladder. If you can get a property significantly BMV then it can be the equivalent to buying a property during a crash. 

Always remember, property is a long term investment. The recent Housing White Paper published by the Government states that the UK needs to build 250,000 homes a year to meet demand (last year it was 140,000) as long as the UK continues to struggle to meet this target; it is likely that prices will continue to rise as supply fails to meet demand.

Is now a good time to buy a property? I can't answer yes or no but I don't personally think there's a bad time to buy a BMV property. 

Property Cohorts' Top 10 Credit Rating Tips

Your credit history provides mortgage lenders with an indication of how financially responsible and reliable you; and helps lenders determine whether they will lend to you and at what interest rate.

Unfortunately; the importance of having good credit isn't highlighted from a young age which ultimately leaves many prospective buyers unable to get on the property ladder.

Here are Property Cohorts top 10 credit tips:

1. Check your credit

It may seem very simple but you'll be surprised how many people we speak to that have never checked their credit rating. It's the FIRST step to knowing what you need to improve and it's one of the first things that a lender will check when offering you a mortgage.

2. Use Experian or Clear Score

You only have to enter a few personal details and both will give you your credit score along with some tips on how you can improve your score. Clear Score is free and Experian offer a free 30 day trial.

PCTIP -  See what you need to improve and cancel after the 30-day trial. You can always log back in at a later date if you want to check again. (It's very easy to fall into the trap of signing up to free trials then continuously forgetting to cancel the service when the direct debits start coming out.)

3. Plan in advance

If you're planning to buy a property, it's worth starting to manage your credit file at least a year in advance.Getting your credit up to scratch does not happen overnight!

4. Get yourself a credit card

If you've never had credit before, it's difficult for a lender to assess you. Consider taking out a credit card and making a couple of purchases on it each month and then repaying the balance in full at the end with a direct debit to build a good credit history. This will show that you can responsibly manage credit.

5. Never miss repayments

Always pay your direct debits and credit card bills on time, if possible pay off your credit card in full. (I am personally really against paying interest on credit cards, so I always pay off my full balance when it’s due as opposed to the minimum payment amount)

PCTIP - If you’ve made late payments in the past, set up a direct debit so you don’t miss them again.

6. Keep your credit card balances low

One major factor in your credit score is your credit utilisation. This is essentially how much you currently owe divided by your credit limit. E.g. If you have spent £8000 on a credit card with a limit of £10,000 then your credit utilisation is 80%. The smaller this percentage is, the better it is for your credit rating.To boost your score, pay down your balances, and keep your credit utilisation low.

7. Get on the electoral role

Your presence on the electoral roll provides valuable proof of your address to lenders. Electoral roll information is used to confirm your identity, which is then passed onto lenders when you apply for credit, to prevent fraud. Thus, if you're not on the roll when making an application it will appear that you don't exist, or you're starting afresh with no credit record; both will have a negative impact.Many people assume they're automatically registered, or don't bother doing it.

8. Be careful with your applications

Do not apply for lots of credit cards or loans at one time. Each time you apply for a financial product, a search will be recorded on your credit record (the so-called credit footprint). If you apply for lots of credit or are declined credit many times in a short period of time this will impact your credit rating. 

9. You can get a mortgage if you have bad credit

There are specialists’ lenders who will lend to those with bad credit. For example, a company called the Mortgage Lender offer mortgages to the self-employed, older borrowers and those with poor credit.

PCTIP - Be aware that you may find yourself paying a higher interest rate due to poor credit.

10. Act on the above tips!

“To learn and not to do is really not to learn. To know and not to do is really not to know.”

― Stephen R. Covey, The 7 Habits of Highly Effective People

Property Cohorts' Top 10 Tips For Saving for A Property Deposit

As it’s a new year we thought it would be a good idea to give you some brief savings tips to those of you saving for a property deposit for 2017/18

1) Set yourself a savings target
Start by working out the true cost of buying the property you desire.
Additional costs to bear in mind when saving for a deposit property include:

• Stamp duty
• Conveyance fees
• Mortgage product fees
• Mortgage adviser (if used)
• Furnishing
• Renovations
• Removal hire

2) Calculate mortgage costs
After you have set your target, work out how the monthly repayment costs of a mortgage for your desired property (bear in mind possible increases in price) and try and save the equivalent on a monthly basis.

3) Set up a standing order
Set up a standing order to leave your account the same day as you get paid. Treat saving like a bill by setting up a regular payment and you'll soon get used to not having the extra cash in your bank account each month. 

4) Use a budget spreadsheet
Make a yearly budget and review it on a monthly basis. Set out all income and expenditure and cut out any unnecessary expenditure. We have put together a Property Cohort Budget Template which you can download and use for free.

5) Don’t be scared to adjust.
Compare the monthly target from your savings spreadsheet to your current rate of savings. If you're not saving enough you can either:
-  Increase how much you save by cutting monthly expenses.
-  Adjust your saving goals, either by reducing the value of the property you want to buy less or by pushing back the target date for buying the property.

6) Save before you spend
This one is self-explanatory!

7) Fixed Rate Bonds
If you are early on in your saving journey Fixed rate bonds can be a great option. It pays a guaranteed amount of interest for a set length of time, however it is likely that you won’t be allowed to access your savings during the fixed term, so only invest money you can afford to lock away.

8) Help To Buy ISA
If you’re a first-time buyer, you could get up to £3,000 from the Government by saving with a Help to Buy ISA. (More information can be found on page 8 of our property guide. (www.propertycohort.co.uk)

9) Stop renting
Most people renting have very little spare money to save for a deposit. Think about whether you could survive without your own space for a short time.
Consider the following:
-       Find somewhere cheaper to rent perhaps out of London
-       Moving back home with parents
-       Downsizing

10) Do not dip into your savings
Only dip into your savings in case of an emergency.
PS.  Dining at fancy restaurants, Holidays to Miami, designer clothes and new trainers are not emergencies!!

Bonus Tip: Don’t just say saving for a house is your priority, show it is!

Brexit: How the UK’s decision to leave the EU may impact property prices.

Potential good news for first time buyers

1. The decision to leave the EU will most likely be felt in the central London housing market. House price growth is currently weak and we expect a modest price fall from current prices.

2. Due to the uncertainty of the impact on interest rates, inflation, house prices & buyer confidence there is likely to be a lack of investment and activity in the residential market, therefore buyer demand will fall resulting in a drop in property prices.

3. Foreign investors may be reluctant to invest in London property due to the uncertainty regarding the economic and political future of the UK, meaning once again that demand is likely to decrease and prices will drop.

4. Demand within the rental market will fall due to a reduced influx of EU citizens, meaning investors may choose to sell their properties or even lower rents.

Potential bad news for first time buyers

1. There may be more foreign investment as overseas buyers will see greater value in the London market due to the significant fall in the pound.

2. Plans to build more homes may have to be put on hold until the impact on interest rates, inflation, house prices & buyer confidence is known.

3. House builders will see their share prices slump, which may result in a reduction in the amount of homes being built.

Overall we believe any fall in prices will be limited. Due to the current uncertainty regarding prices, demand will reduce, however once there is more clarity regarding prices we believe property prices will settle down and property investment will be an attractive option once again.

All of the views above are assumptions based on our personal opinions, research and economic principles, there is no guarantee that any of the points mentioned above will take place.

For further information on getting on the property ladder you can download our first time buyer property guide from: www.propertycohort.co.uk

Follow us on @PropertyCohort for updates and knowledge on the UK property market.

Is getting on the property ladder impossible or is it in your mind?

I was listening to LBC yesterday and the topic of conversation was Barclays introduction of a "100% mortgage"; the presenter posed the question,” Is inherited wealth pretty much the only way to get onto the property ladder"

As a young person that was able to get on the property ladder without the help of family wealth or a loan from my parents I thought it was a good opportunity for me to comment.

The question made me think if it was really impossible for young people get onto the property ladder ....

I've listed some of my views below:

1. I agree that getting onto the property ladder in London is extremely difficult. I believe that less emphasis on living in London is needed; there are plenty locations just outside London that are significantly cheaper. (I do find it interesting that many people seem to think they have some sort of God given right to live in their capital city)

2. Young people need to take responsibility for saving from a young age. If most 24/25 year olds started saving whilst they were 17/18 they would probably be in a position now to put a deposit down on a property. The earlier you start saving the better. (I started saving from when I had my first part time retail job.) Sacrifice is key

3. Access to a big enough mortgage is one of the biggest issues when looking for a property. The unfortunate truth is that you need to find a better paid job if you want access to better mortgages. This is much easier said than done but not impossible. Aim high and apply for jobs that pay you what you deserve to be paid

4. Less complaining more educating... Educate yourself about how property and mortgages work; don't let negative media headlines decide whether you can get onto the ladder or not

5. Live with your parents for as long as possible. Moving out to rent will limit the amount you can save

6. Partner up with a friend or relative and buy a place together. Two salaries are better than one

7. Help to Buy 1 has changed slightly. To reflect the current property prices in London, the Government have increased the upper limit for the equity loan it gives new homebuyers within Greater London from 20% to 40%

I'm not saying anything I’ve listed above is easy; however, I realised a long time ago that we cannot depend on the government or anybody else to truly help us out; I genuinely believe that getting on the property ladder is possible with the right mentality, knowledge and sacrifice.

If you're one of those people that don't have your parent’s wealth behind them (like me) we can either complain like everyone else or knuckle down and build our own dreams.

Guess which one I chose?

PS. Leicester would never have won the premier league if they had the same negative attitude that many people seem to have towards owning a property.

Follow: @PropertyCohort to be kept up to date with the latest property news and the release of our first time buyers guide.

My Property Journey: From A Flat To A House

My last blog post regarding my first property has been retweeted a fair bit recently so I thought I would follow it up with an update on my property journey.

I recently sold my flat that I referred to in my previous post. A friend of mine that lived in the same block of flats as me told me that she had seen flats in the same block selling for about £36,000 more than I bought mine.

Ever the opportunist; I decided to put my flat up for sale, within one day of putting it on the market I had several offers on the table. Within one week I had accepted an offer, and by the time I knew it I had sold my flat for a handsome profit and was back looking for my next investment.

Throughout the selling process; there were a couple of moments where myself, friends and family questioned whether selling the flat was the right thing to do. However, in the end I went back to the age old mantra, “no risk no reward”.

As a result of taking that risk I turned my initial £6750 deposit into £36,000.

Owning a property at such a young age came with it’s trials and tribulations but I have learnt many lessons and I have some brilliant memories of that flat and I can genuinely say all the ups and downs have moved me a step in the right direction to becoming a man.

Following the sale of my flat, I have now embarked on my next property investment. I have just joint ventured with a good friend of mine and purchased a two bedroom detached house.

The plan is to develop the house into two two bedroom flats.

Similar to my first flat, this house has been purchased below market value (BMV) 

Purchase Price: £245,000

Deposit: £24,500 (10%)

Cost of proposed work: approx £100,000

Forecasted selling price: £260,000 per flat. (Total £520,000)

I’m looking forward to embarking on this new journey with the hope that this will be one step toward my aim of rivalling organisations such as Berkeley Group and Barratt Developments.

A couple tips I picked up along the way:

1. Move fast
2. Don’t let people discourage you from taking risks
3. Sometime it’s better to invest in an asset than contribute to an ISA
4. Never get too comfortable with being in one place
5. You don’t always need to know how you will achieve your goals, you just have to have the belief that you will achieve them 

I’m 24 now and I can’t wait to see what God has in store for me when I reach 25.

Follow @PropertyCohort on Twitter to be kept up to date with UK Property News and Investment Advice.

Help To Buy Helped

I thought it was about time I followed up my 1st blog post with a 2nd one.

Thanks to God, I managed to buy my 1st property in July so I've decided to provide a brief breakdown on what the costs were and some key lessons learnt along the way. Hopefully it will make young people realise that it is in fact feasible to get on the property ladder at a young age. (I did it at 22)

Property Price

Price property advertised - £140,000

Initially I offered £130,000 which got rejected 

In the end I negotiated for £135,000

Mortgage

I would advise buyers to speak to a mortgage consultant before you begin house hunting. It will give you a good idea on what you can afford and will help you understand what your monthly costs are likely to be.

Luckily I had an excellent mortgage adviser. I never had to speak with Halifax once as the mortgage adviser sorted everything for me and kept me updated with any information I needed to provide.

(My mortgage repayments are £700 a month) – (I was saving £700 prior to the mortgage)

Conveyancing (My conveyancer seemed to be incompetent at times)

Responsibilities include;

·       Communication with the sellers’ solicitor

·       Legal Work (I.e. Preparing contracts & searches)

·       Registering new owners with the Land registry

·       Exchange of Contracts

·       All monies due I.e. mortgage loan, stamp duty & search fees are paid to your conveyancer who then pay all monies to the seller/HMRC

Basic Costs

Cost	Price
My deposit was 5%	£6750
Stamp Duty 1%	£1350*
Conveyancing	£2352
Mortgage adviser	£395
Halifax product fee	£999
Halifax Valuation fee	£315
TOTAL**	£12,161

*Halifax were doing a deal at the time where they paid for stamp duty (I had to pay it first then they refunded me the money)

**This total doesn't include the cost of furnishing/refurbishing the property

How long did it take?

I think I was one of the lucky people as it only took me about two months to find a property that met my needs/wants.

The whole process (from my initial offer to completion took about 3 months.)

Key Tips

1. It is important to have all paperwork to hand as lenders will want to see

·       3 months pay slips

·       Passport

·       3 months Bank statements

·       Proof of deposit

2. Don't forget banks will only lend you approximately 4- 4.5 times your salary 

3. Consider adding someone's name to the mortgage if you don't earn enough to get a suitable mortgage (however, please note that the banks have your best interest at heart so do not add someone's name to your mortgage if you know you can't afford the payments alone)

4. There are several monthly costs involved with owning a property that need to be considered e.g. mortgage, council tax, utility bills, service charge (if it’s a flat) My total costs for the month (including travel, food & phone & gym bill comes up to approximately £1300.(I think a good aim is to have at least £500 left after all costs)

5. 3 months prior to applying for a mortgage be frugal with your spending. Lender will want to see your spending habits and new rules coming in October mean your bank statements will be under even more scrutiny 

6. A good conveyancer / solicitor with excellent communication is key. Ask for recommendations. Don't just go for the cheapest deal!

http://www.theguardian.com/money/2013/feb/15/choosing-conveyancer-2013

7. LOCATION ... Consider present & future transport links. I.e. Crossrail, local amenities etc.

Conclusion

In total I spent approximately £14,000. In my opinion that is affordable and achievable by many young people. (I have friends whose cars costs more than my deposit)

Remember you don't need to fully know how you're going to achieve something in order for it to happen.

Work hard & Stay Positive