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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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Stamp Duty Holiday End Means Buyers Need a Plan B

The upcoming end of the stamp duty holiday in its current format could lead to a significant increase in the number of chains collapsing and means agencies, now more than ever, need to have contingency plans in place.

That is the warning from chain repair experts HBB Solutions, which says agents need to have a clear plan B if things start to go wrong.

The stamp duty has undoubtedly boosted and sustained the market since it was introduced back in July 2020, but the first stage of its phased-out approach is set to be reached at the end of this month (June 30).

At present, any home worth up to £500,000 is eligible for the stamp duty holiday, but after June 30 the nil rate threshold will drop to homes worth up to £250,000 until September 30. From October onwards, the nil rate threshold will return to its pre-stamp duty holiday level of £125,000.

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HBB Solutions has been in touch with some of the high street’s major lenders on their cut-off dates for receiving a Certificate of Title (COT) in order to complete on a mortgage by month end.

HSBC/First Direct                                         21 June 2021

Leeds Building Society                                23 June 2021

Halifax                                                            23 June 2021

Barclays Bank                                                23 June 2021

Precise Mortgages                                       25 June 2021

Meanwhile, Nationwide/The Mortgage Works has provided no deadline, but have said they will need five working days to send the funds by BACS and if the notice is less, they will deduct £20 for the CHAPS payment.

This effectively means anyone relying on mortgage funding has about a week left for their solicitor to complete their work, so the lenders can get the COT next week and release funds in time to beat the deadline.

This, in turn, means there could be many buyers and sellers, relying on the significant stamp duty savings they could make, pulling out late on and leading to the unfortunate but all too common situation of a chain collapsing like a pack of cards.

However, there are ways agents can prevent long chains and fall-throughs from disrupting their business, HBB Solutions insists.

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

Chris Hodgkinson, managing director of HBB Solutions and a former agent himself, said: “We all know how frustrating it can be when chains collapse. We’ve been fixing them for nearly 11 years now. We typically buy with a discount or alternatively charge a fee, starting from as little as 8%, for our service. But that cost doesn’t have to be absorbed by just the one seller, it can be negotiated across the entire chain to make if affordable and keep the sale of every house together. Even if a sale falls through only days away from completion, we’re here to help and get it back on track.”

Fall-throughs and chains breaking down – how big a problem is it? 

Data earlier this year estimated that one in four sales fall through before completion, costing homebuyers an average of £2,700 each time.

Research from property platform WiggyWam found that, in total, property transactions that fall through are costing UK homebuyers a massive £607m every year.

And there are fears that this number will inevitably rise further as the stamp duty holiday gradually comes to an end in two blocks.

On average, nearly a quarter of am (225,000) fall-throughs occur each year in the property market, costing buyers, sellers and agents alike.

There are a number of different reasons for property sales being cancelled before completion, which typically include mortgage issues, gazumping and gazundering, conveyancing delays, problems revealed in the survey, and broken chains.

Sales that are part of a chain – which is most sales – are especially vulnerable to fall-throughs, as it only takes problems with one part of the chain to cause major issues for everyone else. In particularly long and complex chains – it is not unheard of for four or five sets of buyers and sellers to exist in a chain – the chances of fall-throughs and complications are naturally much greater.

It seems highly likely, given the extraordinary levels of demand at play in the property market right now, that the one-in-four statistic – which others elsewhere have previously suggested is as high as one-in-three sales collapsing – will increase by the end of the year.

“I think we all know the pressure lenders, solicitors, search providers and, in particular, agency sales progression teams will be under in June,” Hodgkinson continues.

“We’re standing by and have our lawyers, resource and, quite importantly, cash funds all in place. We can give you a purchase price within just a few hours and provide a same day completion if it is required. If you have a chain That is not on track, then talk to us, we’re here to help.”

HBB Solutions believes that, even once the two-stage stamp duty holiday has ended, there could be issues with buyers walking away from a sale because they will no longer benefit from the stamp duty saving. In turn, sellers may be less likely to list – or withdraw their home from the market – if they start to panic about demand falling off a cliff.

What is the solution? 

As the old saying goes, failing to prepare is preparing to fail, and HBB Solutions believes that agents need to partner with a firm that can offer alternative solutions to be ahead of the game if the worst comes to the worst in terms of more chains collapsing.

One estate agent partner HBB Solutions is already working with has championed the merits of having a chain repair plan B at its fingertips.

Simon Bradbury, managing director of Thomas Morris, comments: “We find the service and proposition that HBB provide is excellent! In the highly competitive market in which we currently operate, it is increasingly challenging to come up with a genuine and compelling USP to entice prospective sellers.”

He adds: “The HBB proposition is a great ‘insurance policy’ when a chain collapses or a seller needs a guaranteed sale.”

Meanwhile, Relocation Agent Network (RAN) – a national network of estate agents specialising in relocation – has been recommending the services of HBB to its membership for more than two years now.

Mark Westcott, director at RAN, said: “We were impressed by the proposition and the team behind HBB and they were by the quality of the estate agents that make up RAN. The introduction of HBB to the membership has led to many successful deals completed as a result. Our members are now able to market HBB’s services to potential vendors as another option if needed, giving them a competitive edge, as well as promoting a part exchange offering to local developers for any sites they have that don’t have access to that service.”

The remainder of this month is likely to be incredibly busy for agents, conveyancers, surveyors and removal firms, Hodgkinson adds, and then again in the lead-up to the end of September.

Given the pressure on the system, it seems almost certain that there will be a rise in the number of chains collapsing and the number of transactions falling through, and it will be those agents who have an adequate plan B in place who will be best set to cope.

BY PETE CARVILL

Source: Property Wire

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Majority of Property Transactions Since May 2020 Backed by Mortgages

Mortgages have fuelled 70% of property transactions across Great Britain since the market reopened back in May of last year, after initial lockdown restrictions were imposed, according to a research.

Enness analysed market data on mortgage-financed sales as a percentage of all sales in each area of Britain between May 2020 and November 2020.

While 270,785 of the 387,667 homes sold across Britain (70%) have seen the buyer backed by a mortgage, there is some regional difference. In London, 80% of all sales have come through homebuyers with a mortgage, with the East of England, West Midlands (72%), the South East and East Midlands (71%) also coming in higher than the national benchmark.

In contrast, the South West is home to the most cash homebuyers with just 64% of homebuyers purchasing via a mortgage.

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With the capital home to the largest regional percentage of mortgage-backed purchases, London also accounts for the top three highest at local authority level. Lewisham is the mortgage hotspot of Britain for homebuyers with 88% of all transactions financed via the sector, followed by Barking and Dagenham and Waltham Forest (87%).

Slough and Crawley are home to the highest percentage of mortgage-based purchases outside of London along with Hillingdon (86%).

At the other end of the spectrum, just 40% of property transactions in East Lindsey have been financed by a mortgage since the market reopened in May of last year. North Norfolk (43%), Argyll and Bute (44%), Torridge, Ceredigion (45%), Scarborough (48%), Rother, South Hams and Pembrokeshire also rank with some of the lowest levels of mortgage-financed transactions.

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

“A lot has been made about the boost in buyer demand due to the stamp duty holiday, but it’s the continued low rates of borrowing that have really been the foundation of this heightened market activity.

While a stamp duty saving is nice, the ability to secure finance at a much lower rate of interest than historically possible has brought about a major boost to market sentiment in recent years and the impact is clear, with 70% of all transactions financed as such.

Some lenders have begun to tighten their lending criteria and this could make it harder for those with a less stable financial background to obtain a mortgage. However, it’s unlikely to impact the actual ratio of mortgage-financed buyers in relation to those purchasing with cash, particularly while the Bank of England keeps rates at sub-one per cent.”

BY PETE CARVILL

Source: Property Wire

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Lockdown helped third of homebuyers get onto the property ladder

A third of UK homebuyers have been helped onto the property ladder due to lockdown according to new research by Yes Homebuyers.

The research found that for 27% of recent homebuyers say the restrictions of the lockdown due to the COVID-19 pandemic meant they were able to save to get a property, with 46% of those asked stating that the drastically reduced spend across their social life helped them to get a foot on the ladder.

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A further 33% said working from home and a lack of commuting helped their savings, a reduction in family costs helped 10%, while 6% received an inheritance due to bereavement and 5% saved on rent due to moving back home with their parents.

Matthew Cooper, founder and managing director of Yes Homebuyers, commented: “There’s no-one on the planet who wouldn’t like to erase the last year from history and lockdown has been hard for so many people for a whole variety of reasons.

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“At the same time, there have been some great stories of resolve, survival and adaptation emerging across all areas of life and this is indicative of our nation and how we come together when times are tough.

“While we’re all chomping at the bit to get back to some form of normality, it’s also great to see that for a third of homebuyers lockdown has, at least, helped them to achieve their goals of homeownership.

“With little else to spend our money on and a further saving due to the stamp duty holiday, there’s never been a better time to get a foot on the ladder and hopefully, many more will continue to benefit.”

Source: Property Wire

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