It is now cheaper to buy rather than rent in 98% of the UK, plus more

Welcome to the January edition of the Pygott & Crone newsletter.

In this month's edition, it is now cheaper to buy than to rent in 98% of Britain and we share our outlook for the property market in 2018.

Also this month, 40% of buyers will decide to buy based on first impressions and we discuss the options open to first-time buyers.

It’s Cheaper To Buy Than Rent In 98% Of Britain

 

According to recent research, renters throughout the UK could save £1,600 a year on average if they were to buy a home instead of renting one.

A new study has looked into the 50 largest cities in the country to find out how rental and mortgage payments compare.

Out of the 50 cities that were used in the study, London was revealed to be the only city in which renting is the more affordable option.

The research was based on an 85% loan-to-value mortgage and the average asking price, which is just short of £150k.

Average mortgage payments in this price range were found to be £564 per month, whereas monthly rental payments stood at £700.47, almost £150 more than paying a mortgage.

There have been indications throughout 2017 of further increases to the average rental rates, with changes to tax regulations and an increase in stamp duty being passed on to tenants to ease the cost on landlords.

The study showed that Glasgow was the city with the largest margin when comparing renting to owning, showing a huge 57% drop in monthly payments, for those who chose to own instead of rent.

Similar figures were seen in Bradford and Dundee, with renters paying a 53% and 52% premium respectively.

London was the only place where renting was the more suitable option for those on a budget, with homeowners in the capital paying just over a 15% premium in comparison to renters.

UK Property Outlook For 2018

 

A new year has begun which means there are plenty of forecasts and opinions on how the property market will perform over the next 12 months.

We’ve taken a look at a variety of predictions from sources such as The Royal Institution of Chartered Surveyors (RICS), Halifax and Nationwide to see what the general outlook is for the UK’s housing market.

The overall view seems to be one of stability and while there are not many predictions of explosive growth, the majority are suggesting a more slow and steady increase in house values over the course of 2018.

The RICS forecast suggests that 2018 will see similar numbers in activity as shown in 2016 and 2017, with property transactions reaching approximately 1.2 million.

Tarrant Parsons, Economist for the RICS spoke on the results of their research. Parsons believes that lack of housing supply in some areas of the nation could continue to have an effect on property prices and possibly curb the momentum of transactions throughout the year.

It’s not all doom and gloom for those looking to take their first step on the property ladder, as Parsons went on to say that “despite the recent interest rate hike, mortgage rates are set to remain very favourable, with the prospect of further rises seemingly minimal over the coming year. Alongside this, government schemes such as Help to Buy should continue to provide some support to sales activity.”

This view of the market is shared by Nationwide, as their forecast predicts slow growth towards 1% in the early months, but long-term reaching an overall increase between 3 and 4%.

Chief Economist at Nationwide, Robert Gardner, believes that the UK could see disparities between the regions dependant on Brexit, he said “if the financial sector is adversely affected, then the London market is likely to see more of an impact, while if manufacturing firms are disadvantaged, other parts of the country may be more negatively affected, even though valuation metrics appear less stretched.”

New figures from Rightmove have predicted similar growth for the UK in general, however, they have also highlighted the difference between the types of houses on the market. Rightmove expects properties with 2 bedrooms or less – ideal for first-time buyers – to rise by 3% in value in 2018, while non detached homes with 3 or 4 bedrooms – more suited for second steppers – may only see an increase of 2% in value.

A new report from Halifax reiterates the slow and steady predictions seen from other industry experts as they claim “There is little reason to expect any fundamental shift in the key housing market drivers in the immediate future”.

Halifax predicts a slightly more positive outlook for the market, with many suggesting growth of 1%, Halifax believes that 3% growth is a more accurate forecast for UK property prices.

Russell Galley, Managing Director at Halifax, commented on their own findings, stating, "House Prices, in general, are likely to be supported, seeing modest growth in 2018, through the combination of a shortage of properties for sale, continued low levels of housebuilding, low unemployment levels and finally good levels of affordability due to the low-interest-rate environment. Despite the recent rate rise, we do not expect this to have an adverse impact on transactions. A further rate rise is not seen as imminent and we may not see one until the latter part of 2018, if at all."

As always, there are many factors that could have an effect on the value of homes throughout the nation, but the opinion from most property experts is that the market will remain stable and while prices won’t be making any huge leaps over the next 12 months, the steady increases seen over the past few years look set to continue.

40% Of Buyers Will Decide To Buy Based On First Impression Alone

 

 

As any estate agent can tell you, a successful sale hinges on a good first impression. Prospective buyers possess a sixth sense when it comes to viewing a property and if things aren’t up to scratch – inside and out – you can guarantee they will spot it.

In fact, a recent study has revealed that the average house hunter only needs eight minutes to decide if a property is for them or not.

In fact, six in ten adults will also choose not to buy a property based on the condition of the exterior of the property, without even needing to view the inside.

In comparison, 18% of buyers admitted to buying the very first property they view and 15% said they decided to buy the property before they had even viewed it in person.

This decisiveness extends online, with the average buyer spending eight minutes deciding whether or not to visit a property – highlighting the importance of a good online advert.

75% also confessed to being irritated upon finding that an advert or online listing does not accurately represent a property when visiting in person.

The study also revealed which aspects of a viewing signalled an early exit for many prospective buyers. The main offender was an obvious damp patch, which 60% of buyers said would put a stop to any future transaction, whilst a house on a main road or cracks in the wall would also put an end to the viewing.

For the buyers who are good at seeking out the problematic finer details of the property, there were some decisive reasons for buyers backing out of the viewing, such as dirty toilet pipes, overflowing bins, wheelie bins left in front of the property and faded or yellowed paintwork.

Some viewers take issue with a sellers lack of preparation for the viewing such as untidy rooms, poor DIY and ashtrays left around the house.

Other reasons included logistical problems such as the size of the rooms being too small for the buyer’s furniture, issues with the natural lighting of the property. The current owner’s furniture cluttering up the layout of a room, preventing the buyer’s imagination from running wild, led to over a third of buyers to back out of a purchase.

The list showcases the importance of sprucing up your home – both before putting it on the market and before every viewing. A prospective buyer needs to weigh up the additional costs and work involved in buying a property. Ensure you give your home the most generic makeover possible and organise your possessions and furniture in a way that won’t distract the prospective buyer.

First-Time Buyers: What are Your Options?

 

With the recent cut of stamp duty for first-time buyers and low-interest rates, many property experts are predicting considerable growth in first-time buyers in 2018.

The housing market can be an inhospitable place for young first-time buyers. It requires a dedication to an end goal that borders on single-minded and many sacrifices along the way, but it is not impossible to buy a home.

We’ve decided to take a look at some of your best options to get you started or help you across the line and allow you to take that first step on to the property ladder.

Where do you start?

Save: It’s a simple first step, but it’s the one that most buyers struggle with the most. Putting a little away here and there simply won’t cut it, you need to be consistently squirrelling away money, sacrificing holidays and big money spends, in an attempt to scrape your deposit together.

Fortunately, there is help out there. Do some research and find a savings account with the best interest rate. The most popular savings account for first-time buyers at the moment is the Help to Buy Isa.

This account allows you to make monthly deposits of up to £200 until you either buy your first home or reach the £12,000 limit. Once you actually purchase a home, you can use the savings from your Help to Buy ISA towards the deposit and after the sale is complete you will a 25% bonus from the government. For example, if you had £12,000 saved, you would receive a £3,000 bonus after completion.

What are your options?

If you already have some money saved up, but you're just short of the mark, it may be worth considering the following options.

Rent to Buy: Rent to Buy allows you to choose a home that you will one day buy, and pay a reduced rent (80%) so you can save the other 20% for a deposit. Once you enter the scheme, it lasts for five years. During that time you can buy the property, or you can pay for a 25% or 75% share of the property.

Starter Homes: Starter homes are designed to encourage first-time buyers and property developers to come together in aid of the property market. First-time buyers between the ages of 23-40 can apply to be a part of the scheme. They will essentially be given a 20% discount on the value of a new build home up to the value of £250,000.

0% mortgage: A 0% mortgage is similar to a 5% mortgage, in that a guarantor must put forward 10% of the deposit, whilst you put down nothing. The guarantor will receive the cash back, provided you keep up with the mortgage repayments.

Bank of Mum and Dad: When all else fails, what better place to go than the good old reliable bank of mum and dad. Many of the options above require your parents to act as a guarantor anyway, so why not just go straight to the source?

Whilst it might seem daunting to begin saving for a property, there are many options that can help you take your first tentative steps onto the property ladder. Do some research and find out which options suit you best.

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