Perceptions-v-reality in property can confuse even the best-informed of armchair economists. The latest House Price Sentiment Index from Knight Frank and HIS Markit suggests that approximately twice as many households believe their property value has risen, than fallen, yet the measure of sentiment is still nearly 15% lower than its previous peak in May 2014.
Despite this positive outlook, according to HouseSimple research, some 35% of all properties currently being advertised for sale in London (and up to 45% in some boroughs) have been reduced in price – an 18% increase in the number of reductions since February.
Indeed, according to Hometrack, average house price growth in UK cities is 58% down on a year ago, at 5.1%, although this would be regarded as a good, mostly tax-free, investment in many circles, especially as you can simultaneously live in it.
Many surveyors are reporting an increase in bank valuations, but, according to research by Connells, some 33% of this relates to people re-mortgaging as they seek to lock in low-interest rates while improving, rather than moving.
Certainly, the higher rates of SDLT introduced in December 2014 have also made their presence felt, with a maximum 15% payable in some instances influencing the decision to move, although most people are not adversely affected by this. (Incidentally, the maximum payable in 1993 was just 1%).
If you look at the number of price reductions coming through on Rightmove, it may give the impression that the local market is falling, whereas, in truth, the vast majority of those reductions are as a result of over ambitious sellers and agents simply correcting their prices due to inactivity. What happens when stock levels are low? (some) agents will overprice just to gain the instruction.
There is a reasonable supply of new instructions hitting the local market, coupled with level demand, albeit we anticipate the usual summer slow-down as buyers take time out to enjoy their long awaited summer holiday. The best word to describe the market in which we operate is ‘stable’.
The local lettings market has certainly experienced some change, with prices, for vacant properties in particular, being lowered to secure a tenant. Void periods can eat away at your profit margin so it’s important to see where your property sits in relation to current competition (research and tenant feedback being key).
Longer term landlords are more willing to accept a changing market whereas those fairly new to the market are finding it a little more difficult to adjust, perhaps because, based on their mortgage deal, they need to achieve a certain price and also because they have not before experienced a market where tenants have a greater choice in the selection of their next home.
Most affected are 3 bedroom houses in ‘average condition’, with properties priced online from as little as £1450-1500 per month. When it comes to the quality and condition of your property there is now a clear difference between the top end of the market and low-middle end of the market and prices being achieved are reflecting this.
Identity theft – caution when moving house
Recent research has shown that about a quarter of home-movers leave themselves open to some form of identity theft when they move, simply by failing to redirect their post promptly.
Indeed, almost half of all identity theft cases involve a previous address, and 70% of new occupants receive mail addressed to a past occupant. This often includes sensitive personal information, which can be used by a fraudster to obtain credit in your name.
As some organisations can take several weeks to amend their details, we suggest you start to compile a list of those who will need your new address as soon as you begin marketing your property. This might include schools, the Inland Revenue, banks, credit card companies, the Local Authority, the DVLA, Premium Bonds, clubs, etc. Then, as soon as you have a moving date, contact them formally with your new details.
Arrange the Royal Mail redirection service for at least a year and register with the Mailing Preference Service to have your name taken off most direct mailing lists. This will ensure mail-shots from lenders aren’t sent to you at your old address. It’s also a good idea to do the same at your new address, in both your name and that of the previous occupier – if only to avoid heaps of junk mail landing on your doorstep!
If you are concerned that you could be at risk from identity theft, you can set up a credit monitoring service with companies such as Experian, Equifax or CheckMyFile.com which will alert you to any significant changes to your credit report, so you can take any necessary action as soon as possible.
As an ongoing method of protection, buying a shredder can be a good idea, but make sure you get one with a cross cut, or even micro cut mechanism, as opposed to the strip cut types. Thieves will go to great lengths even piecing back together torn, and even shredded documents so don’t make it easy for them. It’s not unheard of for thieves to go down dustbins looking for snippets of information, so make sure nothing is thrown out containing sensitive and personal data.
Something else to consider is this – If your bank or lender has reason to believe, and can determine, that you have been “grossly negligent” in terms of the security around your account, there’s the possibility they may refuse to refund/cover any money that has been stolen.
Check out this weblink from Nationwide, with more tips and a short video from a scene set up in a shopping centre, where the allure of a star prize is enough to trick some people into giving up their personal information, including their bank details.
Consent to let
For many homeowners, letting provides an obvious investment opportunity as an alternative to selling. With the right expert help from your letting agent, the matter should be quite straightforward, although there are certain consents that should be obtained if you are to avoid some potentially costly problems.
You will certainly need the consent of your mortgage provider. They are unlikely to object, but you could be in breach of your mortgage terms if you have not obtained their consent before letting your property. They may also charge an “administration” fee. One important thing to look out for are clauses which increase the interest rate on your loan should the property be used as a “commercial venture”.
Also check to see whether there are any restrictions as to the minimum, or maximum terms the property can be let for and does your lender require you to have a fixed term tenancy in place at all times.
If you own the freehold, you should check whether your title deeds impose any restrictive covenants of which the tenant should be aware. For example, there may be a restriction preventing anyone keeping a caravan on the forecourt, or storing building materials for more than a few days. If your property is leasehold, you will have to check the conditions of your lease as there may be similar restrictions and/or you may have to obtain the freeholder’s consent, who may want to see evidence of tenant referencing.
Importantly, once consent has been obtained, you must ensure that your tenant is aware of, and complies with, any obligations that you yourself would observe as owner in residence.
Finally, insurance. You should obtain permission from both your buildings and contents insurer. There may well be an increase in premiums where a property is let, although there are insurers who specialise in this. As a minimum, you should ensure you are covered for any third party liability in respect of injuries to your tenant whilst at your property.