Letting agents are great in that they manage the trickier and lengthier aspects of tenancies which landlords typically dislike. With that said, finding one which best suits you and your needs can be tricky, CIA Landlord Insurance has put together a handy guide which may assist in laying out the basics.

Who is likely to benefit from using a letting agent?

Typically, landlords who benefit from the use of a letting agent are those who have a large number of properties to manage. Also, landlords do not always live close to the property they are renting out, so a letting agent close to the property may prove wise in order to keep tabs on their tenancies.

Letting agents work well for inexperienced landlords, where they can be utilised for some added security and support. It is highly important landlords are up to date on relevant regulations and legislation, therefore if you are not or you do not feel comfortable in this department, it is most-definitely worthwhile using a letting agent.

What services do letting agents provide?

There are varying levels of service which letting agents provide, from a ‘let-only or ‘tenant-find’ service for example, through to the more comprehensive ‘fully managed’ service.

A ‘let-only’ and ‘full management’ service are typically the two main categories which a letting agent will provide.

A ‘let-only’ and ‘full management’ service are typically the two main categories which a letting agent will provide.

With a ‘let-only’ service, the letting agent takes responsibility for things such as providing rental assessments to give you a better understanding of what you can realistically charge, conduct viewings on your behalf and acquire references from tenants. What can also be expected from this level of service is a tenancy agreement to be provided, credit checks performed and the tenants first payment be taken by them.

A full management service, on the other hand, will incorporate all of the aforementioned elements but you can expect the letting agent to take responsibility for the day-to-day management, too. If for instance, a tenant locks themselves out of the property or there is a boiler fault, the letting agent will arrange for one of its approved contractors to resolve the issue.

What is the cost of a letting agent?

The cost of a letting agent greatly differs depending on factors such as the location and size of your property. As it is a highly competitive market, there is always the prospect of negotiation to get yourself a better deal, so long as you are prepared to haggle. Request a price from a number of sources in your locality, and begin negotiations from there.

If a small independent letting agent is hired, then for a ‘let-only’ service you may be fortunate enough to pay as little as a couple of hundred pounds for the service. However, the likelihood is you will pay the equivalent to a months rent + an annual tenancy renewal fee.

It is important to note, from June 1st 2019 landlords or letting agents are no longer able to charge these fees to tenants. This means that (some) letting agents have been offsetting this loss onto the landlords (therefore paying double what would originally be paid for the renewal fees).

A full management service will typically be a 12-month deal with fees starting at around 12% and can rise to as much as 20% depending on location. If you come across prices lower than this, it may be wise to avoid them for reasons of service quality.

A full management service will typically be a 12-month deal with fees starting at around 12% and can rise to as much as 20% depending on location. If you come across prices lower than this, it may be wise to avoid them for reasons of service quality.

Should I use a letting agent?

With a wealth of information at our fingertips, it may seem lucrative to consider a ‘DIY’ approach for conducting a letting agent’s traditional duties. With plenty of research, it is possible you can do it yourself. Only go down this road if you feel confident in yourself to abide by the relevant regulations and legislation.

One thing to consider if you do decide to use a letting agent, check to see if they are registered with an industry body or trade association. These include the Association of Residential Letting Agents (ARLA), National Approved Lettings Scheme (NALS) and UK Association of Accredited Letting Agents (UKALA) as the main bodies whereby the letting agents have to adhere to certain standards in order to become a member.

The idea of being a landlord is great, but the reality, for the most part, is it is not an easy task. Taking control of all of your own property management may prove extremely difficult depending on the size and number of property’s you own, and the nature of your tenants. You may have the best intentions of delivering everything all of your tenants require but sometimes this may not end up as being the case. If dealing with unhappy tenants is your idea of a nightmare, letting agents will do this for you.

In accordance with your own circumstances and requirements, only you as a landlord can make the decision but by keeping yourself well informed on all aspects discussed in this guide, to begin with, you can improve your chances of making the best possible choice for you.

However, despite propaganda and horror stories surrounding the housing market in the UK, and the question of how Brexit will affect this, there are actually a lot of positives to buying in the UK at the present. It may well be the case, that now is in fact the perfect time to buy a house in the UK, and here’s why.

Population Levels

A recent census actually showed that the population has grown by a record of 7% in the last decade to just over 68 million people. That’s almost the equivalent of adding the entire city of Manchester to the UK every year. In the next twenty or so years, the number of UK houses needed is expected to reach the sum of at least 28 million, which is an increase of 250, 000 households per year. With rapidly growing numbers like this and the demand for houses growing, why wouldn’t you invest in a property? Not only this, but cities such as Birmingham, Manchester and Leeds are flourishing like never before. London no longer has the monopoly, as many places up North are regenerating. Birmingham alone has gone through a complete transformation, costing over £500 million in development.

Low Prices

Housing prices are at an all time low, meaning it can only go up from here, so why wouldn’t you buy them now in order to make money on them later? It’s a very rare combination: the

weak pound, low interest rates and falling property prices. Because of these elements, borrowing is cheaper than ever, and mortgage rates are at an all time low. This increases the amount of money landlords can charge for rent, thus making their monthly rental income higher than ever before. Therefore investing a buy to let property in the UK at present could make you a lot of money in the long run.

Other Positives

Of course there are further positives to investing in a UK property:

• Studies show that the UK is actually the top European city for property investment, despite political Imagine how much it will boom when Brexit is (finally!) concluded.
• For investors, thanks to the internet and a growth in the alternative methods of sale to the traditional, such as quick sale investors, for example here. This is a great option in case investors end up looking for a quick cash sale, or alternatively look to make a purchase of the
• If statistics are indeed correct, it’s set that at least 20% of the population will be looking to rent their home rather than buy them in the next five If this is the case, then now would be the perfect time to invest in a buy-to-let property. Imagine the money you could make in the future - not bad for the pension pot. Sometimes an investment now is worth the reward you’ll get in the future.
• In the world, out of the top universities, sixteen are actually in the
• In regards to the growth in population, mathematically there are actually too few houses for the amount of people in the country now, and by how much that’s set to grow. Because the demand outweighs the current supply, investors who have exposure to property as an asset are likely to be able to regenerate a return from
• The rise in employment levels in the country is also another reason for investors to buy. By the end of 2017, 75.3% of people in the UK were then employed, as opposed to the 5% the previous year. 2017 showed the joint highest number since records began in 1971. To make this more useful, in numbers it means that roughly 415,000 more people were employed since 2016.

In short, these are only a small amount of the reasons why it’s worth investing in the UK now, and why in fact it’s the perfect time to buy property in this country. Regardless of your purpose, whether you’re looking to become a landlord or wanting to buy your own home, looking at prices and statistics now is the ideal time. So what are you waiting for

This is according to a recent study by KnowYourMoney.co.uk. Meanwhile, separate data shows that, in total, there are just over 11 million mortgages across the country, with the combined value of the mortgage market coming in at £1.3 trillion. Here John Ellmore, Director at KnowYourMoney.co.uk¸ discusses further the correlation between a lack of financial planning and subsequent mortgage troubles.

It’s a huge market, and for most people a mortgage will be the largest single debt they take on in their life. It is vital, therefore, that consumers are thorough and diligent in both finding the right mortgage product and making mortgage repayments.

Navigating the mortgage market

Returning to the aforementioned research by KnowYourMoney.co.uk, not only did the survey uncover the types of debt people have, but it also offered insight into the ways Britons are managing their finances. And there were some concerning findings.

Most notably, two thirds (67%) of those in debt have no savings stored away to enable them to pay off debt if required, with men (73%) more likely than women (62%) to lack a financial safety net. Furthermore, nearly three in ten (29%) said they do not feel in control of their debt and have no plans of how they will pay it off.

In light of these figures, it is perhaps less surprising to note that 24% of people in debt said they lose sleep because of it.

When it comes to mortgages, planning and preparation are key. Indeed, with so many mortgages available – 4,214 new products were introduced into the residential mortgage market between 2016 and 2018 alone – choosing the most appropriate option can be challenging.

Importantly, this challenge starts with an individual understanding his or her personal finances.

Debt-to-income ratios

Essential within this planning phase is to know one’s debt-to-income (DTI) ratio. In short, this offers an indication of how much debt a person has in relation to their earnings – it is calculated by dividing total recurring monthly debt by gross monthly income.

But many people are in the dark about DTI ratios; 44% of UK adults do not know what their debt-to-income ratio is, with 39% admitting to not understanding the term.

This needs to be addressed. Without understanding exactly how much debt one can responsibly handle, securing the right mortgage is extremely difficult.

Of course, a mortgage provider will undertake its own due diligence in ensuring a borrower’s income is sufficient for the terms of a particular mortgage. However, in truth, the lender will never be able to match the borrower’s granular insight into their finances.

Avoiding bad debt

Ultimately, despite the negative connotations that still surround the word, debt is an extremely valuable financial instrument. It enables people to pursue life goals otherwise out-of-reach. But we must recognise there are good debts and bad debts.

Good debts are both manageable and will provide value to the individual – mortgages are a prime example of this, assuming the amount borrowed can be repaid. Bad debts are those that cannot realistically be repaid or provide no value – taking on debt to pay-off other debt is a common example of this.

Mortgages, by and large, are good debts, but only when the monthly repayments can be made without being overly restrictive to a person’s financial situation. The first step is for consumers to ensure they know what their DTI ratio is – a task that takes just a few moments thanks to online DTI calculators.

Failure to do so could cause problems down the line. Illustrating this point, it is estimated around 88,000 mortgages in the UK are in arrears of 2.5% or more, while there are 52 mortgage possession claims made every day.

To avoid falling into this situation, borrowers must be sure they only take on good debt. Moreover, whenever possible they should set aside savings to help make repayments in case of cash flow issues or interest rate changes in the future.

Thorough preparation and careful management are at the heart of any successful financial strategy, and when it comes to mortgages these are essential in ensuring people navigate the market safely and only accrue debts in a safe, responsible manner.

Here Jamie Johnson, CEO and Co-founder at FJP Investment, discusses with Finance Monthly the real impact of Brexit on the UK property market.

While it may seem like the country has ground to a standstill as the political standoff in Westminster continues, we cannot let this overshadow the activity and trends underpinning many of the UK’s leading sectors.

The property sector is a case in point – domestic and foreign investment continues to pour into the market, increasing house prices grow and in turn producing attractive investment opportunities. Recent research suggests that property investors also stand undeterred despite Brexit uncertainty –almost half (45%) of property investors have expanded their property portfolio since the EU referendum, whereas only 7% said they had sold one or more homes as a direct result of Brexit.

To understand why the UK continues to be a prime property hotspot despite the current state of political affairs, it can be valuable to reflect on how the sector has fared over the last two and a half years. This including understanding the key trends that have played a central role in shaping the real estate market.

Strong regional growth

In times of uncertainty or transitions, commentators like to take a keen interest into how different sectors are performing in London. As a cosmopolitan hub renowned for its residential and commercial real estate opportunities, the capital has faced some challenges. Since the EU referendum, house prices have largely stagnated, and in some postcodes even fallen.

However, focusing on primarily on London risks overlooking the progress taking place in regional markets. Indeed, national house prices have actually been on an upwards trajectory in recent months, driven largely by strong growth in places like the Midlands and North of England.

Birmingham (up 16%), Manchester and Leicester (both up 15%) have experienced the fastest rates of house price growth since the June 2016 referendum, followed by Nottingham (14%), Leeds (12%), Liverpool and Sheffield (both 11%). In real terms, this means that the average property in Birmingham now stands at £163,400, while the average house in Manchester costs around £168,000. For an investor, this attractive capital growth few assets can match.

So, what are the underlying reasons for these strong performances? Much of it comes down to large-scale regeneration projects which are reviving infrastructure, construction and transport links. Some of the construction works include the redevelopment of land close to new stations that are being created for High Speed 2 (HS2).

Property as an attractive asset class

Significant public and private investment is undoubtedly bolstering the sector, yet another important trend to note is the volume of property transactions taking place even at the height of Brexit uncertainty.

In January of this year – just weeks from the original Brexit deadline, and without a clear vision of what the UK’s transition from the EU would entail in practical terms – the number of transactions on residential properties with a value of £40,000 or greater was 101,170, or 1.3% more than a year prior.

This is testament to the underlying popularity of property as an asset class able to deliver long-term returns, and weather political and economic transitions. In fact, recent research revealed that Brexit hasn’t dampened investor sentiments towards property; the survey of over 500 property investors revealed that 39% plan to increase the size of their property portfolio in 2019, regardless of the ongoing negotiations.

Challenges facing the market

Notwithstanding the obvious challenges facing the UK – namely, setting out a clear direction for the future of the country outside of the EU – there are some pressing national priorities that also deserve attention.

Perhaps most important of all is the housing crisis. At present, there are simply not enough affordable and accessible houses on the market to meet growing demand. And while the government has set targets to address this issue, there is an overwhelming fear that these goals will ultimately fail to materialise.

Last year, Prime Minster Theresa May committed the government to delivering 300,000 new homes a year by the mid-2020s. Although a positive step in the right direction, the current pace of progress suggests that construction efforts will fall short of reaching this target.

Figures released by the housing ministry in March 2019 showed that building work began on 40,580 homes in England during the final quarter of 2018. This is down 8% on the previous three months. Further to this, a National Audit Office report recently concluded that half of councils are expected to miss house building targets.

While Brexit has largely taken priority over important issues, the Government cannot put off committing the necessary time and resources towards rebalancing housing supply and demand. Creative reforms are needed, and debt investment projects, such as off-plan property investments, are but one of the many solutions that could promote the construction of new-build properties.

Despite the current obstacles facing the property market, UK real estate has proven itself to be a resilient asset class even in times of hardship. Bricks and mortar remains a popular destination for domestic and international investment, and looking beyond the more immediate challenges lying on the horizon, it is important to recognise the resilience of property as a leading and desirable asset class.

Following, we are going to explain the trends that led to this massive change and what it means for young buyers.

1.  Ripple Effective

The successive cycles introduced in 1970s consist of economic houses where the property value increases first in London, this wave then goes south easy and other reasons. London always stayed at the front. However, the percentages were not always impressive.

Prices of houses in London have bee n doubled in North (Yorkshire, and Humberside).

2.  Income Growth

There have been some changes in regional prices. These are influenced by national factors like low interest rates and an increase in real incomes. The real incomes have had an impact on house prices. A 1% increase in real income will lead to a 2% increasing house prices. This is because households can afford to pay a bit more. This way, the house prices show a bit more volatility than the respective income.

3.  Supply, Demand and Other Patterns

Recently, there has been poor income growth in London. This shows that England is operating in a weak national housing environment. But it doesn’t show the regional price pattern. Internal migration patterns, supply shortages, higher demand in London also have their impact.

It's important we look closely at the southeast and see how outer London relative to inner London and South-East is as a whole. We need to focus on areas that aren’t very distant from each other. Recently, more people left London than the ones who entered it. London has attracted young people recently, but some older groups have left the city. This loss declined until 2009 but peaked once again, especially in 2016-2017.

This pattern is rather consistent and is leaving an effect on real estate prices. As a high proportion of people are leaving London to settle someone where else, there will be a fall in house prices in London as compared to the South East in the past two years.

In case if you are a young professional and looking for accommodation, you should try to find flats to rent in Edinburgh. CityLets.co.UK is a certified leading property portal that enlists properties for rent all around England. This site has been helping people finding ideal accommodation since 1999.

4.  Types of Property

The price for different types of properties increased and decreased in different patterns. Families can easily move to different locations as they can easily adjust into a different type of property.

With that said, its time we discuss the differences between prices of terraced properties in inner and outer London. This shows the inner London real estate market suffered from a drop-in value. This is once again consistency with Households moving to expensive inner regions.

5.  Investment Opportunities

Migration flow isn’t the complete story. The southeast is also suffering from shortages, but it’s time we discuss the monetary environment and low interest rates.  Housing in London is included by its role as an investment along with being a consumption good.

Investment motives for buying housing are important in other areas, but London has some special characteristics. Prices in London are more responsive to changes in interest rates than anywhere else.

Speaking of falling prices, the average flat in London costs more than £400,000. The average flat in south-east costs £200,000. Even if we ignore the massive difference, this is still beyond the resources of most first-time buyers unless they have strong additional support. In short, the price falls will unlikely to benefit first-time buyers.

Nowhere across London is more unaffordable than Kensington and Chelsea and Knightsbridge in particular and rental costs in the borough are some of, if not the highest in the capital having increased over 23% since 2012.

But since June 2012, Julian Assange has managed to not only live rent free in prime central London, Harrods adjacent and just minutes walk from Hyde Park, but dodge any increase in living costs associated with renting.

The current average rent for a room in Kensington and Chelsea is £1,928 a month and while he may have been forced to pay for the upkeep of his cat, by claiming refuge in the Ecuadorian embassy over the last seven odd years, Assange has saved a huge total of £148,381 - an average of £1,810.

Tom Gatzen, co-founder of leading flatshare platform ideal flatmate, commented: “We’ve seen the capital’s tenants resort to some drastic measures to deal with the cost of renting in London but I think Julian Assange takes the gold for his commitment to a cost effective lifestyle in the London rental market. 

"It doesn’t seem all that long ago that he entered the Ecuadorian embassy but to think in the time since, the average tenant in Kensington would have paid £150,000 in rent for just a single room, which is actually quite mind boggling.  

"Of course, Kensington sits at the top of the table where rental costs are concerned but it does go to show how the cost of renting in London continues to spiral out of affordability for many.

"While Julian’s saving has been notable the harsh restrictions around leaving the property and the immediate eviction process that he underwent probably weren’t worth it. We would have recommended using ideal flatmate so he could have not only split the cost of living in London, but our personality test could have matched him with like-minded roommates.

"If the Ecuadorian embassy is at a loose end with the now empty room, we can certainly help them fill it with a suitable tenant that will bring less media attention and contribute to the monthly living costs.”

We are often asked which is better – property or an investment portfolio. Below, Dan Atkinson, Head of Technical at EQ Investors, answers all your questions.

We invest many things during our lifetimes. Whether it’s time, money, or experience that we are investing we are always looking for a future outcome. When we invest money it’s important to frame our decisions with what we want our future to look like. It’s helpful to have this approach when we decide how to invest our money.

One decision people often consider is should they purchase a buy-to-let property, or should they build an investment portfolio? It’s not quite a clear-cut decision and a better question would probably be, what mix is right for you? Let’s have a look at some of the important factors you need to think about.

Buy-to-let

Many of us are familiar with the housing market and have watched our own properties increase in value. A property rented out to reliable tenants can be an excellent source of income. Rents vary hugely across the country, so always do your research.

It is important to remember there will be costs to cover such as general repairs and maintenance, agency fees and insurances. These costs will continue whether you have paying tenants or not. As a landlord you will also be taking on a number of legal obligations which may result in additional costs. You can outsource some of your responsibilities to a manging agent but this will reduce the return.

However, over the last few years the Government has started to reduce the tax efficiency of property investment. Investors will pay an extra 3% Stamp Duty Land Tax when they buy a residential buy-to-let property. They also previously enjoyed Income Tax relief on mortgage interest, but this is also being reduced and will be restricted to 20% from April 2020. When they eventually come to sell their properties, this will now be subject to Capital Gains Tax (CGT) at 18% (within basic rate band) or 28% (higher and additional rate taxpayers) on the gains.

This coupled with rising property prices leading to lower yields makes it harder to find the right property and more expensive to build a diversified portfolio than it was in the past.

Investment portfolio

Investment portfolios can potentially enable you to spread your investment more widely as you are not having to buy one expensive asset. This means that investors can build up more diversified portfolios to generate income and capital growth. Instead of having their investments just in one town, city, or country they can invest across the globe. Spreading their money into different types of investment such as property, equities, and bonds helps reduce some of the risks.

Whether you choose to build your own portfolio or delegate this to a professional, there will be costs. These relate to the ongoing management of the funds, ensuring that the overall mix remains suitable for you, and a structure to hold these safely and securely.

Investors have a choice about how they hold their portfolio. ISAs in particular provide freedom from Capital Gains Tax and Income Tax; you can add £20,000 to your ISA each year.

Income generated by a portfolio is taxed differently to property. For investments held outside an ISA, the first £2,000 of dividends are tax free and the subsequent rates (7.5%, 32.5% and 38.1%) compare favourably with the main rates of Income Tax (20%, 40% and 45%). Some of the income generated by a portfolio will be taxed as Interest and most investors will have a tax-free Personal Savings Allowance of up to £1,000. The respective rates of Capital Gains Tax are also lower at 10% and 20%.

Perhaps the biggest advantage of using an investment portfolio approach is liquidity. It isn’t possible to dip in to the capital value of a buy to let property without selling the whole thing. In comparison you can sell part of an investment portfolio if you need access to capital. As well as the practical and tax considerations, it is normally a lot quicker to sell an investment than a property.

In summary

So what about you?

As with many aspects of life and financial planning there is no easy answer. You should consider what you need this money to do for you. For most people our money is there to serve our lifestyles (current or future). If we start to find managing the money takes away from this then we probably need to reassess our decision.

If you are likely to need to dip into it then an investment portfolio might be more attractive. Delegating responsibility about where to deploy your money and the day-to-day management may also become desirable as how we want to spend our time changes.

Benham and Reeves looked at the historic FTB property price data from the Land Registry and how this had changed month to month across each UK region and London borough, before projecting these monthly price changes forward 34 years to see what the average first-time buyer house price could hit for those born today.

With the average FTB now 34 years of age and today’s average FTB house price in England at £207,526, those born today could be looking at an average of £1,214,381 to get on the ladder in 34 years’ time.

This is, of course, much higher in the capital and despite the current market slowdown, the average FTB house price in London is now £412,679, although this could increase to a huge £4.5m over the next 34 years.

The data shows the average FTB house price would also top the £1m mark in the East of England and the South East, where the average house prices are currently £241,259 and £259,567 but could hit £1.9m by 2052.

The cheapest area to buy for FTBs born today would be the North East with a predicted price of £210,739, up from £110,645 today.

Looking into London, Kensington could be toppled as the capital’s most expensive borough, from an FTB perspective anyway. Despite the much higher price of property today, the slower rate of growth in FTB property prices in the last seven years means that Waltham Forest could overtake the PCL borough with an eye-watering average house price of £11.5m by 2052.

Kensington would still rank second with an average FTB house price of just under £8.4m, with Hackney (£6.8m), Westminster (£6.8m) and Haringey (£6.6m) all home to some of the highest prices when getting on the future ladder.

Hounslow has seen the slowest rate of growth in FTB house prices historically and ranks as the most affordable for an FTB born today, but even then they would need a whopping £2.8m to get on the ladder in 34 years’ time.

Benham and Reeves Director, Marc von Grundherr, commented: “This research considers the ups and downs of the first-time buyer market historically and how things could play out for the generation of first-time buyers being born today if these trends were to repeat themselves. 

Of course, it’s impossible to predict the future of the UK property market, particularly given the current turbulence caused by wider economic and political factors, however, this research acts as a warning of what could happen if we continue to fail in the delivery of affordable starter homes.

Not only does it show the huge jump in prices over previous years but how this could worsen further down the line. 

While we hope that prices won’t reach these dizzying heights, we’ve certainly seen stranger things happen across the UK property market in the last 34 years, so who knows what the next 34 may bring.”

(Source: Benham and Reeves)

The report looked at figures for 2018 and showed that 370,000 people applied for their first mortgage, an increase of 1.9% on the previous year and the highest number since 2006 when there were 402,800 applications.

New lending

The report also showed that there was some £62 billion in new lending during 2018, an increase of almost 5% on the same period the previous year.  Schemes such as the Help to Buy scheme from the government means that more people than ever are in a position to buy their first home, without always having to have a massive deposit.

New buy to let mortgages stood at 5,100 but this has actually fallen on previous years, by around 5%.  This shows that the market has become a little cautious in the light of new tax rules and other regulations being put in place for landlords.

First home success

With 370,000 new first-time buyer applications, this is the highest number in a 12 month period for 12 years, showing that while there are concerns about the housing market, there are still plenty of positive signs.  This works out as around 35,000 first time buyers a month that are moving into position to buy their first home.

The report also showed that the average age of the first time buyer was 30 and their gross household income was £42,000.

Getting that first mortgage

The increase in numbers is a positive sign but there are still considerations for first-time buyers, and this is why that average age is around 30.  For starters, you need to have a deposit of between 5-20% of the cost of the home before you attempt to get a mortgage.  So if you are looking at a property worth £150,000, you will need at least £7500 in a deposit.   The more deposit you have, the more mortgage products are open to you.

Deposit isn’t everything, you also need to factor in other costs.  Buying your first home still involves some costs that can be quite substantial and include:

• Solicitors fees
• Survey Costs
• Removal costs
• Building insurance
• Furnishing and decorating costs
• Mortgage arrangement and valuation fees

There’s no Stamp Duty to pay on your first property up to a value of £300,000, as long as it isn’t worth more than £500,000.

Monthly repayments

After the problems of the Financial Crisis, lenders are also a lot more cautious about ensuring you can afford your mortgage payments and still pay all of your other living costs before they commit to giving you the money.

It can be an idea to put together a budget before you start mortgage shopping that looks at your outgoings.  This can be things like food, utility bills, council tax, water rates and also any existing debt you might have.   You will need to provide proof of income and outgoings to show the mortgage company that these figures are accurate.

You may qualify for a home buyer scheme backed by the government and a mortgage broker will be able to tell you about that.  There are affordable housing schemes, shared ownership schemes and also the Help to Buy scheme that could all make the difference between getting that house or not.

Finding the right deal

There’s a lot involved with finding the right mortgage deal and that’s why many first time buyers now use a mortgage broker.  They aren’t tied to specific companies and can find a product that suits your circumstances and budget.  That way, more people can continue to become first-time property owners in 2019.

One77 looked at the average cash and mortgage buyer house prices from the Land Registry and how much higher or lower the average mortgage house prices was, compared to those funded by a cash purchase.

With interest rates remaining at affordable levels and house prices at not so affordable levels, it’s no surprise that mortgage sales volumes across the nation are 138% higher than cash sales volumes. However, despite slower market conditions and the ease of dealing with cash buyers over those with a mortgage, the average house price for cash buyers is still 9% lower than mortgaged average house price levels.

By Region

In fact, there is just one region where cash buyers pay a higher property premium and that’s in London.

The gap is highest in the North East where mortgage funded house prices are 14% higher than those purchased with cash.

Great Britain

Some of the highest gaps in Great Britain are in Scotland with the highest being Falkirk, where house prices fuelled by mortgaged buyers are 32% higher than cash buyers. North Lanarkshire (26%) and Renfrewshire (25%) are also amongst the highest.

Hartlepool is the largest gap in England at 25%, East Renfrewshire, East Dunbartonshire, Preston, Middlesbrough, Burnley and St Helens also make the top 10.

Although placing 18^th in Great Britain, Newport is home to the highest Welsh gap in mortgage and cash buyer house prices at 16%.

Although only the 83^rd largest gap overall, Sutton is home to London’s largest gap with mortgaged fuelled house prices sitting 10% higher than those purchased with cash in the borough.

On the flip side, there are a couple of factors that can see the average cash sold price exceed that of mortgage sold prices in an area. Property prices could be more realistic, or buyers could have pockets deep enough to front the cash as is the case in some areas of prime central London (Westminster in particular). There’s also the chance that more properties in that area are unmortgageable and therefore competition from cash-only buyers will push up the cash sold prices statistics. This is often the case in the remote and sparsely populated Scottish islands, where lenders won’t go due to the tricky geographical factors and lower demand for property.

Managing Director of One77 Mortgages, Alastair McKee, commented: “Many home sellers will be drawn to a cash buyer as it can often mean a quicker, smoother selling process with less paperwork and no onward chain, which can be hugely appealing to someone that needs a quick sale in particular.

However, savvy buyers will know that they are in this stronger position and as a result they will often negotiate more off the asking price than they otherwise would, with the seller tending to accept it, resulting in a lower sold price achieved. I myself sold my last property at £100,000 below asking price to a cash buyer due to the greater convenience of doing so as I was lucky enough to be in a strong position due to my onward purchase, so I can certainly understand the appeal.

When considering which works best for you it’s really down to priorities. If you need to sell quickly then a cash buyer is the way to go, but if the sold price is more important, it’s worth holding out for an offer at full asking price.”

Homeowners are having to dig deeper than ever before to fund a home move, with the costs associated with buying and selling a home at their highest ever, according to reallymoving’s recent annual Cost of Moving analysis. The total cost of moving home increased by 6% between 2017 and 2018 for the average homeowner, to a record high of £9,812 – equal to one third of the median UK salary of £29,588.

At a time when the property market is stagnating due to uncertainty over the outcome of Brexit and fear of a no-deal scenario, homeowners pressing ahead with a move are facing the third consecutive year of a price increases, which can be attributed to higher stamp duty and conveyancing costs due to a 3% rise in house prices during 2018. On a UK level, taking into account regional rates, stamp duty now makes up almost half (46%) of the total cost of a home move.

Existing homeowners now pay on average £4,500 in stamp duty, an annual increase of 11%. Average conveyancing costs in 2018 were £1,497 versus £1,417 in 2017. Estate agent fees, EPCs (Energy Performance Certificates) and removals costs remain unchanged and surveying costs have risen by just 1%, as providers compete to offer movers the best possible deal in a flat market. Estate agent fees typically cost £2,880 based on a rate of 1.2%, an EPC £55 and a survey £400, while removals, varying considerably according to the volume and distance moved, cost on average £480.

First time buyers see costs plummet

In sharp contrast, first time buyers have seen the costs associated with buying their first home plummet by almost a third (29%) in 2018 to £1,809. This is due to changes to the Stamp Duty Land Tax regime implemented in England in November 2017 which mean first time buyers pay no stamp duty at all on properties up to the value of £300,000. The average first time buyer in 2017 paid £800 in stamp duty, but this bill has now fallen to zero, bringing total moving costs down dramatically.

Tables showing annual change in moving costs for homeowners vs. the average First Time Buyer (FTB)

Table showing annual change in average property prices for homeowners vs First Time Buyers (FTBs)

North/South divide in cost of moving

The cost of moving home in London has now reached £23,039, 2.3 times the UK average. Home moves in the South East, South West and East of England all cost more than the UK average, while in every other region of the UK (East and West Midlands, North East and North West, Wales, Scotland and Northern Ireland) the cost of moving is well below average, as a result of lower house prices. This clear north/south divide means homeowners in the south enjoy far less freedom when making major life choices such as moving home.

Graph shows: Regional cost of moving for homeowners in 2018 (reallymoving)

Rob Houghton, CEO of reallymoving, said: “It’s never been more expensive for homeowners to move, despite the fact that most providers of home move services, such as estate agents, removals companies and surveyors have refrained from increasing prices over the last year as they fight for business from a smaller pool of movers.

“It’s a different story for first time buyers however, who have benefited from a significant fall in the upfront costs of buying their first home due to stamp duty changes. For those first time buyers with a medium to long term view, now could be a good time to buy with costs and mortgage rates low and plenty of sellers prepared to do deals.

“For anyone planning a home move, it’s always a good idea to shop around online for the best deals and compare by ratings and reviews left by past customers, as well as price.”

Those wishing to invest in property this year need to be aware of the emerging markets and demographics in order to make the best decisions.

Here, you will discover the ultimate real estate investment guide to purchasing property in the year ahead.

Which areas should you focus on?

Not all areas of the UK are facing a tough property market. In fact, some areas are positively thriving. If you want to ensure you are making the right investment, there are certain locations throughout the UK that you should be focusing on.

Birmingham is a key area currently experiencing adequate growth. It is experiencing significant infrastructural developments and has seen a drastic increase in the level of inward investments. It is thought the city is going to witness a 14% growth over the next three years, making 2019 a great time to invest.

Newport in South Wales is another area to consider. Out of all of the UK council areas, the town has been recognised as the 9^th largest in terms of increase in house prices. According to local estate agents, there are waiting lists of buyers looking to invest in the area. This means, if you want to invest in Newport, you are going to need to be patient.

Other key areas experiencing a strong property market include Trowbridge in Wiltshire, Northampton, Leeds, Leicester and Coventry.

Which sectors are performing well?

In terms of which sectors to invest in, there are a couple of market trends to pay attention to this year.

Due to economic uncertainty, the rental market is expected to rise significantly over the next year. However, changes in legislation have led to many buy to let landlords pulling out of the market. Further changes set to be introduced in the form of the Tenant Fees Bill on June 1^st, 2019, could potentially push more landlords to leave the market. This means, there will be a higher demand for private rental opportunities. Investors who have the funds could therefore significantly profit from buy to let opportunities.

Auctions are also going to play a large role in the property market. Investing in property from an auction house enables investors to potentially snag a bargain. More sellers are likely to turn to auction houses, particularly if they require the funds quickly.

Overall, the property market has proven how resilient it can be in recent years. There may still be a lot of economic uncertainty, but as you can see above, some areas and sectors still remain lucrative to investors.