Earlier this year the council announced that the threshold for empty business rates would drop from £2,600 from £18,000. This means that more commercial properties would fall out of this exemption and would be liable for rates to be paid by the landlord or the tenant.

Shops and offices are exempt for the first three months after the property becomes empty and industrial units are exempt from rates for the first six months. After this period full rates will become payable.

Mortgages could become harder to get, with one in ten borrowers currently eligible for a mortgage being turned down in future.

The Financial Services Authority this morning published its long-awaited Mortgage Market Review.

The FSA’s consultation paper is to try and avoid another credit crunch where lenders were prepared to lend a 125% of a purchase price to clients who clearly couldn’t afford to pay it.

I remember seeing clients who I believed were being offered too much money and had not taken into account the fact that life and circumtances change.

New measures would include an affordabiliy exercise and a stress test to see how the finances would cope if there was an increase in interest rates.

On the one side this all seems very sensible. If you were starting with a white blank page then you would make sure as far as possible that the person can afford the the big debt he is taking on.

On the other side this will squeeze out people from the market. If the average salary is £23,000 then most people could only afford a property for £69,000 (3 times your salary when I bought my first property) and this doesn’t take into account any dependents. This limits the range of properties open to first time buyers and in South of the country totally blocks them out of the property ladder.

Lenders will now be responsible for risk assessing the client rather than a mortgage broker. This reduces the risk of fraud but heightens the entry bar to being offered that all elusive mortgage offer.

The report is a consultation so industry can comment on it but I don’t know how much will change before the publication of the final draft.

A greater number of house purchase mortgages were approved in November 2011 than at any time since December 2009.  The information has come from national valuation firm e.surv, which makes forecasts from its own data ahead of statistics from other bodies such as the Council of Mortgage Lenders.

If these e.surv figures prove to be correct, then the CML’s November statistics, will have to show a bounce-back from the downbeat figures it has newly released for October. In October, according to the CML, 44,500 loans for house purchase were advanced, down from 48,200 in September and from 46,900 in October 2010.

When you compare previous months figures from the two organisations, they matched each other in October in that both E.surv and CML indicated that lending dropped in October. However the actual number of mortgage approvals reported by E.surv( 50,383) is much higher than the CML’s figure of 44,500 loans for house purchase (for October).

Mortgage approvals rose by 15% compared to November 2010, says the firm, which is part of LSL, parent company of Your Move and Reeds Rains estate agents.

E.surv also indicates that more loans were made last month to borrowers with small deposits, including first-time buyers, revealing that loans to borrowers with a deposit of 15% or less accounted for 13% of all mortgage lending in November, up from 10% in October, and the highest since October 2008.  They further point out that the majority of Loans (75%) are for purchases below £250,000

Richard Sexton, director of e.surv, said:

“For the last few months, the banks have been focusing their lending on specific groups, particularly buy-to-let investors, but this is the first time they appear to have increased lending to first-time buyers in any notable sort of volume.

More first-time buyers are rolling up their sleeves and piecing together the bigger deposits required to access high loan-to-value mortgages.

No doubt they are sick of paying astronomically high rents and having their monthly budgets ransacked by the increasing cost of living.”

If you’re thinking of moving and need a conveyancing quote then let us pitch for your business

Cheers

Mark

The Council of Mortgage Lenders (CML) have reported this month that the low interest rates mean that first time buyers could be paying the lowest amount of interest on a mortgage since January 2004.

Previously first time buyers have been paying 20% of their income on mortgage interest this has now dropped to 12.3%.

Despite the CML report that lending activity in October 2011 dropped to 44,500 loans from the 48,200 loans advanced in September 2011.

It is likely however that first time buyer activity will increase in the New Year due to the government’s stamp duty concession ending in March 2012.

There appears to be no better time for first time buyers to take their first steps onto the property ladder.

No doubt we will see a rush of first time buyers entering the market in the New Year, all wanting to ensure that that take advantage of the stamp duty concession and the continuing low interest mortgage rates available.

If you do decide to buy a property please contact us for a competitive conveyancing quote. With our online case management system and dedicated team working for you, you can be assured that we will do our best to get your house purchase moving.

Christie Limb

Partner

Over the last 20 years we’ve seen a massive growth in the number of indemnity policies used in conveyancing transactions. This is partly due to people and conveyancers (they are often different things!) becoming more cautious, partly as a business opportunity for insurance companies, and partly to speed things up in conveyancing.

So what is an indemnity policy? Basically it’s an insurance policy used to safeguard against some risk with the property you are buying. You can get policies to cover many things such as building an extension in breach of an old condition on the title deeds, or buying without the aid of a local authority search. The policy will normally contain a number of conditions – what they will and won’t pay out for – and also confirmation of the maximum amount they will pay out.

Wouldn’t it be better to just sort the original problem out? Better – Yes; Easier or quicker? – No. A common condition put on older title deeds in some areas would be that you can’t build on a piece of land without the consent of Mr XYZ. Now Mr XYZ probably died 100 years ago. His heirs and successors could give their consent – if you could find them. Also even if you did find they may refuse consent, or take 6 months to decide that they are prepared to allow it and/or charge a fee for saying yes. When you’re in a chain of transactions who all want to move next month, this sort of delay isn’t acceptable. In these circumstances an indemnity policy is ideal.

The indemnity insurance policy usually has a one-off premium, and the policy stays with the title deeds and lasts as long as the house (and insurance company!). It means that all parties in the chain can move on.

The reason you can get the policy so easily is because the risk in these circumstances is very low – if the insurance company were having to pay out regularly they just wouldn’t be offering the policy in the first place.

This blog is titled “the rise of the indemnity policy” – if you go back 20 years you would still see indemnity policies but they were pretty rare and were a real pain to arrange. In those days what would normally happen is that people would “take a view”. The Solicitor would discuss with a buyer the likelihood of someone actually enforcing the policy and they buyer would normally decide that actually they weren’t bothered about it and would carry on and buy. The solicitor would also consider the position on behalf of the mortgage company and come to the conclusion that it presents no risk to their security, and therefore the transaction would go ahead.

This position has changed over the years – people are more prepared to sue generally, so no-one wants to “take a view” any more. Coupled with the insurance companies seeing a business opportunity and making it easy to put these policies into place and a whole industry has been created out of nothing.

Cheers,

Mark

Buying a house or flat for the first time is a pretty daunting experience. It’s ranked as one of the top three in terms of stress (the other two being death and divorce), and this stress is only made worse if you don’t know what is happening.

Elsewhere I’ve done but that’s quite long – probably 2 cups of tea worth. For now I thought I’d throw down 10 things that first time buyers should know

1. What is a mortgage
   A mortgage is simply a loan. The difference is firstly that the loan is attached to the title deeds of a house or flat – so that the property can’t be sold without having to pay the mortgage off. Secondly it’s a loan spread over a much longer period than most other loans – usually over 20-30 years.
2. What is a 90% mortgage?
   When people talk about percentages in relation to mortgages they are talking out the percentage of the money being borrowed against the value of the house (or “Loan to Value”). So for example if a mortgage company say the maximum loan to value they will lend is 90% then that means if you’re looking to buy a house for £100,000 the maximum that mortgage company will lend on that house is £90,000.
3. What is a deposit
   In relation to buying a house the deposit is usually referred to as the amount you’re putting down. So in the example given in 2 above the deposit you’re putting down is £10,000.
4. What is ‘Equity’
   This is the amount of money you have ‘in the house’ – i.e. if the house was sold and the mortgage paid off then it’s the amount that you would get. When you first buy a house the equity will be the same as the deposit – the amount you’ve put down. However, as house prices rise (and they do normally) so does your equity. So if your £100,000 house is worth £120,000 when you sell it then your equity will have increased by £20,000.
5. How do I look around a house?
   This will usually be clear in the advert for the house (either online or in an Estate agent). You’d normally go through the Estate agent to arrange a viewing. Sometimes you’ll go round with the sellers, and sometimes it will be with someone from the estate agents. It’s a good idea to take someone else with you when you are looking round – partly for personal safety reasons but mainly so you can discuss it afterwards.
6. When and how do I make an offer?
   When you’ve found a property you are interested in you can make an offer. What you offer will depend on the property market in your particular area at that moment, how this property is priced, and the attitude of the seller. For example if it’s a sellers market then anything less than the full asking price will be rejected. If it’s a buyers market then sellers may well entertain an offer below the asking price. It’s worth doing a bit of homework first – maybe finding out if the seller is open to offers, and how long the property has been on the market – if it’s been on for ages with no offers then they may be more open to negotiating. Also ‘sellers market’ and ‘buyers market’ are just general terms – what happens depends on this particular property – great properties in great areas will always sell strongly – no matter what the rest of the housing market is doing.
7. How do I know what I can afford?
   What you can afford will be a combination of how much the mortgage company will lend to you based on your income, the percentage they are prepared to lend (see point  2 above), and the amount of depsit you have saved up (see point 3 above). You can check the amount the mortgage company will lend against your income online. When doing this you’ll see  phrases such as ‘4 + 1’ and ‘3.75 x joint’. What “4 + 1” means is that if you have two incomes they will work out how much to lend you by taking 4 times the higher annual salary plus 1 times the lower salary. So if one of you earned £20,000 a year and the other earned £10,000, they will lend you a maximum of 4X£20,00 plus 1x£10,000 which equals £90,000. “3.75 x joint” means they’d add the two salaries together and multiply them by 3.75. So in the 20/10 example they would lend 3.75x £30,000 (£20,000 plus £10,000) which equals £112,500.
8. How much is it all going to cost?
   It’s worth working this all out before you start. We can give you an instant conveyancing quote online. You will also have to factor in other costs – mortgage companies often charge an arrangement fee (basically a fee for saying ‘yes’), and will always charge a valuation fee (the amount will be specified when you check out the offers). You also need to think of the cost of moving – will you be using a removal company, hiring a van, or making lots of trips in a car.
9. How long will everything take?
   With regard to finding a property you like it depends what’s out there and how fussy you are. Once you’ve find the one you want then it will generally take 2-3 months for the conveyancing process to be completed and you move into your house. I’ve done a separate blog on “what is conveyancing” – but basically it’s the legal process of putting the house into your name  after we’ve checked it’s OK to buy
10. What if I’ve changed my mind?
    Even though you’ve made an offer and it’s been accepted, under the law inEngland &Wales (Scotland is different) you aren’t committed to buying it until you have “Exchanged Contracts”. Up until that point either party can pull out with no comeback. Once contracts have been exchanged then it’s legally binding and any party pulling out after that will potentially face a legal claim running into many thousands of pounds

When our marketing manager Mel first came to work for us she wanted to change our adverts that referred to ‘conveyancing’ to refer instead to ‘property conveyancing’ as she felt that ‘conveyancing’ on it’s own isn’t a widely known term.

We disagreed with her (well we’re lawyers and obviously we’re always right). We did prove to be right in the end – when someone is in the process of buying a house they find out what conveyancing actually is quite quickly and learn that ‘conveyancing’ is what they will need.

However Mel was right too – before people actually start the house (or flat) buying process they generally have no idea what conveyancing actually is – and why would they?

So what is Conveyancing? Well put simply it’s the legal process that passes ownership of a property from one owner to another. That’s great but it doesn’t tell you much.

How it fits into the whole house buying process is a bit weird. You want to buy a house so you work out what you can afford and whether you can get a mortgage. You start looking around in the areas where you want to live. You look on rightmove and go to the local estate agents. You narrow down your search. You look round house after house (you’ve got to kiss a lot of frogs before you find your prince) until eventually, finally you find a house you like. You bring someone (a builder friend) round for a second opinion and they say it’s OK.

You make an offer – it’s rejected. You offer a bit more and finally it’s accepted. After all this time and effort, it’s only now that people usually find a conveyancer and instruct them to do the conveyancing.

So what does the conveyancer do? Well basically they are checking lots of things about the property you want to buy. They will use “searches” (basically just a list of questions sent to various authorities) to find out if the road outside the property should be looked after by the council or will be down to you to maintain; to find out if the sewers go to a main drain or (for example ) a septic tank; to find out if the property is in a flood plain or built on contaminated land; and many many more questions.

They also find out if the sellers actually own the land, and check that the title deeds don’t contain any nasties – which could mean you can’t live there; or could mean that the current owners have a problem that they need to solve before they can sell it to you.

They will also check your finance is in place and act for your mortgage company if you are having a mortgage. Once everything checks out they will get you to sign a contract and agree a completion date with you and the sellers. The completion date is the moving date. This generally takes place 2-3 months after you started the Conveyancing process.

So by the time you started the conveyancing process you’d already found where you wanted to live – and then you have to wait another 2-3 months before you can move in?! That sounds like a nightmare! Well it can be stressful. But a house or flat will be the biggest thing you ever buy in your life. It’s important that it’s checked out properly before you make such a big commitment.

We can provide you with a conveyancing quote to find out how much your conveyancing will cost.

If you want more detail on the whole house buying process I previous wrote the (it’s even in 3 parts)

Cheers,

Mark

For the last (insert number here) years the media have been trotting out stories about the house market – either it’s on fire or it’s plummeting off a cliff – there never seems to be a happy medium.

However when the media talk about ‘the property market’ they are usually just talking about prices. It either goes along the lines of:-

“House prices are rising – it’s shocking – first time buyers can’t get on the property ladder”

or

“House prices are falling – it’s shocking – people are going to lose all this money”.

You tend to get one or other of those stories but very little in between.

Whilst they make great (!?) headlines they completely ignore the most important part of the property market – the number of transactions going through each year.

The reason this is important is because of the parts of our economy that hang off the back of the housing market. Every time someone moves house they are likely to buy carpets, curtains and often some furniture. They’ll then spend a fair bit in the large DIY stores and/or employ the services of an army of electricians, plumbers, joiners.

By focussing on the property prices the media tend to miss the point. However it’s worse than that – by painting such bleak pictures they have the effect of exaggerating what was already there. So for example as the housing market started to slow down in 2008, the wild stories in the press turned the dip that we have every few years (there was one at the end of 2004) into  a housing market recession. Back that up with stories that “you cannot get a mortgage these days” and people freeze. All those plumbers, electricians, joiners (and yes, Conveyancers) have to find other ways to make their money.

On the flip side when things start to pick up again they will produce the “Housing market on fire” stories – which encourages people to panic-buy property – leading to an overheating property market.

How about a nationwide press swear-box – every time the press run a story about house-prices they have to give £100,000 to a homeless charity. Now where’s Rupert Murdoch’s phone number…..

Mark

Some of you may have caught George Clarke’s TV programme on Channel 4 last night entitled the Great British Property Scandal.

The thrust of the programme seemed to be on the fact that young families can no longer realistically get on the property ladder until they are in their late 30’s.

The programme seemed to focus on the following points as ways of tackling the problem namely

1.      Refurbish Empty homes;

2.      Build affordable new housing;

3.      Develop City Centres;

4.      Regulate the private rental market more extensively; and

5.      Forget the right to buy scheme.

I have discussed the proposed rejuvenation of the right to buy scheme by the government in an earlier blog so please take a look at it on our website but is it really such a bad thing?

The programme seemed to think so citing the fact the amount of properties taken out of the system far outweighed the properties put back. All lot of tenants for social housing simply are not interested in buying a council house but feel put under pressure to do so but schemes such as these. History has taught us that the houses that are taken out of council ownership are never really replaced and so all that happens is that the stock is greatly depleted.

It remains to be seen whether this government can manage this any better than the last one.

If you have any questions about the above or are considering purchasing your council property under a right to buy scheme, please drop me a line at wjames@fidler.co.uk or 01623 451111.

The stamp duty holiday for first time buyers has not been extended past next March 2012 so if you are a first time buyer you will need to act quickly if you have been putting off purchasing your first home. Please take a look at our website for more information regarding the house buying process.

There does however still seem to be a problem with first-time buyers getting on the ladder so what other options are available to them?

The government has started the right to buy scheme again. Under this scheme families will be offered discounts up to 50% below market value with the money released being used to build new affordable homes.

It has also planning on underwriting mortgages for 100,000 young families looking to buy newly built homes and launching a fund of £400, to promote housbuilders to construct thousands of homes.

Whether the schemes are sufficient replacements for the stamp duty holiday remains to be seen.

If you are thinking of purchasing in the near future in light of the deadline above, or are interested in more information regarding the schemes mentioned above please drop me a line on wjames@fidler.co.uk or contact us on 01623 451111.