Housing and the Autumn Budget
We thought, at Homesite, it might be useful to give you a rundown of the latest budget and how it affects the housing industry, in both the areas we cover (Notting Hill, Bayswater, Kensington & Holland Park) and the wider market.
For once, it was a relatively low-key affair for housing. Too often, in recent years, the chancellor has used the opportunity to announce one tax rise after another for the sector. No doubt, to the relief of all our landlords and second-home owners, there were few mentions of stamp duty and capital gains tax. There were, though, some important issues hidden within the detail of Rishi Sunak’s speech. Here’s a summary of the key points:
New homes
The centrepiece of Sunak’s housing budget was a promise to invest nearly £24bn to help stimulate the building of new homes. Sunak claimed it was the “largest cash investment in a decade” into housebuilding which will “turn Generation Rent into Generation Buy”. The money will be divided up into a number of different initiatives, including:
1) £1.8bn to be spent on the development of 1,500 hectares of brownfield land - part of the government’s £10bn commitment to help facilitate the building of more than a million new homes.
2) A £11.5bn investment in the Affordable Homes Programme. This is a fund from which housing associations, developers and local authorities can borrow to build affordable homes. Unlike social housing, these can then be rented or sold but only at affordable prices. The fund is expected to deliver 180,000 new homes, two thirds of which will be outside London.
Cladding
The chancellor announced a £5bn fund for removing dangerous cladding from high rise blocks. The figure includes contributions from a new Property Developers’ Tax - a 4% tax which will be levied on developers’ profits over £25m. The fund is considered woefully insufficient by many experts and, controversially, is only available for buildings of over 18 metres. Those between 11m and 18m have, instead, been offered loans to pay for the work. Since the budget, new House Secretary Michael Gove has waded into the argument, putting on hold any plans to make leaseholders pay for making cladding safe and questioning why they should pay "at all".
Help to Buy coming to an end
It has not been a good budget for developers. On top of the new Property Developers’ Tax, Rishi Sunak also confirmed the Help to Buy scheme would come to an end in 18 months’ time. It is a significant blow to developers - in 2020-21 alone, 55,600 people used the scheme to get them onto the property ladder. In response, Bellway, one of the UK’s largest housebuilders, has said it will be scaling back some of their activity.
Green funding
With Cop26 in Glasgow, many were expecting some big announcements for green housing. In addition, many landlords were hoping for some financial help to get their properties up to an EPC ‘C’ rating, which will be a legal requirement in 2025. Rishi, sadly, disappointed them all, announcing a £3.9 billion fund for de-carbonising homes - an almost insignificant figure compared to the estimated £500bn it will cost to do so to the UK’s ageing housing stock.
Stamp Duty
There was some considerable pressure from within the housing sector to continue the stamp duty holiday, but with the government’s coffers emptied by the pandemic, the chancellor showed no signs of doing so, nor of reducing it in any way.
CGT
There were fears Rishi might increase Capital Gains Tax for second and BTL homes. Instead, he extended the grace period for paying any CGT on property sales from 30 to 60 days after the completion date.
Rates
In good news for our local high streets, shops will be given a 50% discount on their rates for 2022-23.
Council tax
The government claims council tax will need to rise by 3% to fund their pledges. Many independent commentators believe the figure will be closer to 6%.
What’s going to happen to interest rates?
In recent months, there has been a lot of talk in the press about interest rates. Prices and wages have been rising rapidly since the end of lockdown, which has been driving up inflation. It was initially thought to be only a temporary spike but has proved stubbornly persistent. As a result, most commentators were expecting the Bank of England to raise the base rate by 0.15% to 0.25% in November. To everyone’s surprise, it didn’t happen. It is only likely to be a temporary reprieve, a month or two at most, and it is then forecast to continue rising to around 1% to 1.25% by the end of 2022.
Swap rates, the rate at which the banks themselves borrow money, have already gone up. At the start of this summer (May), the swap rate on a 2-year fixed-rate loan was 0.31% and 0.71% for a 5-year loan. Now they are 1.24% and 1.26% respectively. Lenders such as TSB, Barclays, Halifax, Nationwide and Santander have responded by raising the rates on many of their cheapest mortgage deals. Some are predicting that the best rates could double to around 2% over the next 12 months.
Coming from historical lows for both mortgages and the base rate, there is plenty of room for manoeuvre, especially since most borrowers have already been stress-tested by lenders for far larger increases in their monthly payments. Nor will the base rate rise affect everyone immediately - 74% of mortgage holders are currently on fixed-rate deals. And, for anyone coming off a 5-year deal, 2% may represent a reduction rather than an increase, as the average rate five years ago was 2.34%. For those on a 3-year deal, there will be a rise, but only a very modest one, with the average deal in 2018 around 1.81%.
Although rising costs will have an effect on the wider housing market. Because we are not used to rising rates, in the short-term, it may dampen demand, but only very slightly as borrowers adjust to the new reality. Things should then pick again, shortly afterwards, peaking in the spring. It is also possible that inflationary pressure will reduce rather than rise during the course of 2022, as global demand returns to more normal levels. The economy has proved very difficult to predict during the pandemic and things can change very quickly. Last month’s inflation forecasts, for example, are already being revised.
If you want to get an idea of where mortgage rates currently are, below is a selection of this month’s best buys from Moneyfacts.co.uk:
Two-year fixed rates: 1.14% from HSBC. Product fee £995. 60% LTV.
1.24% from HSBC. Product fee £999. 75% LTV.
Three-year fixed rates: 1.44% from HSBC. Product fee £999. 60% LTV.
1.49% from HSBC. Product fee £999. 70% LTV.
Five-year fixed rates: 1.46% from HSBC. Product fee £1,499. 60% LTV.
1.50% from NatWest. Product fee £995. 60% LTV.
Discounted variable: 0.51% For 2 years. From Progressive BS. Product fee £0. 60% LTV.
0.79% For 2 years. From Progressive BS. Product fee £0. 75% LTV.
BUY-TO-LET (BTL)
Best two-year fixed rate: 0.99% from The Mortgage Works. Arrangement 2.00% Advance. 65% LTV.
Five-year fixed rate: 1.49% from The Mortgage Works. Arrangement 2.00% Advance. 65% LTV
Best Discounted variable: 1.19% for 2 years. from Accord Mortgages. Completion £995. 60% LTV.
Please note, the information we provide is our personal opinion and should not be relied upon for financial advice. Should you need financial advice or guidance please contact an appropriate professional.
First impressions count
When you are doing viewings and you step through the front door of a home for the first time, you are filled with anticipation about what lies beyond. Will you be impressed, or will you be disappointed?
People don't often spend much time in their hallways - even though it gets a hard life, it’s always the last room to be decorated and is often little more than a dumping ground for coats, bags and bikes. But, remember, first impressions count, and that’s especially true when you are buying or selling a property. Buying decisions are often made within seconds of entering your home, so get the hall right and the battle is already half won. Here are some top tips for making the most of it:
Space:
To make your hall feel as spacious as possible, the most important advice of all is to keep it clean and simple. A cramped and cluttered hallway is an instant turn-off. Try not to use more than a single item of furniture. Narrower pieces work best, such as console tables. Mirrors, on the other hand, should be encouraged. If it’s well-placed, it will not only give the illusion of space, it can also help brighten a typically dingy hall. Keep coats, shoes and bags locked away in cupboards, but where that’s not possible, some stylish shelves and hooks can work – the trick is to make it look ordered in some way. Be sure to hide away all those voluminous puffa jackets and muddy trainers. And, if you normally keep prams or bikes in the hall, give them a temporary home somewhere else, such as in a shed or in the back garden (if you have one).
Light:
If your hallway feels like you are walking into a cave, and many do, do something about it. This may be as simple as cleaning windows and replacing heavy curtains. If it's not blessed with any natural light, your light fittings become even more important. So, for example, replace that old light fitting you inherited from the previous owners with a striking feature light, such as a chandelier. Or, if that's not possible you could introduce some extra light by placing a lamp on the hall table. A more radical option would be to replace a solid wall with a glazed one, allowing you to “borrow” light from a neighbouring room.
Colour and finishes:
Don’t be afraid of using bold colours, as they can add some unexpected glamour to a dingy entrance. Even those forgotten pieces of furniture can be reinvigorated with the application of a striking colour or pattern. A well thought out colour scheme will smarten things up considerably and ensure people are eager to see the rest of the house. Stay away, though, from colour or pattern clashes, as they will shrink the space.
The floor:
When meeting a person for the first time, it's often said that the first thing you notice about them is their shoes. In a home, you notice the flooring first and, like scuffed unpolished leather, threadbare carpets don't impress. A hard-wearing surface is your best option, whether it's tiles, stone or timber, although some carpet is often the quickest and cheapest solution. Remember, though, if your hall is dark, lighter flooring is best but light carpet stains easily, whereas light wood or tiles tend to wear far better.
Heading back to work & normality
This year, as a result of the pandemic, the market is not following the usual script. Although the market did cool slightly, down 0.3% (source: Rightmove), the fall was some way below expected levels. Over the last ten years, the average dip in August was 0.82% and, as recently as 2018, it dropped by as much as 2.3%.
Rightmove’s figures show 2021’s relatively small fall is being driven almost entirely by the upper end of the market (4 bed houses and above), whose prices came down by 0.8%. In the more mass-market sectors, prices rose. For first-time buyers, (2-3 bed homes), prices were up 0.6% and by 0.3% for second-steppers (3-4 bed homes). Demand in these sectors remains strong and supply levels constricted. Enquiries were up by 56% and sales by 9% when compared to August 2019 and properties sold at their fastest ever rate (36 days - subject to contract). At the same time, stocks are at record lows. Bearing in mind that the first phase of the stamp duty holiday came to an end in June, it is clear these unprecedented levels of demand are being driven more by our changing needs than any savings we might make.
There have been concerns for some time now about how both the economy and the housing market will perform over the longer term. The picture, though, is becoming clearer and our economic prospects are looking far healthier than many were expecting.
Russell Galley, Managing Director, Halifax, says:
“The macroeconomic environment is becoming increasingly positive, with job vacancies at a record high and consumer confidence returning to pre-pandemic levels. Coupled with a supply of properties for sale that looks increasingly tight, and barring any re-imposition of lockdown measures or a significant increase in unemployment as job support schemes are unwound later this year, these factors should continue to support (house) prices.”
Even the unwinding of the final phase of the stamp duty holiday on 30th September is not expected to have much impact on demand, with Rightmove predicting an autumn bounce in both buyer and seller activity and prices.
There's good news for Londoners, too. There is now hard evidence of a return to work (and living) in our capital. The Times reported that Monday 6th September was the busiest day for London’s underground in 18 months and bus passengers were up by 71% compared to the previous week. During the height of the pandemic, the flight from London had meant that demand in the capital had fallen considerably, especially for flats. That process is now demonstrably going into reverse and will soon bring upward pressure on both demand and prices.
HOUSE PRICES AND STATISTICS
The other indices continue to drag behind Rightmove's and will continue to do so as we move into the autumn phase of the housing market.
Nationwide: Aug: Avge. price £248,875. Monthly change +2.1%. Annual change +11%
Halifax: Aug. Avge. price £162,954. Monthly change +0.7%. Annual change +7.1%
Land Registry: June: Avge. price £265,668. Monthly change +4.5%. Annual change +13.2%
Hometrack UK 20 City Index: July: Avge. price £267,200. Quarterly change +2.3%. Annual change +4.4%
Rightmove: Aug: Avge. price £337,371. Monthly change -0.3%. Annual change +5.6% (asking prices on Rightmove)
According to Zoopla the average price paid in Notting Hill is £2,153,295 with the current average value of £1,553,701
If you are thinking of selling your property in Notting Hill please give our team a call or email on
info@homesite.co.uk
0207 243 3535
How to find a good builder
If you’re buying at one of our auctions, the chances are you will be buying a probate property. They tend to have belonged to older people, so they often require updating. However, if that’s not something you regularly do, finding a good builder to undertake the work is a challenge that often fills us with dread. It seems, every time you go to a dinner party or switch on the TV, all you ever hear are stories about cowboy builders, spiralling budgets and huge project overruns. So what can you do to avoid this happening to you?
The good news is that finding and hiring a good builder is not quite as difficult as you may think - you just need to follow a few simple but logical steps.
A recommendation from your friends and family is the ideal starting point, but if you don’t know anyone in your immediate circle that has had work done recently, don’t give up. You can spread the net a little wider by sending an email/WhatsApp/facebook message to all your trusted contacts, outlining exactly what you are looking for. If that fails to unearth a good builder, you can turn to one of the professional trade organisations, such as the Federation of Master Builders or the National Federation of Builders. Both organisations have a find a local builder service. The advantage with them is that their members have already been vetted and should work to certain standards. If anything does go wrong, they both have mediation services. You can also try one of the independent rating sites, such as www.checkatrade.com, www.mybuilder.com or www.ratedpeople.com.
It’s not just about choosing a good builder, you also need to choose one that is right for your particular job. Scale is important and so are your own, individual requirements. If you are building a large extension, don’t hire a one-man band and, equally, don’t hire a large company to do a small job. It’s best that they have the most relevant experience possible, so, for example, if you are having work done on a listed building, try and find a contractor that has experience in that area rather than someone who does a lot of new build work.
Whichever method you end up using to find your builder, you should put them through your own vetting process and you should always feel comfortable with them as you may need to work together for several months. Good references are essential, but don’t just take them at face value. Try and visit a couple of their recent projects and, ideally, speak to the owner of at least one of them.
Ask them about the quality of the work carried out, the reliability of the contractor and whether there were any budgetary or financial issues with the project. Don’t be embarrassed about it either. If you are spending tens of thousands of pounds on the project, think about how much worse you'd feel if it went wrong.
On the subject of things going wrong, any contractor doing anything more than a minor piece of work should be fully insured - ask to see copies of their insurance policies. And be wary of any professional qualifications or memberships on business cards and letterheads, as these can easily be faked, so check with the relevant organisations to see if they are genuine.
Having shortlisted your potential candidates, the next step in the process is to get them to produce a detailed quote and an estimate of the timetable for the job. In order to make this as accurate as possible, make sure the description you provide of the work required is as detailed as possible. Also, you should know there is a big difference between a quote and an estimate. An estimate, unlike a quote, is merely a rough guide or a guess. Sometimes an estimate is valid, for example if there are some unknown issues involved, such as whether existing foundations are suitable for a new extension, but mostly you should be very wary indeed of an open ended estimate.
Don’t chose the contractor solely on the basis of the cheapest price; you will probably be spending a lot of money and you will have to live with the results for a number of years. Neither should you choose a builder on the basis of his immediate availability, as a good builder is normally in demand and may not be able to start work immediately.
Once you have decided on your builder, tie down all the loose ends of the job and write a formal contract with a start and completion date. You can add in an overrun penalty clause but be generous with its timings. If you don’t know how to set up a contract, you can download a number of standard ones for free from the Federation of Master Builders’ website (you will need to register).
Within the contract you should also agree payment stages. There are always unexpected extras involved in any sizeable building project, so you should allow for the budget to run over by around 20%. Never pay too much money up front and don’t be tempted by a VAT free deal, it means there will be no paperwork to fall back on if it all goes wrong and such dodgy accounting standards may also be reflected in the building work. Finally, set up a regular meeting to check on progress and if you are not happy about anything, flag it up.
Celebrities That Have Lived Or Live In Notting Hill
Celebrities That Have Lived Or Live In Notting Hill
Notting Hill famous to the stars
- Jennifer Lawrence
- Lindsay Lohan
- Keira Knightley
- Harry Styles
- Hugh Grant
Notting Hill is north of Kensington, south of Bayswater and east of Holland Park. The area has been home to many celebrities over the years. This article will talk about some that have lived or live there now!
Jennifer Lawrence
Jennifer Lawrence is a world-famous actress that has starred in many movies such as X-Men and The Hunger Games. On August 15th, 1990, she was born in Louisville, Kentucky and grew up there until she moved to New York City at age 14. In her early twenties, Jennifer began working professionally as an actress with roles in projects like "Inception" and "Winter's Bone".
Lindsay Lohan
Lindsay Lohan is a celebrity that has lived in Notting Hill for several years. On July 24th, 1986, Lindsay was born in New York City and is an American actress, singer, and fashion designer.
She began her acting career with a guest appearance in "The Parent Trap" at 11. She became well-known for portraying characters such as Cammie (Camp Rock), Stewart (Confessions of a Teen Idol) and Sam (A Prairie Home Companion). Lindsay Lohan now lives at 19 Hyde Park Gate in Notting Hill, where her father lived when he was younger!
Keira Knightley
Keira Knightley is a world-famous actress that has starred in many movies such as Pirates of the Caribbean and Pride & Prejudice. On March 26th, 1985, she was born in Teddington, London and grew up there until she moved to Hampstead with her parents at age six.
At 14 years old, Keira was cast in a show called "The Bill" and began her acting career. She has starred in leading roles in movies such as King Arthur, Loves Actually, The Jacket, and the Caribbean series Pirates.
Keira was nominated for an Academy Award for Best Actress on December 25th, 2005, at age 20, when she played Elizabeth Swann/Elizabeth Turner in Pirates of the Caribbean: The Curse of the Black Pearl. Keira Knightley lives in Notting Hill at an apartment located on Draycott Place!
Harry Styles
Harry Styles is a world-famous singer and songwriter who starred as one of Hollywood's most influential young stars today. On February 12th, 1994, he was born in Redditch, United Kingdom and grew up there until he moved to London at age 16. Harry is a member of the boyband called One Direction that has released five albums since 2011.
Harry Styles became famous for his looks and songwriting ability when he was on a television show called "The X Factor" with other bandmates. After the show, One Direction went on hiatus in March of 2016 to focus on solo careers and released a documentary called This Is Us about their lives together. Harry Styles currently resides at 25 Draycott Place!
Hugh Grant
Hugh Grant is an English actor and producer that has starred in many movies such as Four Weddings and a Funeral, Notting Hill, Bridget Jones's Diary and About A Boy. He was born on September 12th, 1960, in London but grew up mainly in Oxfordshire. Hugh first found work as the lead singer of the pop band Johnny English.
Hugh lived in Notting Hill at 24 Draycott Place for over 20 years before moving to Los Angeles on January 12th, 2016.
These are the celebrities who live or have lived in Notting Hill.
Protected trees (TPOs)
These days, it can sometimes seem like trees have more rights than people. If you want to remove one, or even prune it and you live in a conservation area or the tree has a TPO (Tree Preservation Order) on it, you will have to ask for permission to carry out the work.
So what are TPOs and are they something you need to know about?
TPOs were first introduced in 1947 and are designed to protect trees that, in some way, provide a local amenity. They don’t have to be hugely special. For example, a tree could be given a TPO because they are a local landmark, are of a certain age or size, or simply because their removal would have a negative impact on the public’s enjoyment of the local environment. To give you an idea of how common they are, there are over 600 TPOs in just one London borough (Merton). And that’s excluding the thousands of trees in the vicinity that are protected by virtue of being in a conservation area.
The numbers are not surprising. It’s not difficult to get a TPO. You simply put in a request to your local authority and if they think you have a case, within twenty-four hours they will grant a temporary TPO. After that, they will consult with interested parties over whether the listing should become permanent. For this reason, when building work is about to take place, trees are often cut down by the owners/developers before any planning application is made. A last minute TPO instigated by an agitated neighbour could bring the entire project to a halt.
Once a TPO is in place, it is a criminal offence to do anything that may harm the tree, including lopping and felling it without express permission from the Local Authority, which may not always be forthcoming.
As Arborist Rick Meldon of R.Meldon Tree Services (www.rmeldonstreelife.co.uk) explains,
“The purpose of a TPO is to protect a tree, so that is Local Authority’s default position when dealing with any applications.”
However, you are likely to be given permission to prune a TPO tree by up to 20% and, under certain circumstances, you may be able to fell the tree. For example, if the tree is dead, dying or dangerous. The same applies if it is causing significant damage to buildings, ie to roof tiles, walls or if it is causing subsidence. There are also degrees of protection - for example an ancient oak on public land is likely to receive a far higher degree of protection than a relatively ordinary but large tree in someone’s back garden.
“And,” says Rick, “Local Authorities aren’t ogres, they will regularly offer you alternative suggestions if you cannot do exactly what you have requested.”
One oddity of the TPO rules is that if a TPO tree is in the way of an extension, there’s very little possibility of removing it. On the other hand, if you demolished the entire building and started again, you would have a far better chance, as new developments are looked upon more favourably. One thing that is very clear is that, when it comes to TPOs, you have no right to light. If the tree is completely overshadowing your house, it’s bad luck.
For those of you who decide to ignore all the official processes and just go ahead and cut down a TPO tree, there’s a good chance you’ll be reported and most commonly by a neighbour. It could lead to a fine of up to £20,000 or more. If the court deems that, as a result of removing the tree or trees, that you have benefitted by an uplift in value to your property, you could be fined by an equivalent amount.
Lichfield District Council is one of the few who publish their fines, which range from £16,000 for felling a TPO oak tree and damaging the roots of other TPO trees during construction works, to an £1,800 fine for the sub-standard pruning of a TPO tree and failing to serve a Notice of Intent to undertake the works.
If you want to do anything with a TPO tree, it’s best to first consult a professional like Rick Meldon. Applications take up to 8 weeks and if you are not successful, you can appeal to the Home Secretary. And if you are not sure whether a tree has a TPO on it, check it out with your local council.
Conservation area trees are far less controversial. You need to ask for permission before pruning or cutting down any tree whose stem diameter is at least 75mm, measured at 1.5m above the ground. The Council then has 6 weeks to either place a TPO on it, or if the tree is of no particular significance, allow you to get on with the work. The penalties for unauthorised work can be quite high – a few years back, a Norwich resident was handed a fine of £2,000 per tree for felling 11 trees without permission.
If you want to check if a tree has TPO, just use this link - https://www.gov.uk/apply-work-on-protected-tree
Keeping a cool head this summer
The sun has finally come out (for a while, anyway) and the temperature is rising. For most of us, it’s a truly joyous time of year – ice creams for the kids, cocktails in the garden and barbecues galore. For those whose homes get unbearably hot, however, it can be anything but – with energy-sapping days and sleepless nights. And it’s even more of an issue if you are working from home, as there is no escape.
There are some things you can do, though, to make your home a little more comfortable without having to go to the expense (and the running costs) of buying an air conditioner.
1) The best (and most obvious) course of action is to create some sort of through-draft. Ideally, that means opening windows on two different sides of a building. It’s not a disaster if all your windows are on the same side – just open up the windows in all the rooms and keep the doors open between them (wedge them open if necessary, as they often blow shut).
2) If you’ve got them, you should also open up any rooflights. Warm air rises, so it is an extremely effective way of allowing any built-up heat to escape.
3) Even if you have just one opening window, you can still point a fan at it and it will blow out some of the hot air and create something approaching a through breeze.
4) For those who have sash windows, try opening both the top and the bottom panels -the theory is that cool air enters at the bottom and exits via the top.
5) If your windows are south-facing, it’s best to keep curtains and blinds closed until the sun has moved away. At the same time, keep the windows open as they can still generate a breeze. If it is practical, you could also apply some solar control window film which is claimed to cut down heat gain by as much as 77%. Alternatively, you could fix some awnings to the outside of the windows.
6) One of the lesser-known hacks to a cooler home is to leave bowls of water around the house or even wet sheets - the evaporation process can cool the air.
7) House plants will do a similar job, as they will also release moisture into the air.
8) Fans are always useful but one of the cleverer hacks is to place a bowl of iced water in front of them, ensuring the air they blast around the room is super-chilled.
9) Household electrical equipment can contribute significantly to the problem as they often generate considerable amounts of heat. Avoid using tumble dryers, dishwashers and ovens. Dry your clothes outside and cook on the barbecue. And don’t forget to turn off lights, computers and TVs when you are not using them. Buying some low energy bulbs can also make a big difference, especially if you are replacing halogen ones, which are typically used in recess downlighters. They put out so much heat they will burn you if you touch them.
It's at night we suffer the most, so you’ll be glad to hear there are some excellent tips for keeping you cool in bed.
1) Before you go to bed, take a cold shower - it will bring your body temperature down at just the right moment.
2) Ditch the duvet and stick to sheets. And make sure those sheets are made from natural materials. There’s also a whole range of extras aimed at making your bed cooler, from special mattress toppers to heat controlling pillows. You can even buy a flexible silicone ice pack, which you slip into the bottom of your pillowcase.
3) For those on a budget, the freezer is your best friend. You can freeze anything from sheets to pyjamas and pillowcases. Just pop them into a sealable bag! Another great tip is to fill a hot water bottle and then freeze it.
If, after all that you’re still too hot, you’ll just have to admit defeat and buy yourself a portable air conditioner. Prices start from about £300-£400 but be warned, that's just the start of it, as they cost a fortune to run.
Buy-to-let in Notting Hill
Buy-to-let in Notting Hill
There are quite a few changes afoot in the rental sector at the moment. Rents are rising steadily - up by 0.8% in March and by 3.4% annually (source: Homelet). However, according to new research by Nationwide, the rental market might be about to get a major boost. 40% of the tenants they interviewed from the private rental sector are now considering moving home. That’s compared to 32% of homeowners with a mortgage, suggesting rental demand could soon surpass the unprecedented levels currently being experienced in the sales market.
At the same time, buy-to-let lender, Paragon, has revealed average yields on BTL properties had risen to 6% in the first three months of this year. That’s up 0.2% when compared to the final quarter of 2020, which could well encourage some further investment in BTL properties.
It’s not all good news for landlords, though, there is yet more legislation they now have to contend with. The government’s new ‘Breathing Space’ initiative kicked off on 4th May. The scheme aims to give those who have gotten into financial difficulties time to get advice and organise an action plan to deal with their debt/s. Charges, fees and interest on debts will then be frozen for up to 60 days. Landlords will be notified by The Insolvency Service if one of their tenants is put onto the scheme and, during that period, landlords will have to put any eviction proceedings on hold. Landlords must also now include details of the scheme in their documentation when they seeking to regain possession or the eviction could be rejected. Although the legislation is well-intended, the new scheme is likely to leave landlords having to deal with ever more paperwork and intractable rental arrears.
What may also soon have an effect on demand in both the sales and rental sectors is the government’s much heralded Mortgage Guarantee Scheme, which kicked off last month. 95% mortgages had almost completely disappeared from the market as lenders tried to minimise their exposure to high value loans during the height of the pandemic. Many first-time buyers were effectively locked out of the sales marketunless they were able to raise at least a 10% deposit.
The scheme aims to give them a leg-up onto the property ladder. Under it, the government is guaranteeing lenders the proportion of the mortgage that’s over 80%. For a 95% mortgage, for example, that means they are guaranteeing 15% (5% is the deposit). Both first-time buyers and home movers are eligible. It’s exclusively for repayment mortgages of between 91% LTV and 95%LTV. Unlike some previous schemes, it can be used for the purchase of both new and existing homes.
Already, it has led to a large number of high street lenders launching new 95%LTV products. Amongst them are Barclays, Halifax, HSBC, Lloyds Bank, NatWest and Royal Bank of Scotland and Santander. Rates are, typically, a little higher than they are for those with larger deposits, hovering around the 4% to 4.5% mark.
It’s too early to see how popular the scheme will be. If take-up is high, it could provide a significant boost to the sales marketbut at the same time, take some of the heat out of the rental market.
House makeover and it's value
Making the most of your makeover budget
It’s estimated that, as a result of lockdown, we are now sitting on a giant pile of money - £180bn, to be precise. That’s 10% of our Gross Domestic Product (GDP)! So, what are we going to do with it all? Having spent so much time in our homes, we now know their every lump, bump and defect and we have been going home improvement crazy. But if you’re planning on making some improvements, what is going to give you the best return for your money?
PropertyHeads has produced a home improvement calculator that will tell you exactly that. If you want maximum bang for your buck – it’s cavity wall insulation that you need to go for. It will produce a 715% return. That’s 7.15 x your original investment (typically, about £701). With our increasing awareness of our carbon footprint, it shouldn’t come as much of a surprise that we value our home’s energy efficiency so highly. And, although some commentators are predicting the end for open plan living, the figures don’t agree. Knocking out walls to create more open plan living produces the second highest return on your investment, at 286.46%.
Strangely, fitting solar panels to your home produces the smallest return (0%). You would get your money back in terms of increased value. There’s no doubt, they will save you money on your energy bills, as well as making your home more attractive to buyers when compared to other, similar homes that don’t have them. The next smallest return is installing central heating (35.7%). That’s probably because we all now expect our houses to have central heating and for it to work. If not, it would, instead, reduce the value of a property.
Many of the biggest returns come from smaller works that cannot necessarily be expanded – ie. there’s a limit on the number of walls that will benefit from cavity insulation. So, if you want to maximise the value uplift rather than getting value for money, you may need to look at some larger scale projects, such as building an extension. It may only give you a mid-table return on your investment (133.61%) but it will give you the biggest value increase of all at £105,185.
One of the easiest wins is to create some offstreet parking. It is relatively inexpensive at £4,507 and won’t entail turning your house upside down while it's being done. Afterwards, it will then guarantee you a parking spot whenever you want one and should increase your home’s value by £19,546! If, on the other hand, you’re sick of staring at grubby old walls during lockdown, fret no more – because painting them will give you a 111.23% return on your investment.
If you live in any of our areas listed below, you are already likely to be a canny buyer, but please remember, these are average figures. They can only ever be used as a very rough guide and figures will vary considerably between one house and another.
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#bayswater
#kensington
#hollandpark