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Is Ending the Stamp Duty Holiday Good for Property Market?

Introducing a stamp duty holiday at the height of the pandemic was commendable but it has over-stayed its welcome, says Tom Bill, Head of UK Residential research at Knight Frank.

With the benefit of hindsight, the stamp duty holiday was unnecessary. The Chancellor was right to introduce it last July but the notion it is needed to support the country’s economic recovery has not rung true for many months – which is a welcome development.

Would activity in the housing market have been as strong over the last year without the holiday? It is doubtful but we would still be talking about a remarkable year compared to initial expectations.

The general election of December 2019 was the catalyst for the release of frustrated demand that had built during five years of Brexit-induced political uncertainty. While Covid initially put this recovery on hold, it was subsequently amplified as people reassessed their homes during successive lockdowns. Then along came the stamp duty holiday.

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Its merits as a way of stimulating wider economic activity are clear but the decision to extend the holiday by six months beyond the original March 2021 deadline is more open to debate.

However, if we remember back to the Budget, which took place on 3 March, it was a time of some uncertainty. Schools had not yet re-opened, less than a third of the UK population had received their first vaccination and a stamp duty holiday had been a welcome boost for those that most needed it.

The introduction of a taper was arguably more significant than the extension. It showed the government had listened to concerns about pressures on the conveyancing system and meant it avoided newspaper headlines about buyers missing the deadline through no fault of their own.

However, in hindsight, a three-month extension and a three-month taper was possibly excessive.

UK house price growth was still only in single digits at this stage but it had been above 5% for seven months and the holiday was already distorting sales patterns.

March was a record month for transactions in the UK and over the year more money was spent in the housing market than since before the global financial crisis. Predictably, sales volumes dropped sharply in April in a similar way to 2016 after the implementation of a 3% stamp duty surcharge for second home-owners.

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It has made the true state of the market difficult to assess. It is the equivalent of looking in the mirror at the funfair – you can make out the overall shape but little of the meaningful detail.

However, the stamp duty holiday hasn’t just squeezed transactions into artificially short periods of time, it has also put people off entering the market.

A tax deadline there is no guarantee of meeting, together with stories of sealed bids, over-worked conveyancing solicitors and a shortage of removals vans will have deterred some – exacerbating already-low levels of supply and putting upwards pressure on prices.

Supply did not pick up after Christmas this year in the way it normally does, due to uncertainty over new variants and the fact many families were home-schooling. Ambiguity over missing the original March stamp duty holiday deadline was just another reason not to list your property.

Market appraisals are a leading indicator of new supply and normally build during the first quarter of the year. In the ten years between 2009 and 2019, the number of appraisals only fell once between February and March. That was in 2016, ahead of the introduction of a 3% stamp duty surcharge in April.

This hesitation on the part of sellers highlights how people crave stability. That is true irrespective of any wider debate about the flaws of a transaction-based tax.

In a similar way to rising interest rates, there will be a financial hit from ending the holiday but the wider point is that it signals a return to normality.

Indeed, the second half of this year should see healthy levels of activity in the UK housing market. There is frustrated demand in the system, new supply is starting to pick up and the labour market is stronger than most economists predicted six months ago.

Almost a year after its introduction, there is no sense the Chancellor was wrong to introduce the stamp duty holiday but there is a strong feeling that it has, thankfully, over-stayed its welcome.

BY PETE CARVILL

Source: Property Wire

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Pandemic boom drives UK house prices up by most since 2004

UK house prices jumped by the most in more than 16 years this month, soaring by 13.4% from June 2020, and demand is expected to stay strong while a coronavirus emergency tax break remains in place, mortgage lender Nationwide said.

In monthly terms, house prices were 0.7% higher than in May as buyers rushed to take advantage of the tax incentive and sought bigger homes after their experiences of lockdown.

“While the strength is partly due to base effects, with June last year unusually weak due to the first lockdown, the market continues to show significant momentum,” Nationwide’s chief economist Robert Gardner said on Tuesday.

Economists polled by Reuters had expected prices to rise by 13.7% in annual terms and by 0.7% from May.

The tax break, introduced last year as part of British finance minister Rishi Sunak’s emergency support for the economy, had originally been due to expire at the end of March.

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But the first 500,000 pounds ($693,250) of any property purchase in England or Northern Ireland are now due to remain exempt until the end of June, and a 250,000 pound tax-free allowance will run until the end of September.

“Underlying demand is likely to remain solid in the near term as the economy unlocks,” Gardner said.

“Consumer confidence has rebounded while borrowing costs remain low. This, combined with a lack of supply on the market, suggests further upward pressure on prices. But as we look toward the end of the year, the outlook is harder to foresee.”

THE BOE IS WATCHING

As well as the tax break, Sunak’s huge jobs support programme is also due to be phased out by the end of September, raising fears of an increase in unemployment.

Nationwide said it was still possible that the shift in demand for larger properties seen during the pandemic would continue to help the market once the tax break is gone.

The lender published a survey last month showing that almost seven in 10 homeowners who were considering a move would be doing it even without the extension of the tax incentive.

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Nationwide said house prices were close to a record high relative to incomes, making it harder for first-time buyers to raise a deposit. But mortgage payments were not high as a proportion of pay, due mostly to low mortgage rates.

The Bank of England has said is monitoring the housing market as it weighs up the chances of a broader pick-up in inflation as the economy reopens. read more

Last week, the central bank left its key interest rate at an all-time low or 0.1% and made no change to its plan to increase its government bond purchases to 895 billion pounds.

Despite the signs of recovery in Britain’s economy, most BoE rate-setters said they wanted to “lean strongly against downside risks to the outlook”.

Nationwide said house prices in London rose at the slowest rate of any region in England during the second quarter of 2021 but they still increased by 7.3%. Northern Ireland was the strongest performing region, with prices up 14% year-on-year.

Writing by William Schomberg

Source: UK Reuters

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Average house price in Scotland has increased by 92 per cent

The average house price in Scotland has increased by 92 per cent since the start of house price data from Registers of Scotland (RoS) in 2003-04.

The latest statistics from Registers of Scotland’s Property Market Report 2020-21 show that the average price of a residential property in Scotland in 2020-21 was £194,100, up by 6.7 per cent on 2019-20 and up by 25 per cent when compared with the pre-financial crash average price of £154,813 in 2007-08.

The volume of residential property sales decreased by 6.5 per cent from 102,053 sales 2019-20 to 95,428 sales in 2020-21 and, although volumes were 36 per cent higher than the low of 70,334 sales in 2011-12, the 2020-21 figure was the lowest volume when compared with the previous three financial years (2017-18, 2018-19 and 2019-20).

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The introduction of Covid-19 measures resulted in a substantial drop in sales being submitted to Registers of Scotland for registration in the first quarter of 2020-21, followed by some higher-than-average increases in the latter quarters of the year as lockdown measures were relaxed.

The sales volume remains 36 per cent below the pre-financial crisis level peak of 149,944 sales in 2006-07.

The value of residential property sales in the financial year 2020-21 was £18.5 billion, a decrease of 0.2 per cent when compared with 2019-20.

This marked the first year there was a decrease when compared with the previous year since 2011-12. The residential sales market value increased every year from 2012-13 to 2019-20, but remains 19 per cent below the pre-financial crisis level peak in 2007-08 (£22.9bn).

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The report also looks at the non-residential market. The total market value of non-residential sales in 2020-21 was £2.8bn. Commercial sales accounted for 71 per cent of this total, with the remainder from sales of forestry, agriculture and land.

The non-residential market was also impacted by Covid-19 measures. In particular, there was an adverse impact on the market value of the commercial sales market, with market values in 2020-21 being lower in every month than the market values in 2019-20, except for March 2020-21.

Accountable officer Janet Egdell said: “The combined market value of the residential and non-residential markets in 2020-21 was £21.3bn (Residential £18.5bn and non-residential £2.8bn), 4.9 per cent lower than the previous year 2019-20. The combined market value remains 30 per cent lower than the peak of the market in 2007-08 (£30.4bn), but 24 per cent higher than 2003-04 (17.2bn).”

Source: Scottish Legal

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Homebuyers Can Still Benefit from The Stamp Duty Holiday

Homebuyers can still make the most of the stamp duty holiday despite the first phase ending in six days but will have to act quickly, a leading property lawyer has warned.

The first phase of the stamp duty holiday extension – where buyers have not had to pay the tax on the first £500,000 of a property’s value – will end on June 30.

However, some homebuyers are rushing to try to complete before the deadline the second phase – where the first £250,000 is tax free – which will carry on until September 30.

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Simon Nosworthy, head of residential conveyancing at London law firm Osbornes Law, said: “There is a perception that the stamp duty holiday will be over on June 30, but that isn’t the case. There are still reasonable savings to be made until the end of September, but buyers will need to act quickly to make sure they complete before the deadline. I would say that if a buyer starts the process in the next 5 weeks or so they should be confident of completing before the September deadline.”

Simon predicts that the market will remain buoyant despite the lower tax-free amount. He added: “I would expect the lower and the higher ends of the market to remain busy in the next few weeks,” he says. “For those at the lower end the saving on £250,000 is still a substantial amount, while for those at the top end the saving of a few thousand pounds is a drop in the ocean. As a result, I would expect large transactions to be unaffected by the end of the stamp duty holiday’s first phase.”

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

The main issue for home buyers is that most of the housing stock has already been sold during the last few months.

Simon added: “There is a supply and demand issue as most of the housing stock has been going really quickly. We had one case where the buyer was going for a fairly average 1940s semi-detached but the house went to sealed bids with 12 bidders and each potential buyer had to give reasons why they wanted the property and evidence of their finances. The market has been exceptionally busy, so finding a property to purchase is an issue. However, if you do then it’s not too late to make the most of the stamp duty holiday.”

BY PETE CARVILL

Source: Property Wire

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UK house prices rose at their fastest rate since 2004

UK house prices rose at their fastest rate since 2004 in June as buyers competed fiercely in a market rebounding from Covid-19 lockdowns, Nationwide said.

The average price of a property in the UK rose 13.4% in June from a year earlier to a record £242,709, Britain’s biggest building society said. In the quarter to the end of June prices rose 10.3%, up from 6.3% in the first quarter of 2021.

June’s rate of growth was boosted by the shutdown of the property market a year earlier during the first Covid-19 lockdown but prices also rose sharply because of a buying frenzy.

Households are rethinking their property needs in light of the crisis, heading for the suburbs and coastal towns for more space and cheaper prices. The market has also been charged up by Chancellor Rishi Sunak’s stamp duty holiday, whose full effect ends on 30 June with some benefits lasting until October.

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David Westgate, chief executive of property consultants Andrews Property, said: “It’s starting to feel like prices are freewheeling with buyers snapping up properties, particularly those with generous outside space, as soon as they come on to the market. The end of the full stamp duty holiday tomorrow may see activity cool a little but not significantly, as there are plenty of buyers who still have time and the motivation to complete before the tapered relief ends on 30 September.”

Prices rose in all parts of the UK, led by Northern Ireland where houses sold for 14% more than a year earlier. Wales was the next strongest region. In Scotland, where the stamp duty holiday ended in March, prices rose at an annual rate of 7.1% – the weakest in the UK.

In 2004, when prices were rising at a similar rate, the housing market was recovering from the Iraq war and heading for the financial crisis that caused Northern Rock to implode.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Nationwide’s chief economist, Robert Gardner, said demand was likely to remain solid for a while with prices likely to rise further as the economy rebounds amid rising consumer confidence and low interest rates. But he said the outlook was hard to predict with the government set to reduce support for households and businesses but with many people still looking for more space.

“Underlying demand is likely to soften around the turn of the year if unemployment rises as most analysts expect, as government support schemes wind down,” Gardner said. “But even this is far from assured. Even if the labour market does weaken, there is also scope for shifts in housing preferences as a result of the pandemic to continue to support activity for some time yet.”

By Sean Farrell

Source: ShareCast News

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BoE: Mortgage borrowing rises to £6.6bn in May

Net mortgage borrowing climbed in May to £6.6 billion from £3 billion in April, the latest Bank of England (BoE) data has revealed.

Despite this significant leap, the BoE said borrowing still remained below the record figure of £11.4 billion achieved in March of this year.

Mortgage approvals for house purchases inched up slightly in May to 87,500 from 86,900 in April. This was also lower than the peak of 103,200 in November 2020.

Today’s data also revealed approvals for remortgage – which only captured remortgaging with a different lender – increased slightly to 34,800 in May, from 33,400 in April. This remains low compared to the months running up to February 2020, the BoE said.

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The ‘effective’ rate – the actual interest rate paid – on newly drawn mortgages went up by two basis points to 1.90% in May.

The BoE said this was marginally above the rate in January 2020 (1.85%), and compared to a series low of 1.72% in August 2020. The rate on the outstanding stock of mortgages remained unchanged at a series low of 2.07%.

Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “It’s not surprising that the mortgage market is continuing to perform well, with homebuyers keen to move before the first change to the Stamp Duty holiday at the end of June.

“There’s also a lot of competition amongst lenders, with mortgage rates nearing record lows in some cases – this is of course great news for borrowers”

He added: “We expect figures for June to be even higher, and for activity to return to more normal levels after the threshold for Stamp Duty has been lowered to £250,000.”

Meanwhile, Karen Noye said these figures demonstrated how buyers were ‘soaking up the last of the favourable stamp duty conditions before tapering began’.

“Once the holiday has fully come to an end in October we may enter into a market where buyers choose to wait and see and the number of people looking to buy significantly reduces,” she said.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

But she warned the end of furlough and other schemes could change the landscape going forward.

“For some time, the housing market has been propped up by government schemes and initiatives like the stamp duty holiday and then 95% mortgage scheme, which has encouraged people to borrow at times where they may have chosen to sit on their hands.

“Once the government’s helping hand has been withdrawn, we may see people opt for a wait and see approach and mortgage borrowing could plummet.

“Similarly, part of the reason the market has been so hot as of recent is due to people wanting to move to properties with gardens or home offices in light of the restrictions on movement and working.

“As things get back to normal this frenzy may start to fade and people feel happier to stay put as cities open back up and outside space is lower on the agenda.”

By Kate Saines

Source: Mortgage Finance Gazette

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What the End of the Stamp Duty Holiday Means for the Property Market

June 30th marks the end of the Stamp Duty Holiday at the current £500,000 threshold, with it set to stagger back to the normal rates before the final deadline at the end of September. But what will the end of the Stamp Duty Holiday mean for the property market, and when is the best time to buy a property in 2021?

Below Ross Counsell, chartered surveyor and director at property buyers, GoodMove, shares his thoughts on the Stamp Day Holiday, how it’s contributed to higher property prices and predictions for the year ahead.

When does the Stamp Duty Holiday end?

After much anticipation, the Stamp Duty Holiday in its current format will come to an end on 30th June. Following this, there will be a staggered reduction from the original threshold of £500,00 to £250,00 until the 30th of September. On the 1st October, it will return to the previous level of £125,0001.

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The Stamp Duty Holiday has been a catalyst to the massive boom in the property market and increase of house prices, with more people rushing to buy a property while the holiday restrictions are in place.

Has the Stamp Duty Holiday contributed to higher property prices this past year?

With such high demand for property fuelled by the Stamp Duty Holiday deadline, comes higher average property prices. According to ONS’s latest statistics, UK average house prices have increased by 8.9 per cent over the year to May 2021 and now stand at a mammoth £265,000 2 – the highest seen in the UK in many years.

The Stamp Duty Holiday, as well as demand for more spacious properties fuelled by lockdown, has helped the property market succeed through what has been an immensely difficult year in other industries.

How many people have used the Stamp Duty deadline?

Coupled with the recent First Homes scheme, the Stamp Duty Holiday has given many first-time buyers the possibility of getting a foot on the property ladder. We carried out a poll which found that on average, nearly two in five (39 per cent) Brits have taken advantage of the Stamp Duty Holiday when buying their home in the past year. 3 For that lucky percentage, they are expected to have made significant savings of up to £15,000.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

What does the Stamp Duty Holiday extension mean for the property market in 2021?

As we have seen from HPI statistics across the year, the housing market has become extremely saturated, following people rushing to buy properties to meet the deadline. Mortgage approvals and new buyer enquiries for properties have risen by 44 per cent⁴ with the rise in demand reflecting the inflation of house prices.

In a sense, the government’s exclusion of contract exchange with Stamp Duty may be of benefit in the long run. We can expect to see a decline in demand from October once the deadline officially ends, and expect this to be a better time to buy a property this year before rushing to try and meet the deadline.

Should buyers wait to purchase property until the end of the new deadline?

For anyone looking to purchase a property, the advice is simple – hang fire. If the statistics are reflective of anything over the past year, the Stamp Duty is of benefit to only one side of the coin – the sellers. If buyers can wait it out until the end of the deadline, they should expect to save a significant amount of money on a property.

A home is the heart of you and your family, and with only three months to go until the end of the Stamp Duty deadline, it’s worth buyers taking their time to find their dream property. Such a significant stage of life should not be rushed, as this can cause dissatisfaction in the long term.

So, in the meantime, Counsell suggests doing your research, and really getting to grips with the property market. Before looking to buy, research the area and any streets you’d be interested in living on, so you don’t need to spend time later. Look at listings every day and know exactly what it is you are looking for in a property so when the Stamp Duty ends, you can jump on it straight away. Further, make sure you have a mortgage-in-principle ready to go which will speed up the process once you decide to put in an offer.

Buying a home amidst the competitiveness of the property market can be disheartening for buyers, but it’s important to stay positive and be patient!

BY PETE CARVILL

Source: Property Wire

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Buy-to-let landlords rate energy efficiency of properties as top priority

The green credentials of prospective properties have been rated among the top consideration for portfolio buy-to-let landlords, a survey by Hodge has found.

The bank discovered environmental friendliness and energy efficiency were up there with rental yield and opportunity for capital growth as the top investment priorities when it quizzed landlords, investors and brokers.

Indeed, it was important for 82% of respondents demonstrating how influential green credentials were for landlords today.

Andy Button, head of investment finance at Hodge, said: “The buy-to-let market is particularly buoyant right now with demand continuing to grow throughout the pandemic, and it’s interesting to see how the priorities for landlords are changing when looking to add to their portfolio.

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“While rental yield and potential for capital growth are, of course, top priorities our research reflects a change in mood of the market, where sustainability and green credentials are becoming ever more important.”

“According to a recent Savills report, 26% of people considered the environment the most important issue facing the country and, according to Opinium research, 78% of the public believe they have a personal responsibility to deal with the climate crisis – many of these people will be renters.

“Therefore, to stay competitive landlords can’t ignore tenant preference; they, along with developers and estate agents, are having to provide choice in sustainable housing options.”

Button added: “It’s clear that sustainability will feature more and more in new build development design, and more stringent compliance to EPC, and an investment strategy more closely aligned to sustainability could actually improve cash flows in the longer term, as tenants might be prepared to pay higher rents, in exchange for lower utility costs.

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“Our research suggests that investors are very much alive to the longer term benefits that having sustainability credentials in a portfolio can afford.”

Hodge’s PBTL product has been developed for buy to let landlords with four or more properties, who want to stay organised with one loan to cover them all. It offers mortgages of up to £5 million for between four and 15 properties and will also loan to those buying multi-unit blocks.

The lender also offers a Specialised Residential Investment loan, up to £10 million, for larger investors with over 15 properties/units, and includes specialist property types, like multi-unit blocks and Houses of Multiple Occupancy.

Source: Mortgage Finance Gazette

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The UK Residential Property Market’s First £100 Billion Summer?

The forecast, which takes the current trajectory of the housing market and applies it to the rest of summer months, estimates that there will be 420,000 sales in the UK across June, July and August at a total spend of a record £107bn. This will make this summer the highest grossing quarter in UK residential property market history, and is in stark contrast to previous years. Throughout the past half decade, total spend from buyers during the summer months has averaged £69bn-per-year, a figure that comprised of a little over 300,000 sales.

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Speaking on the forecast, Nick Whitten, head of UK living research, said: “It is well-documented that the Summer is the best time to sell a home, with sentiment receiving a natural positive boost from the warmer weather. However, our data suggests that this post-lockdown summer will set a new record. The reasons behind the buying bonanza – with the most exchanges and highest total sales value on record – are threefold. The stamp duty extension to the end of June means that during the quarter eager buyers and sellers will look to force a deal through. This, combined with the increased financial stability many buyers are feeling as we unlock from Coronavirus, and the well-documented supply constraints in the UK market, means we can expect to see demand swallowing up available stock, pushing up prices but not to the extent that it will affect transactions.”

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The Government has set a clear priority to help more people onto the housing ladder through its Own Your Home campaign. The campaign puts the spotlight on six Government-backed support schemes to allow people to access some form of home ownership.

The forecasted spike in activity this Summer will be particularly evident in the north of England, which is predicted to see circa 100,000 sales – around 25 per cent of the total UK.

Stephen Hogg, head of north west and residential UK regions, said: “We have seen the market steadily improve and are fully expecting a further acceleration throughout the Summer. “North-shoring” is a trend we have seen pre-COVID but even more during and post-COVID with purchasers seeing better value for money in the north. Regional towns and cities continue to be voted the best places to live in the UK with less congestion and some of the best schooling. The regional cities are bouncing back quicker, HS2 offers further medium to long term growth prospects coupled with the Government’s levelling up agenda. Flex working is becoming the norm and therefore the need to live close to the Capital is diminishing. The historical brain drain of regional centres seeking high skilled high paid jobs in London is a thing of the past. With the likes of Manchester, Birmingham, Edinburgh offering opportunities equal to or not available in London they are now attracting a vast talent pool who in turn are boosting the local housing markets.”

BY PETE CARVILL

Source: Property Wire

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Home buyers blow moving budgets by £14,000

New research reveals that a third (31 per cent) of home buyers surveyed have rushed into buying a property to take advantage of the tax break, rising to 56 per cent of owners aged 25-34 and to 49 per cent aged 16-24. The research from Tymit – the UK’s first instalment-only credit card – showed that despite these savings, homeowners are facing an unexpected welcome home gift: debt.

Two-thirds of home owners surveyed have forgotten to budget for purchases such as furniture and decorators – with the average overspending by £14,861 – despite having more time to plan their big move. With many Brits rushing up the property ladder this year, Tymit predicts they’ll blow their moving budgets even further.

There’s no place like debt

The average budget for kitting out a new home was £22,387, but when analysing respondents’ actual spending, the research reveals that Brits surpass their original target by 67 per cent – at £37,248 total – which sends them into the red. Londoners are crowned the worst planners as they overshoot their budget by £27k, and one in five go over by £50k. Those residing in the capital are followed by movers in the West Midlands (£18k) and the South East (£17.8k).

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With the average house price in England costing £268k, homeowners would be saving £3.4k thanks to the tax break. But these savings are bittersweet, with bad budgeting surpassing stamp duty savings by a massive 337 per cent.

Better budgeting

As a result of this bad planning, Brits spend almost three years paying off these additional expenses across a mix of loans and credit cards. A staggering 60 per cent of homeowners surveyed say they would do things differently if they had the chance, with a fifth saying they would budget better and the same amount doing more thorough research into furnishing and decorating costs. Of those surveyed, 11 months is the optimum amount of time to prepare.

The top five purchases likely to blow home-buyers’ budgets are:

  1. Building Service Charges – 59 per cent
  2. Plumbing Bills – 57 per cent
  3. Kitting out the Bathroom – 51 per cent
  4. Kitting out the Garden – 51 per cent
  5. Decorators – 51 per cent

The top five lifestyle purchases associated with home moving, likely to blow home owners budgets are:

  1. Increased Energy Bills – 62 per cent
  2. Second Car – 53 per cent
  3. Countryside Attire – 44 per cent
  4. Buying a pet – 42 per cent
  5. New toys – 42 per cent

Martin Magnone, CEO and co-founder of Tymit said: “Home is where the heart is, but rushing to make one saving on your home move can cost you more in the long run. Brits should be planning their expenses longer term as it is not just essential for budgeting the big move, but for the whole new lifestyle it brings too. For when the unexpected does arrive, there are ways to fund them without saddling yourself in revolving debt. Responsible lines of credit available – such as Tymit – have no hidden fees and are completely transparent on interest rates, helping you effectively budget your way back to zero, and enjoy your new home in the process.”

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

To help the UK’s home buyers budget better, Tymit has partnered with Clare Seal – founder of The Financial Wellbeing Forum and the Instagrammer behind My Frugal Year –  to share her top tips for the home buying process:

  1. Stress test your budgets: The last year has shown us that your financial situation can turn on a dime. With this in mind, create a budget that factors all of your regular incomings and outgoings, then stress test how factors outside of your control – such as a reduction in salary – would dent your overall finances. This will help you to set a safety net should the worst happen, enabling you to determine a realistic mortgage range and calculate leftover income for ongoing expense that won’t put you out of pocket.
  2. The little things add up: When you’re spending hundreds of thousands of pounds on a property, a hundred here and there on the little things seem inconsequential in comparison. But they’re not – the little things all mount up. Whether it’s new cutlery, crockery or finishing touches, record everything in your budget to keep your spend on track.
  3. Don’t forget about lifestyle: They say home is where the heart is, but it’s important that you think about your lifestyle outside of the home too. Factor in these costs to your budget – and try to think about how it might change in your new area. Will transport costs increase? Will your gym membership change? Planning for these changes will ensure you can make the most of the new area, so your home doesn’t feel like your prison!
  4. Trust the numbers, and nothing else: Buying a house is exciting, but when buying a house with a partner, relative or friend, it can quickly lead to disagreements on which items warrant more budget. If you’re in heated negotiations about which sofa, carpet or TV to purchase, always refer to your budget and let the numbers – not the heart – have the final say.
  5. Use credit wisely: With the best will in the world, in can still be easy to blow your budget from time to time. If you do find yourself using loans, credit cards or Buy Now Pay Later services, make sure you do so responsibly. Having a credit card can be no bad thing as long as you have a plan to manage it, and don’t over-commit yourself – brands such as Tymit come with no hidden fees or interest rates, and have handy interest calculators that help you to create a repayment plan that works best for you and your home.

BY PETE CARVILL

Source: Property Wire

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