September Newsletter - International students u-turn will benefit London's rental market

In this month's edition, we start off with the news that the Government will allow international students a two-year visa on graduation, which comes as excellent news for the capital's rental market.  

It's been an encouraging month for the market too, with house prices rising at their fastest rate in three months and the ongoing Brexit turmoil providing people with an opportunity to get involved with purchasing and selling property. 

Elsewhere, we ponder if it's worth paying your mortgage off early, we provide top tips if you're looking to convert your loft and finally, we take a look at why stamp duty reform could bring landlords back into the market. 

Bernadette Teuma
Director
Coldwell Banker Southbank

Converting your loft - what you need to know

 

For some of us, a great option to increase the floorspace in our homes is to move upwards into the loft area. However, if you’re considering converting your attic space into living space, there are a few factors that you should consider before starting any work…

Is it worth it?
When you are weighing up the potential of a loft conversion, it’s worth deliberating whether the cost of the work is equal to the value which you are adding to your property, so that you don’t end up overspending with no hope of recouping the costs when you decide to sell up. A loft conversion can add up to 20% to the value of a property, a significant amount; however, the cost of completing the works can vary depending on the type of space that you have available and the complexity of the requisite works. Shop around for your building quotes so that you have multiple options and then compare property prices in your area that have had loft conversions to see the difference in price; this should give you a strong idea in terms of budgeting.

Is my loft suitable for conversion?
Not all lofts can be converted into bona fide living space, as there are some caveats in terms of the available head height in the area, the pitch of the roof, the structure of the roof and obstacles such as water tanks or chimneys which may obstruct the area. When you measure from the bottom of the ridge timber to the top of the ceiling joist, you need to have at least 2.2m of usable space for a conversion to be suitable.

Do I need planning permission?
Depending on the type of conversion that you are implementing, you may not need any planning permissions whatsoever. As of 30th May this year, “Permitted Development” rules grant rights to enable homeowners to undertake some types of building work without the need for any permissions. If you are completing a simple conversion, with no structural changes to the roof, then you will most likely not require planning permission, making the process a lot simpler. To read about “Permitted Development”, see government guidelines here: https://www.gov.uk/guidance/when-is-permission-required

How do I intend on using the space?
One of the most important questions to ask yourself before you commit to the building work is what exactly you need the extra space for. In some instances, this will be an easy question to answer; for example, if you’re a growing family in need of an extra bedroom. However, for others the use of the room may not be so clear-cut. If you’re adding the extra space simply because you’re feeling a little squeezed for space in your property, then a loft conversion may well be the wrong answer as, although you’ll be increasing your living area, you will most certainly be losing useful storage metres. If you are looking for more space, then consider moving into a more appropriate property in your area – you may well have made a profit on your current property which would enable you to upsize.

Don’t fall foul of your insurer
Before completing any works on your property, ensure that your insurer has been fully briefed with regards to the possible changes to your property as you don’t want to invalidate your home insurance. Adding value to your property may affect your premiums, and any building work being completed (such as floors being taken up or electrics changed) can result in damage to the property which may not be subject to insurance claims.

International students u-turn will benefit London's rental market

 

The UK government has announced a reversal of policy to allow international students a two-year visa to stay in the country upon graduating from a British university, an excellent piece of news for London’s rental sector.

The move overturns a contentious policy implemented by former Prime Minister Theresa May during her time as Home Secretary in 2012 which gave students just four months to find employment after graduating. This led to a drop in the number of international students coming over study in the capital, which the new rules will surely address.

Currently, the UK has over 450,000 international students with this number surely set to increase thanks to these changes. The students must be enrolled at an educational institution that tracks immigration checks, meaning landlords have one less thing to worry about when it comes to finding the right tenants for their properties.

This is excellent news for London’s rental market; increased numbers of students settling in the capital will increase demand for rental properties, meaning the market will need to respond to keep up with the need for more lettings.

If you’re a landlord with a rental property that you’re looking to fill, then finding the right agent is vital to making sure that your homes are occupied and you see a return on your investment. Coldwell Banker combine expert local market knowledge alongside our industry expertise to provide all of our clients with an in-depth, professional service.

 

Click here to discuss letting your property through us today.

Should you pay your property's mortgage off early?

 

New research from financial services firm Hargreaves Lansdown has shown that one in six of us who have purchased a property will either be over 65 by the time the mortgage is fully paid off, or the loan will never be fully paid off. The question stands, therefore, as to whether you should pay your mortgage off early or not?

As the average age of homeowners creeps upwards, and first-time buyers are entering the marketplace beyond 30 years old, the prospect of entering into retirement with a mortgage still to pay is going to be a reality for many. Research conducted by the Financial Conduct Authority supports this notion, with the FCA forecasting that 40% of first-time buyers in 2017 would still be repaying their home loans at 65.

First and foremost, do your sums to see whether you have anything to worry about in the first place. If you are going to be receiving a healthy pension anyway, then the prospect of continuing mortgage payments may not be anything to worry about. On the other hand, if you are going to be on a lower income than you’re currently accustomed to, then mortgage payments may well prove to be a stretch. If this is the case, here are a few options to help you pay that mortgage off sooner:

Overpay whilst you can
Speak with your mortgage provider to see when your prospective final payment is, and use this to incentivise yourself to pay early when you can afford it. Many mortgages will not charge you for overpaying, instead embracing the higher payments so double-check with your provider and overpay in order to bring forwards that final payment date.

Consider remortgaging
With interest rates at record-low levels, many borrowers are now considering remortgaging in order to obtain a more favourable mortgage. Eventually, you will be moved onto your lender’s standard variable rate (SVR) if you do not remortgage or move onto a different deal during your mortgage term. Avoid these less favourable mortgage rates which will extend your mortgage term, and you could slice years off your repayment schedule just by switching providers or plans.

Reduce your mortgage term
Rather than overpaying on your current mortgage plan, reassess your financial status to see what you can really afford now. You will most likely be in a different economic position now to when you first purchased your property, and potentially able to afford higher repayments. If this is the case, and you are likely to remain in a stable position for the foreseeable future, then reducing your term and increasing your monthly payments is a guaranteed way to pay off your mortgage more quickly.

House prices rise at fastest pace for three months

 

Mortgage lender Nationwide has indicated that house prices in August rose at the fastest annual pace in three months, with prices rising 0.6% year-on-year. This upturn in pace is contributing to the widespread sentiment that the housing market is beginning to perform particularly strongly once more.

Supporting the figures from Nationwide, reallymoving.com have published their August monthly House Price Forecast which predicts continuing growth in prices across the United Kingdom.

According to the report: “Average values are set to rise by 1.5% over the next three months (August to October 2019), continuing their steady climb. Particularly strong growth in August will see prices increase by 3.2%, and whilst they’ll then dip by 1.4% in September, they will be up 3.1% annually – the largest annual increase since November 2018.”

CEO of reallymoving.com Rob Houghton has this to say on the current status of the property market:
“The outlook for the property market over the next three months is remarkably positive, considering the current political and economic context. The recent election of a new Prime Minister who is committed to leaving the EU on Halloween even if a deal isn’t reached could mean clouds are gathering on the horizon, but any impact on prices in the short term is likely to be mitigated by the urgency of home movers to complete deals in the next three months.”

Stamp duty reforms could bring landlords back into the market

 

Proposed reforms to stamp duty could offer dividends for the property market, with buy-to-let landlords set to reap the benefits should the Government make changes to the current system.

During his leadership campaign, Prime Minister Boris Johnson pledged to cut stamp duty in the cases of sales under £500,000 and over £1.5m, alongside a suggestion that further cuts could be made to help those at the lower end of the property market in an effort to assist first-time buyers.

At present, landlords or other homebuyers are required to pay a 3% stamp duty surcharge when purchasing a second property, a significant deterrent for the Buy-to-Let sector at a time when homes worth between £250,001 and £925,000 are already subject to a 5% surcharge.

But research suggests that just 10% of properties purchased in 2019 so far would have been liable for stamp duty should the second property tax be removed, leaving landlords in a healthier position financially and encouraging them to invest in Buy-to-Let homes. The impact on the market as a whole is easy to see; more properties purchased makes for a healthier market as a whole, alongside offering more options for renters.

Managing Director of mortgages.online Paul Flavin offered the following on the current state of play: “The increased stamp duty payable on buy-to-let purchases, and the removal of the ability to offset mortgage costs has put many investors off the property market, with a knock-on effect of reducing the stock of rental properties.

“We have two basic messages for the Chancellor (Sajid Javid). Relief for buy-to-let investors and measures to stabilise the economy with clarity once and for all on Brexit, are both needed urgently. We would encourage the Chancellor to look again at the negative impact these measures have.”

Plans to switch stamp duty from buyers to sellers in an effort to encourage more first-time buyers to enter the market have already been quashed by Javid, but it’s clear that reforms on stamp duty are required in order to encourage buyers, whether landlords or otherwise to purchase property.

How has Brexit created opportunity in the housing market?

 

It’s been another period of gigantic upheaval in British politics in regard to Brexit, with Parliament now suspended and the dreaded No Deal scenario now outlawed on the departure date of October 31ST.

Despite the turmoil, months of uncertainty have seemingly encouraged a spike in activity in a rush to beat next month’s original deadline. Buyers and sellers are therefore making something of a concerted effort to complete their property transactions within the next quarter.

Data released from Rightmove has shown that agreed house sales last month rose 6.1% from the same point last year, with every single region showing improvement. Considering the current climate of Brexit, could this upsurge in the property market actually be attributed to the relative political instability, rather than in spite of it?

Supporting this microcosm of activity in the market is the number of UK mortgage approvals which have also risen significantly. Approvals for house purchases rose to their highest level for two and a half years in July, with Howard Archer, chief economic adviser to the EY ITEM Club, stating that: “It is possible that mortgage activity is being lifted by some people looking to complete their house purchases before Brexit occurs on 31 October, given the major uncertainties surrounding the UK successfully leaving the EU with a deal.”

Speaking prior to recent developments in the House of Commons, CEO of reallymoving Rob Houghton says: “The outlook for the property market over the next three months is remarkably positive, considering the current political and economic context. The recent election of a new Prime Minister who is committed to leaving the EU on Halloween even if a deal isn’t reached could mean clouds are gathering on the horizon, but any impact on prices in the short term is likely to be mitigated by the urgency of home movers to complete deals in the next three months.”