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How to avoid a down valuation

When property markets are buoyant – such as they are now with a stamp duty holiday and the rush to relocate – asking prices are often matched or even exceeded, especially if there’s a bidding war between buyers. News published in autumn 2020, however, sounded a note of caution for purchasers determined to secure a property, at whatever cost.

The saying ‘a property is only worth what someone is willing to pay for it’ is only true up to a point – and that point is when a surveyor carries out a mortgage valuation. During a mortgage valuation, a surveyor will check if the property is worth what a buyer has agreed to pay for it.

The danger of down valuations

Today’s trend shows a worrying number of down valuations – when the surveyor thinks the price the buyer is paying is too much. In fact, Bankrate UK found 46% of purchasers buying in the last six months had the property they wanted to buy down valued by their chosen mortgage lender, with homes valued between £400,000 and £500,000 subject to the most down valuations. The average down value was by roughly £11,666 but the gap was reported to be as much as £240,000 in the greatest discrepancies.

If the price agreed is way over what the surveyor thinks the home is really worth, the mortgage lender could choose to reduce the amount of money it loans or retract the mortgage offer altogether. If this happens, the buyer has to either make up the shortfall, negotiate a lower purchase price with the seller or withdraw from the transaction.

Which valuations are the most reliable?

Both buyers and sellers rely on an accurate valuation to keep their transaction on track. You may use an instant valuation tool on an estate agent’s website at the start of your journey and although this is satisfyingly speedy, it merely gives you a flavour of what a property could be worth. 

Often described as a ‘ballpark figure’, an online instant valuation is an estimate created from broad averages and will not reflect the size, condition and location of an individual property. For the most accurate valuation, you’ll need a local estate agent with a successful track record in the home’s neighbourhood. A valuation that’s conducted within a property so the agent can see everything first hand is the best place to start. The figure noted from the visit will be married with current data – what similar properties are selling for and the strength of buyer demand – to settle on the most accurate value.

How can I avoid a down valuation?

If you’re a seller, it’s always best to choose a personally-recommended estate agent with a strong reputation in your local area. They will value a property using current sales figures, recent sold prices and area-specific knowledge. It’s also wise to obtain valuations from three different estate agents so it’s clear who may be over valuing. 

Buyers can identify if they’re offering over the odds by researching house prices of similar properties. Analysing sold prices is very important, as many house price indexes that make the press reflect asking prices and it’s unusual for the final price paid to mirror what the property was originally advertised for. Start by asking local estate agents for recently sold examples and Land Registry’s house price data is freely available online, showing final selling prices. For a guide on real-time values, purchasers can search for properties for sale on the leading portals and note down the asking prices of ones that are similar to what they want to buy.

Why is my insurance valuation much lower than my mortgage valuation?

Many home movers confuse a mortgage valuation with an insurance valuation. An insurance valuation is almost always lower than the price a buyer paid for a property as it merely reflects how much it would cost to rebuild the dwelling like-for-like. It does not reflect the value of the land a home is built on or any premium that may hike the value, such being near a good school or in a private road, for instance. 

If you would like an accurate appraisal of a property you wish to buy or sell – one that is in line with current values and won’t leave you exposed at the mortgage valuation stage – please get in touch.

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Is open-plan living a ‘broken’ concept?

Open-plan living has become a popular modern-day feature of homes across the country, maximising space in smaller new-build homes and opening out areas to create a family hub. 

In the first decade of the 21st century, one fifth of British homeowners demolished a downstairs wall and there was a 50% rise in the number of kitchen diners. A further 20% of Britons planned to combine a separate living room and cooking space in the near future.

Fast forward another 10 years, and the trend has gone full circle. Our love affair with open-plan is over and instead, homeowners are reverting back to breaking up large rooms in favour of more private and cosy spaces – the broken plan concept. 

The reason? We are spending more time than ever at home – an extra eight hours a day in fact. Of course, the Coronavirus pandemic has played a big part in that, with many of us having no choice but to embrace the sense that ‘there’s no place like home’ and use living areas as work spaces. 

A 2016 study found that one of the main reasons we avoided eating at the dining room table was because it reminded us of work, especially if it was strewn with notes and documents. Now, with the comeback of formal dining – because let’s face it, that’s one of the few social pleasures we’re able to enjoy risk-free – and more than a quarter of the UK workforce planning on working remotely for the long-term, open-plan living no longer accommodates hybrid lifestyles. 

How to go from open-plan to broken plan

Broken-plan is the perfect compromise between open-plan and closed spaces, and can be achieved without the expense and inconvenience of erecting internal walls and doors. 

Some of the ways you can reintroduce individual areas into an open space include: 

  1. Being creative with furniture and colour – high-backed sofas and tall freestanding shelving units can work really well for breaking up large spaces. They can also act as useful sound barriers. Different wall colours and flooring can enhance the sense of division too. 
  2. Using partial walls – half width or half height walls can create effective partitions between different living spaces, and you will still benefit from fluidity. 
  3. Having more internal windows and doors – many older properties will still have their internal door frames or serving hatches in place, so installing glass doors or windows will be easy and allow you to enjoy the best of both worlds. In purpose-built open-plan living areas, consider folding or pocket doors that disappear into the wall when not needed, or temporary, decorative partitions.
  4. Level up – where your ceilings are high enough, you could put more distance between spaces with a slight mezzanine floor or even a balcony, using the area beneath for storage (or even a den for the children). 

The Great Divide

If you’re still struggling to see how broken-plan can help you effectively compartmentalise areas of your home to facilitate different aspects of your life, then going back to brick – or basics – might be your best option. 

Installing internal walls will not usually require planning permission but building regulations will still apply. This is to ensure the alterations you are making do not have a detrimental impact on things like fire safety, ventilation, lighting and access. 

In addition, it may not be as expensive as you think because if walls were effectively removed in the first place, they were probably not load-bearing and therefore a stud wall rather than solid wall can be put in its place. The same goes for purpose-built open-plan areas. 

So do not fear if your open-plan space is no longer fit for purpose – there are plenty of options to close the gap(s). And if you feel the only option is to move to a more suitable property, get in touch and we can show you some alternatives.

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How to cut your electricity costs this winter

Electricity usage in the UK is 36% higher on average during winter and with millions of people continuing to work from home for the long-term, bills are expected to rise even higher this season.

With half the amount of daylight compared to summer months and temperatures averaging 5.3°C from December to January, it’s no surprise we spend longer indoors – making more cups of tea, turning more lights on and watching more TV. 

The rapid rise in smart meter installation across Great Britain has gone some way towards educating homeowners and tenants about their electricity usage – and even changed behaviours – but there may be some golden nuggets of information that could help you further.  

Here, we share some additional insights that will help you reduce your electricity bill this winter. Some of them might surprise you!

  • Bigger appliances cost more money to run

The bigger your TV screen, the higher your electricity bill. The more water in the kettle, the more you will pay for that coffee. And if you were thinking of investing in a desktop PC to aid home-working, think again. A laptop can cost 85% less to run in comparison.  

With household appliances, it’s a good idea to find out how much they cost to run and check the EU Energy Label. Many household appliances, including fridges, dishwashers, washing machines and televisions, will be rated A+++ to G (although reverting back to A-G by 2021). The lower the rating, the less energy efficient it will be to run so think about upgrading the appliance or using it less. 

  • Location, location…and load

To maximise the energy efficiency of an appliance, it must be in the right place with the right contents. Many appliances have a climate class, meaning there is a specific type of atmosphere in which it will operate optimally. Fridges and freezers, for example, shouldn’t be placed in overly warm rooms, in direct sunlight or too close to a wall. Neither should they be overloaded or iced up. 

Similarly, a dirty or clogged appliance can use up a lot more power than intended, so ensure the washing machine and tumble dryer filters are clear of fluff and gunk, and ovens and hobs regularly de-greased. If you have to use a tumble dryer, untangled clothes will dry quicker. 

  • There’s off and there’s ‘off off’

We all know not to leave our appliances on standby as power drawn from such devices can account for 10% of our electricity bill each year. However, sometimes that’s not enough. Ever felt your phone charger when your phone isn’t plugged in? Still feel warm? Because it’s still consuming electricity. You need to go one step further and ensure as many appliances as possible are ‘off off’ and by that, we mean unplugged. You can still record TV shows with your TV unplugged but do leave your set-top box on.

  • It’s not just water that can leak

Yes, electricity can leak too – well, kind of. Faulty wiring or appliances can cause abnormal electricity consumption. It’s tricky to prove and find the source but if you are worried that your usage is coming in much higher than it should be, it’s worth investigating. 

  • The energy price cap doesn’t stop you being overcharged 

In January 2019, the energy price cap was introduced to ensure fairer energy prices for consumers who were on default and standard variable rate tariffs. As it stands, most variable rates are lower than the energy price cap anyway, and according to 2019 figures from Ofgem, more than half of UK households are still on a default or standard variable rate tariff – the most expensive type of tariff. Switching to a fixed-rate tariff is still the best way to save money – more than £300 a year on average, in fact. 

So, whether you’re looking to rent a furnished property, are buying a home with some appliances included or simply want to save money,  check energy ratings, tariffs and the off switch to lower your electricity bill. Contact us if you’d like more information.

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Help to Buy v. 5% mortgage: pros & cons

Generation Rent is a phrase most of us are now familiar with but in October 2020, Boris Johnson decided to cut through the Covid news to announce he wanted to change that to Generation Buy. 

His Conservative party conference speech contained plans to launch a new range of 5% mortgages. While home loans for those with small deposits are not unheard of, they have become a rarity this year as lenders have focused on loaning to those with deposits of 15% or greater.

The news has been well received by the property industry and home movers, who are hoping the mortgages will be introduced while the stamp duty holiday is running, and that they continue beyond 31st March 2021 when stamp duty rates are scheduled to return to normal.

For buyers with small deposits, there is now a choice of purchasing assistance – wait for the 5% mortgage to be introduced or press ahead using the Government’s current Help to Buy scheme. Here we examine the pros and cons of both options:

5% mortgage offers

The Prime Minister’s intention of reinstating mortgages for those with 5% deposits is in its infancy and at the time of writing, details were scant. It is thought the home loans will be long term, fixed-rate in nature and that the Government would provide a state guarantee to encourage lenders to participate, which reduces their risk. It is also thought that the mortgages would be exclusively for first-time buyers and that financial stress tests – which measure a borrower’s ability to repay the mortgage in the present and the future, should circumstances change – could be relaxed or removed completely.

Pros: 

  • easier to get on the housing ladder as a small deposit is needed
  • only the mortgage, and no other loans, to repay 
  • leads to outright home ownership when the mortgage is paid off
  • relatively straightforward to arrange, through a High Street bank, online or via a mortgage broker

Cons:

  • high house prices mean even a 5% deposit can be out of reach for many
  • could be reserved exclusively for first-time buyers
  • the Government own a portion of the property while the loan is outstanding
  • no start date or terms and conditions available at present
  • potential to fall into negative equity quicker than those with a higher value deposit

Help to Buy Equity Loan Scheme

The Help to Buy Equity Loan Scheme was introduced in 2013 and effectively sees the Government loan a buyer up to 20% of the home’s value (40% in London), while the buyer has to personally contribute a deposit of 5%. Together, the two deposits equate to a 25% deposit, allowing the buyer to access more competitive mortgage deals. The current scheme ends in March 2021, although a similar but revised scheme will start in April and run for two years.

Pros:

  • currently applicable to all owner-occupier buyers, including first-time buyers, second steppers and downsizers
  • the Government’s equity loan is interest-free for the first five years
  • the loan itself doesn’t have to be repaid until the property is sold or the mortgage term ends, whichever comes first
  • you can remortgage at a later date and borrow more to clear the equity loan 
  • you can repay the equity loan early and even avoid interest repayments if you do so in the first five years 
  • you are free to sell the property whenever you like

Cons:

  • only valid on purchases of brand new homes bought from house builders or developers
  • interest on the loan needs repaying after five years and the rate will rise annually
  • the new Help to Buy Equity Loan Scheme starting on 1st April 2021 will be restricted to first-time buyers of brand new homes
  • an upper purchase price cap applies – the property should not cost more than £600,000
  • you may end up paying the Government back more than you borrowed, if your home rises in value

If you need help with weighing up your options and crunching the numbers, we’d be delighted to assist. Please get in touch for moving and mortgage advice.

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Lettings Group 1

Minimum EPC ratings in rentals could rise

Landlords may, once again, have to improve the eco credentials of their buy-to-let properties if the latest desires of the Government get the go-ahead. The Department for Business, Energy & Industrial Strategy launched a consultation document at the end of September 2020, inviting feedback on its plans to further improve the energy performance of privately rented homes in England and Wales.

‘C’ could become the new minimum

It’s a hefty 48 page document but we set aside time to unpick the details and bring you the main point.  The central proposal within the consultation is the intention to raise the lawful EPC (Energy Performance Certificate) requirement in private rented properties to band C – by 2025 for all new and renewing tenancies, and by 2028 for all tenanted properties.

The new consultation document can be viewed in full here, and anyone with an opinion can leave feedback on the 32 consultative questions raised using this link. The deadline for comment is 30th December 2020.

It was only earlier in 2020 that landlords had to accommodate a change to EPC standards. On 1st April 2020, all properties in the private rental sector needed an EPC rating of at least a band E – anything less is now classed as an unlawful let.

Four years to ready new rentals 

Now, the Government’s ‘preferred policy scenario’ outlines that homes being rented out for the first time and those properties where the tenancy is renewing should demonstrate a valid EPC with at least a band C rating by 2025 – a revision of the band D benchmark set out in the Government’s 2017 Clean Growth Strategy (CGS). 

Landlords can apply for a Green Homes Grant

With approximately 3.2 million privately rented properties in England and Wales having an EPC rating of D or below, now is the time to explore the Government’s £2 billion Green Homes Grant scheme – especially as all works must be completed by 31st March 2021. 

The grant scheme is open to landlords, as well as owner-occupier, and will fund at least two thirds of many energy efficient improvements, with an upper contribution limit of £5,000 per household. The Government has set up a dedicated Green Homes Grant online resource, where landlords can check their eligibility and view what eco improvements can be made. 

A valuable upside of going green?

The Government took the opportunity to outline extra reasons to make energy efficiency improvements, on top of lower fuel bills and reduced carbon emissions. It said in its consultation document ‘landlords who make energy performance improvements benefit from increased rental income and reduced void periods, whilst seeing increases to the value, quality and desirability of their assets’. The Government also cited its own house price study that found properties with a current EPC band C rating were worth around 5% more than those with an EPC band D rating. 

If you would like to talk over the EPC rating of a property you own and the possibility of applying for the Green Homes Grant, contact us today.

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6 ways to be winterwise in your home

As any Game of Thrones superfan will chant as the evenings draw in, ‘winter is coming’. Just how mild, wet, bitterly cold or stormy it will be this year, nobody knows, but one thing is certain – winterising your home can save you money and stress in the coming months. Not doing so may leave you – literally – out in the cold. 

Here are some jobs around the home that should be done now before the big freeze arrives:-

  • If it ain’t broke, STILL fix it

Starting outside, it’s important to get rid of any leaves, moss and other debris that can block your gutters, downpipes and gullies to prevent leaks and breakages. Secure or fix any broken or loose roof tiles, and repair any broken fence panels before winter gales blow them away completely. Also check for cracks in external walls and consider getting them repointed. 

  • Carry out a heating health-check

Whatever type of heating system you have, make sure it’s in good working order before it’s too late. Check storage and immersion heaters, get chimneys swept and your boiler serviced. Some households will have a regular boiler service included as part of an insurance policy or care plan, but if not, you can get a Gas Safe registered engineer to carry one out from as little as £75, or contact your energy supplier for a quote. You should also bleed your radiators to maximise their efficiency.

  • Shop around for energy suppliers

Cranking up the thermostat will impact your energy bills so before you become too reliant on your radiators, compare the best energy deals. You can switch suppliers – even if you’re a tenant – and potentially save hundreds of pounds each year on gas and electricity. You may consider a smart meter at the same time as switching, which will help you identify costly appliances that are used more in winter, such as fan heaters and tumble dryers.  

  • Draughtproof windows and doors 

Whether you opt for a DIY reseal or use more complex weatherstripping techniques, make sure the warmth in your home is not escaping through your windows and doors. Use draught excluders, and upgrade curtains and blinds to thermal versions to keep the heat in. 

  • Insulate, insulate, insulate 

According to The Green Age, about 25% of the heat in a house escapes through the loft, 35% through the walls and 10% through the floor. Insulating these areas can dramatically reduce heating bills. Insulating pipes with foam tubes, also known as lagging, can also prevent them from freezing or worse – bursting. 

  • Be prepared

With winter comes an increased risk of power cuts and storm damage, so it’s advisable to take some time preparing in advance. Put together a power cut survival kit and ensure you know where your stopcock is (82% of 18-24 year olds have no idea). Check your insurance policy and consider home emergency cover – worryingly, research from Defaqto revealed that almost 3 in 4 home building and contents policies don’t include cover for home emergencies. 

Green Homes Grant

Many of the action points above – including draught proofing, insulation and heating controls – are potentially covered by the Government’s new Green Homes Grant. There’s a narrow window for applications and vouchers are only valid for 3 months or until 31st March 2021, whichever is sooner. Find out what is covered, whether you’re eligible and apply using the dedicated online form.

If you would like more advice on winter home care or would like to move to a new property during the winter months, contact us today.

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Trading up? Advice for second steppers

Whether you’re spurred on by the stamp duty holiday or have found being home together has highlighted a lack of space, we are a nation on the move to bigger properties. The rise of the second stepper – homeowners trading up from their first home to a larger residence – is more pronounced than ever, with upsizers fighting over three and four-bedroom houses across the country.

The scramble for more space is, of course, pushing up house values. Rightmove reported in September 2020 that prices continue to climb – up 0.2% in August 2020 when compared to July 2020, and up 5% annually. The online portal also noted acute activity and record asking prices in the second-stepper sector. 

If you’re in a one or two-bedroom property and intend to join the ranks of the second stepper, there are a few considerations other than a higher asking price. You may wish to think about the following before you ascend the property ladder. 

  • Moving costs: there’s a brilliant window of opportunity to buy your next home with no stamp duty or at least a reduced bill*. You’ll still have to factor in, however, solicitor’s fees, a mortgage arrangement fee (if applicable), removal costs and an agent’s fee if you also have a property to sell.
  • Redecorating costs: if you’re gaining more rooms or more square footage, your interior will cost more to change. Be mindful that you’ll need more paint and more carpet, for instance, plus there will be more windows to dress.
  • Running costs: a bigger property will cost more to heat and power. It’s also worth checking out the council tax banding of a bigger home you’re interested in, noting the difference when compared to where you are living now.
  • Budget for furniture: extra bedrooms are brilliant but to optimize the space, they need to be furnished, so factor in the cost of buying a bed, bedside cabinets and a wardrobe. Likewise, if you’re swapping eating from a tray on your lap for a dedicated dining room, you’ll need to buy a table and chairs.
  • The value of a home office: if your primary motivation for upsizing is to gain a home office, you may face stiff competition from others moving for the same reason. Be prepared to pay a premium for houses where there’s a dedicated study on the ground floor, or consider alternative options, such as using a guest bedroom as a home working hub or adding a garden room for the 9 to 5.

If an extra bedroom, a home office or extra outside space is on your moving wish list, tell us the size of your current home and we’ll show you properties for sale that give you the extra space you crave. Get in touch to start your search. 

*Purchases must legally complete by 31st March 2021 to qualify for a zero or reduced stamp duty bill