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The true costs of moving house

costs of moving house

Purchasing a property or moving home is a highly stressful life event. This is because it takes time to choose a property, or put your house on the market and to get all of the necessary legal stuff out of the way. And of course the deal can always fall through, due to the chain effect. As well as this, there are the costs – both initial and ongoing – which can be punitive if you’re not prepared. This is why it’s essential to work these all out when it comes to your budget.

Here’s a breakdown of what to expect:

Upfront costs                        

Deposit                                                                      

On average you’ll need at least 5-20% of the purchase price (with schemes such as Help to Buy you won’t need as big a deposit as you would normally). In general, the higher your deposit the more likely you’ll be to get a mortgage and a better deal when it comes to interest rates.

Stamp Duty

This is the most annoying of costs as it can be very onerous and stall movement in the market. This makes the lives of first-time buyers specifically difficult, which is why there were changes made to the stamp duty rate back in December’s Autumn Statement, where the ‘slab’ nature of the tax was altered in favour of a more ‘progressive’, income tax style. You’ll now pay nothing on the first £125,000 of the property price and those with properties worth less than £925,000 (after that the percentage goes up to 10%); will save money on stamp duty in comparison to what they paid before.

Valuation and mortgage fees

The mortgage lender will sometimes charge a valuation fee in order to assess the value of your property to establish how much they’ll lend you. The cost can vary from a couple of hundred pounds to over a thousand. Not all lenders do this, but it’s quite common. There are also mortgage fees to take into account, which include arrangement fees (up to £2,000) and booking fees (often a couple of hundred pounds).

Surveyor’s fees

Before you purchase a house you need to get it checked out by a surveyor. This is key to ensure that you don’t end up with repair problems further down the line. Surveys range from a basic home condition survey costing around £250 to a full structural survey which costs from around £600 plus.

Legal fees

You’ll also need a solicitor or a licenced conveyancer to carry out legal work when you’re buying and selling your property. They do local searches to check if there are any local plans such as major works in the pipeline. Overall, these costs tend to be £1,000, although this can vary.

Estate agent costs

These fees are paid by sellers, not buyers and range from 1% to 3% of the sale price (plus of course 20% VAT). This will take a large chunk of your budget, so you need to consider this when choosing your estate agent.

Removal costs

These vary, but if you can get a good deal, or know a ‘man with a van’ this could be the best route to go down. Average costs usually amount to a few hundred pounds.

Ongoing costs

Repairs: It’s not all about what you pay initially; there are also ongoing costs to bear in mind. The average repair bill for new owners is £5,750, although your survey should highlight problems that need fixing immediately.

Insurance: It’s also important to take out building insurance to protect your new home – although this can be included in the service charge if you’re a leaseholder. As well as this, remember contents insurance for your possessions, as well as life insurance to pay off your mortgage in case you die before you’ve repaid everything.

Council Tax: This can be really high depending on where you live and the valuation band the property is in. Make sure you take this into account before you purchase a property as you may end up in a high council tax area such as Surrey.

Running costs: How much are monthly utility bills? Water bills? Broadband? These can add hundreds per month onto your costs.

Leaseholders’ costs: If you’re a leaseholder you will have to pay ground rent (around £50-£100 a year) as well as service charges to the freeholder. These can be very high, so you must check the small print before you buy the property. There are many stories about people buying properties and then ending up being lumbered with big bills and being ripped off by the freeholder, so make sure you prepare yourself by researching previous costs and how much on average you’re expected to pay. If you try to negotiate with your freeholder and feel that you aren’t getting anywhere, you can seek redress through a Leaseholder Valuation Tribunal.

Why buying near a national park could be a very good move

building near a national park

Many people dream of waking up to stunning scenery every day with gorgeous views right on their doorstep. However, this will cost you £39,000 for the privilege, according to recent research.

Data from Building Society Nationwide has shown that the premium on properties close to national parks has risen from 18% to 21%. Living in a National Park has become much less accessible during the last ten years, due to strong popularity from people looking to get a second property or live in a beautiful area. The figures also showed that the premium’s 8% for a property within 5 km of a National Park.

nation parks index

Nationwide Parks Map 2014-2015

Source: http://your.nationwide.co.uk/PublishingImages/pdfs/Nationwide-Parks-Map2014-AW.pdf
peak district national park google maps

Peak district national park – Click to view in Google Maps

So, if you’re looking to make a great investment, that doesn’t lose its value (and live in beautiful surroundings to boot); you may want to see if one of the 190,000 households in Great Britain located near national parks are on the market.

The 21% price premium is equivalent to £39,000 in cash terms, based on the current average house price (£188,810 in the third quarter of 2014). This is up by 3% from a year ago, when previous research by Nationwide was carried out.

As well as this, there’s also a ‘fringe benefit’ for properties located just outside the boundaries of National Parks. These areas are very popular, due to the stunning countryside. Development’s also controlled, with little in the way of new houses being built; this helps to explain why house prices are still buoyant.

The figures show that the South Downs have overtaken the New Forest as the most expensive National Park in which to buy property. It’s England’s newest national park and spans Hampshire and Sussex with the highest number of households. The park includes a number of towns such as Petersfield, Midhurst, Liss and Petworth. Have a look at the table below to see the average house price and percentage change over the last year.

There’s an indicative premium on each park also calculated:

Table

As you can see, The Peak District has the highest number of people in it, with 5.9 million living within 25km of its boundary. The central location makes it accessible from population centres such as Derby, Sheffield and Manchester. Average prices within the park have increased by 11% over the last year.

In Scotland The Cairngorms is the largest national park by land area and located in a sparsely populated part of the country. Loch Lomond and the Trossachs are close to big cities such as Glasgow and Edinburgh, with 1.1 million people within 25km.

In Wales, national parks cover 20% of the land area, the highest proportion in comparison to other national parks. Snowdonia is the least expensive park to live in – although there was strong growth over the last year.

If you enjoy walking, nature, the countryside and big open spaces; it could be worth looking at a purchase in one of these beautiful parts of the country.

You can also benefit from the fact that your property will likely always be in high demand, so this is for people looking to make a solid, long term investment.

Is the government’s green deal worth it?

Green Deal

In today’s environmentally conscious world we hear a lot about green energy, energy saving products and carbon emissions.  Green “issues” have the benefit of making people feel good about themselves which is always a bonus. Generally we all able say “yes we are religious about recycling” and glow with smugness.

There’s also the point that these days,  the government has made it almost impossible for each household not to recycle, with the introduction of  bi-monthly pickups forcing us to separate our plastic and glass from our normal household rubbish. It would be fair to say that 15 years ago this would have been inconceivable, a little like imagining the social pariah being a smoker would become today. These views are very populist, and as stated before, very trendy (although perhaps not quite as much as they were pre-recession).

Energy Efficiency Rating

Energy Efficiency Rating

The most recent of these green policies was the announcement by the government to force landlords into making their properties more energy efficient by 2018. The aim is to get every rental property up to a B and E status on the governments energy efficiency scale.

This policy sounds good on paper, as energy bills will go down for most tenants; however, it’s almost a forgone conclusion that their rents will rise.

Naturally, this will not affect those who have purchased new build properties, but for those who own a property more than 30 years old, there could be a costly bill to pay somewhere. Some estimates say that the amount could be between £9000 and £12,000, a hefty sum that will almost certainly be passed onto the tenants in rental increases.

As with many government initiatives, there are always unintended consequences and a policy like this could send more people out on to the streets if rents become unaffordable. Worse still, the owner may just decide it’s not worth it and sell up.  This legislation inevitably interferes with the market and makes things generally more difficult for everyone and benefits nobody, with one exception: The green industry. It is claimed that it will “help to kick-start a multi-million pound market in energy efficiency products and services in the UK”, but there could be a lot of negative knock-on effects.

The Green Deal Initiative

The Green Deal involves government loans to encourage homeowners and businesses to upgrade their properties into one of the more energy efficient bands as set out by the government’s targets. The most efficient is of course Band A and descends to Band G (the least efficient).  The Green Deal was launched in January 2013 and helps homeowners cover the cost of home improvements such as loft and cavity wall insulation, solar panels and wind turbines, heating, double glazing and draft proofing.

To get started, you’ll need to have an assessment of your property completed by a Green Deal approved surveyor at a cost of £120. This will be someone from The Green Deal Oversight and Registration Body who will do a survey and give you advice on how and where you could make savings.  The surveyor will then file a report on your home which will be directly sent to the advisory body and they can assess your eligibility.  If you are eligible they will draw up a finance plan and set you up with a Green deal provider who can help explain your Green deal plan.

From then on, it’s full steam ahead with the installation of the products and you repay the cost of the loan through your electricity supplier, who, in turn; passes those repayments on to the Green Deal provider.  These loans are to be paid back between 10 and 25 years. Sounds simple enough, huh? However, should you move, you cannot take your Green Deal with you.  The Green Deal stays with the property and the new owner will take it up.

Some estimates say that the amount could be between £9000 and £12,000, a hefty sum that will almost certainly be passed onto the tenants in rental increases. The loans typically come with an interest rate of between 7.9% and 10.3%, much higher than if you were going to take out an ordinary loan from the bank to cover the costs.

Secondly, most of the products, such as cavity wall insulation (which can cost between £9000 and £26,000); only come with £4000 cash back, so the homeowner is still heavily out of pocket. The positive side to this deal is that average household heating bills are cut by around £460 a year.

double glazing windows

double glazing is considered an ‘extra’ under the Green Deal scheme

When it comes to cavity wall insulation, the surveyor will suggest energy efficient doors for the front and the back of the property – together these cost around £1000. However, the government has set aside £6 million for this type of improvement and so this will be added to the amount of money that you are able to claim back.

Be Careful:

If you opted for double glazing and a new boiler, which under the scheme is considered an ‘extra’; it’s worth really working out how much you would actually save in the long run.  For example, double glazing for the average three-bedroom home can cost around £5,000, but the saving on your heating bill could be £175 a year. If you combine this with a new boiler that has an energy efficiency rating of ‘A’, the cost to the householder is £2,300 and saves you £490 a year. However, the Green deal only offers a net contribution of £1,600 towards the cost of these upgrades.

As with all schemes like this, there are upsides and downsides. So far only 2% of the households that were assessed for the Green deal have actually taken it up.  Those that have, discovered funding problems along the way, where the cashback system has had to be put on hold due to lack of funds.  Perhaps we can assume that those initially interested realised early on that the costs outweigh the benefits and so withdrew? Or maybe, as with many government schemes, it was so full of jargon that it’s instantly off-putting.  Either way perhaps the slow uptake explains the aforementioned levy on landlords.  Could this be a way of achieving targets without having to foot the bill? After all, sooner or later those properties will go back on the market branded with a Government approved Green stamp.

Optimism Green Deal
Our assessment is that these schemes are more hassle than they’re worth. They sound good, but it’s that old cliché: if it sounds too good to be true, it probably is!

Three myths about estate agents

Estate agent myths

Ah, estate agents. You gotta love them, huh? I mean, they’ve such a great reputation – almost as good as tabloid journalists (and bankers – surely les betes noires de nos jours…) However, despite their cursed habits such as telling you a property is ‘bijou’ when it’s actually a dump and that it ‘needs work’ when it’s a complete wreck; many estate agents (as with journalists and bankers no doubt) ARE well meaning. Yes, REALLY.

Perhaps it’s the wide boy image they’re given in the media, the idea that they’re always up for making a buck or two on the sly, perhaps it’s simply the fact that buying and selling property is an enormous hassle and that people automatically criticise people who are involved in the process; who knows?

Whatever the case here are three myths about estate agents busted. Yes, busted. Once and for all…

1 – Estate agents will tell you anything to make a sale

Ah, this old chestnut. Generally people seem to be under the impression that estate agents will tell buyers (and sellers) any old yarn in order to make the sale and get that commission. It’s widely believed that you shouldn’t trust everything they say and while this may have been true at one stage, these days estate agents rely a lot on word-of-mouth and repeat business as there’s a lot more competition. Plus, they are legally obliged to tell the truth – although they don’t have to reveal any information they’re not asked about. As well as this, a damning online review or news story could be disastrous for a smaller agency that’s relying on picking up new business. At the end of the day (to use a clichéd phrase) no decent agent wants an agitated client calling them up and pulling out of the deal as they’ve found something out that they previously weren’t aware of through their solicitor or the survey. Agents have a big incentive to ensure that a sale doesn’t fall through and the more they exaggerate, the less likely it will succeed. It’s in their interests to make you happy and to be as honest as they can.

And this brings us onto myth number two…

2 – Agent commission is based on sales (if only….)

You were probably unaware of this, but individual agents are rarely paid commission on securing a sale. Instead, money is actually made on getting a new property listed with them. Yes, you heard correctly. Therefore, it’s not in their interests specifically to lie to buyers, but to convince you they can sell your property quickly and effectively and that they’re the best estate agents in the area. The way they do this is by showing you history of properties they’ve sold etc and the kind of prices they’ve achieved. This means that in theory at least, they want to ensure as many sales go through as possible. However, it’s always important to remember that an individual agent is interested in doing whatever it takes to get you to commit to their property list.
Conveniently, this brings us onto point number three…

3 – The agent with the most listings is the best agent to call

It’s always tempting to go for the biggest agents, the well-known chains that always seem to get sales fast and have satisfied customers. It’s vital to remember though that you may not get the attention you deserve, as they’ll have lots of other clients to attend to. It’s true that sometimes the larger agencies put more pressure on their staff, they inevitably end up driving around here there and everywhere and may not have the time to prepare efficiently.

There are plenty more myths about estate agents, but these are three of the major ones. I bet you were surprised by number two! Another thing to add is that many people vastly over-estimate the money earned by agents and don’t really understand the way they operate. Of course, there’s no smoke without fire, you’ll always get dodgy people trying to rip you off. Just be aware though that the majority want their clients to be happy and to build their reputations off the back of this.

9 key questions to ask an estate agent when buying a house

Questions to ask an estate agent

When it comes to buying a home, it’s necessary to do your homework. Ultimately, property is a psychological game and it’s all about being more prepared than the next man or woman. Although estate agents are known to exaggerate certain issues, they’re legally bound to be honest, so they have to tell the truth if you’re trying to find out crucial information. Remember that it’s very important to try and find out as much as you can about the property you’re looking to buy, as this could save you a fortune further down the line.

Here are nine crucial, but not always obvious questions you need to ask estate agents if you want to get key information about the property you’re looking to buy:

Length of time the property’s been on the market

If the house has been on the market for more than three months, ask the agent why it’s not selling. There will be a reason it’s not, and you need to find out what that reason is. Research location, transport links, size of rooms and think about the type of person that the property would likely attract and if the property caters for this type. The bonus is that the seller may accept a lower offer if they can’t shift the property.

How long have the owners lived there for?

If the owners have only been occupying the property for a few months and are now suddenly deciding to sell, there may be a reason for that. Are the neighbours loud? Are there major works in the pipeline (this is a problem that can affect leaseholders who sometimes end up with massive bills – however your lawyers should inform you about any works due to take place in the area once you’ve put an offer in). If the owner is desperate to sell because they’re going overseas for example, you may have a better chance when it comes to getting a bargain.

Things you like, TOTALLY want to know about the property

We’ve already mentioned major works, but there are a whole host of things you’d likely want to know about the property you’re looking to buy. Is there a big negative factor that other people are aware of? A demolition nearby, a tube link set to close? These are all things to consider. Usually your solicitors should find out about these kinds of things, but it’s still worth putting tentacles out to get down with the local gossip. Why not chat to a neighbour and ask a few general questions? Or just take a drive around the area after dark to see what kind of people inhabit the local ‘hood. You should also ask if the property has frequently changed hands or not – if so, red flags should start flashing and you should DEFINITELY find out more.

What is included in the sale?

It’s important to ask what’s included in the sale. Is the shed included, for example? Fixtures and fittings? And where does the boundary lie? Also, make sure you see all of what you are getting, as often most of the contents are included.

What offers have they had so far?

If you ask the agent, he/she will probably tell you if offers have been put in, but not how much they were. If you can find out about other offers, it will be easier for you to know what you should offer. This can also save you a lot of money in the long run and the agent may be willing to give you an indication as it’s in their interests to sell the property as soon as they can.

Have the sellers found a property?

Have the sellers found another home yet; and, if they have: when do they have to move out? If they’ve got a property, they may look to sell as soon as possible. Otherwise you may be in for a wait and you need to be prepared as to how long, as ending up in a complicated chain is never a great situation.

Are you allowed to chat directly to the sellers?

Estate agents may hate this, but they can’t stop you. Sellers are often more honest and unlike the agent, they can’t pretend they don’t know the answer to questions such as when they’re moving.

Dem bills, dem bills

We all know how much bills can mount up each month. It’s therefore a good move to try to get an estimation as to how much you’ll be liable to pay each month. It may not seem important now, but council tax especially can be high and you don’t want to have any nasty surprises.

Local area

Find out as much as you can about the local neighbourhood. Transport links, crime rates, schools, are all things to take into account; you should definitely quiz the sellers about these things as they’ll likely be pretty honest about their experiences.

Remember than many of your concerns will be answered by the surveyors/solicitors – just keep an eye on their findings and probe further if you feel you want to know more about any particular issue.

 

How to select a building firm

Choosing a builder

These days, it seems as if almost every TV channel has at least regular home improvement shows on schedule. It appears that the old adage “An Englishman’s home is his castle” has never been more apt – although we’d also like to extend that to women too of course! This obsession with property programmes seems rather peculiarly British, but luckily there’s something for everyone; from absolute disasters to DIY delights. Whatever the case, clearly these programmes make gripping viewing. However, the truth is that if you’re looking to make your property look fabulous, it’s rarely plain sailing. It’s very important to focus on the job in hand, even if the works cause a lot of disruption – you have to suffer to gain, as they say.

One of the key factors when it comes to making your property renovation go smoothly is to choose the right builder. We all know there are cowboys out there, so where better to start than with your friends and family contacts?  However, it’s important to be careful when it comes to directly employing your chums because of the direct stress you’ll be under. You may feel you can’t be as assertive as you could be if you hired someone you didn’t know and it can be very hard to criticise a friend – especially if they’ve offered you ‘mate’s rates’ so to speak. And of course if they have offered you a discount they may leave for a gig that pays more so the whole job may take longer. In a nutshell: hire a building firm that has absolutely no connection to you.
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How to work out how much you should offer when buying a property

Property offers

Recently, the media has been awash with frightening stories about ‘gazumping’ – and even ‘ghost gazumping‘ – where buyers who had their offers initially accepted were left out of pocket and pretty annoyed after the seller accepted a higher offer from someone else. The desperate shortage of property in London and the south east means that this is a problem that shows no signs of completely going away. It’s not just this that rattles would-be buyers; the prospect of having to compete against a hoard of other determined competitors is also very off-putting. And some estate agents don’t help, by ramping up the rhetoric about ‘x property being very popular – you’ll probably need to bid above the asking price’ and arranging ‘open days’ where buyers are shuffled around properties like sheep.

Unfortunately this is just part of the new reality of buying a home, and as with anything, those who do their homework have a better chance of achieving their desired result. After all, no one wants to end up paying over the odds for an average two-bed in an ok-ish suburb and run the risk of being stuck in negative equity/generally regretting the purchase further down the line.

As with many things in life, a good strategy can be to look at what everyone’s doing and do the opposite. After all, there’s going to be a ton of competition for that Victorian three-bed conveniently close to transport links and located in a pretty good part of town. Even if it’s on for a reduced price as it needs ‘updating’, don’t kid yourself; the competition will be intense (again, we’re talking especially about popular parts of London and the south east here).

It would therefore be wise to not get your hopes up too much if the competition is fierce.Think very carefully as to whether you want to play this game; there’s a good chance that you won’t win. Obviously, it depends how many people are in the running, but remember that estate agents always exaggerate (of course it depends – there are honest estate agents out there, but they’re in this industry to make cash first and foremost).
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Is it time to think about an extension?

It doesn't take long to get sick of microwave meals and takeaways

Whether to extend or move: this is the question on some homeowners’ minds at the moment.  No doubt this is a difficult decision to make in light of what is going on in the UK’s property market: prices are soaring and acquiring that larger property is becoming more difficult without substantial capital.  However, the good news is you don’t have to buy, you could just take the easier (in many ways) route and add a few home improvements or build an extension.  There are two main reasons for embarking on such an adventure and these are to either add value to your home, or to make the most of what you have.

extending a loft - home extension exampleMaxmimising unused space like the loft, can not only increase profit should you sell but give you or your children a special place to play in if you have them.  The good news is that whatever the economic climate, these types of improvements can prove to be invaluable.  With all the upheaval and monetary costs associated with moving, many homeowners are realising that it’s well worth swapping upgrading for improving.

To some people, the idea of extending the family home may well be daunting, but it doesn’t have to be as scary as it sounds.  The important thing to remember is that regardless of whether you actually go through with your building project; a property with planning permission will always sell for more money than one without.  Luckily we’re here to give you a few tips, so before you go ahead with any changes to your property, here are a few things to consider:

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