February Newsletter - How To Save For A House Deposit

In this edition of the Coldwell Banker, we look at how to save for that all-important house deposit; with more mortgages being issued to first-time buyers than ever before, this could be the year you purchase that first home. We also analyse the bustling rental market, with tenant demand on the rise and on the sales side we look into which properties have performed the best over the past decade. Away from property, we look at whether Brexit really changes anything for us now that we are in the transition period, and look at how eco-friendly homes are contributing to a greener environment.

Tenant Demand showing no signs of Slowing Down

The opportunities available for landlords on the property market are better than ever in 2020. Demand from prospective tenants has remained strong over the past year and is showing no signs of slowing down. This makes it the perfect time for landlords to expand their portfolio to meet the demand; with rental properties being snapped up in no time.

The considerable competition tenants are experiencing battling for viewings reduces the risk of homes being left vacant unexpectedly; leaving landlords with increased peace of mind. Findings reported by Home Let show that there has been an increase in rental value across the whole of the UK. The North lead this variation with the North West rental value increasing by a staggering 8.3%, and seven UK regions are each reported to have more than a 5% increase.

As well as higher demand, the rents increase can also be linked to a number of societal factors. There has been a resilient economy, higher wages, with low unemployment rate, allowing private tenants to still afford the rise in price. The Tenant Fees Act which was thought to move some of the fees from tenants to landlords, seems to have actually found its way back to tenants in the higher rent prices. There has also been a rise in the average age of renters, also adding to the demand.

David Cox, chief executive of ARLA Propertymark, said “looking ahead to 2020, we hope the government recognises the importance of increasing supply for tenants and uses it as an opportunity to make the market more attractive for landlords. This will encourage more landlords back into the market as well as ensure that tenants, including those who are most vulnerable, are not at a disadvantage in being able to find a suitable and affordable home to rent.” The rental market has shown great resilience over the past year despite the Brexit implications remaining unknown. The strength of the private rental sector is set to continue into 2020 conforming to the basic economic principal of supply and demand.

Which Property Type has Performed Best over the Last Decade?

Now that we are in 2020, looking back at the previous decade can help to shine a light on what we are to expect next in the property market. New research from Proportunity – a new equity loan startup firm – has shone a light on which properties have increased the most in value from 2010 to 2020.

Surprisingly, terraced properties have seen the greatest rate of growth nationally – with an average growth of 3.05%, compared to 2.9%, 2.35% and 2.33% for semi-detached, flats and detached properties respectively.

London has seen the highest rate of growth with the region’s averages outperforming most other parts of the country, with terraced properties in the capital of the country proving to be an outstanding investment decision. In the year 2000, the average price for a terraced property stood at £127,833 in London, however by the end of 2019 this had risen to £499,178 – a startling 290% increase.

“The 2010s were marked by the after-effects of the financial crisis, and then by Brexit uncertainty,” Vadim Toader, founder and chief executive officer of Proportunity, says:

“Despite these headwinds, we have largely seen growth across the board, but the clear winner is terraced housing – or more specifically, terraced homes in London – with buyers likely attracted to their historic characteristics and charm, as well as their limited supply, compared to new builds.”

If you are considering investing into a property this year, then there are three key aspects to keep in mind in order to be successful;

1) Plan for success; know exactly who your audience will be when you let the property out, or sell it on.

2) Gain a mortgage in principle; this will enable you to move quickly as investment properties will often have heightened levels of competition around them.

3) Work with a good estate agent; a reputable agent will be able to advise you on everything from the right area to invest in, to the potential yields you will be able to reap.

Region Name	flat CAGR 2010-2019	terr CAGR 2010-2019	semi CAGR 2010-2019	detached CAGR 2010-2019
East Midlands	0.74%	1.78%	2.11%	2.25%
East of England	2.62%	3.47%	3.59%	3.07%
London	4.93%	5.07%	4.33%	3.06%
North East	-0.50%	0.08%	0.47%	0.67%
North West	-0.04%	1.07%	1.43%	1.21%
South East	2.49%	3.40%	3.41%	2.84%
South West	1.34%	2.19%	2.35%	2.18%
Wales	0.50%	0.90%	1.01%	1.20%
West Midlands	0.65%	1.52%	1.96%	1.91%
Yorkshire and The Humber	-0.12%	0.91%	1.30%	1.32%
England and Wales	2.35%	3.05%	2.90%	2.33%

Saving for a House Deposit

For most of us, the most expensive thing that we ever purchase will be a property, and the prospect of saving for that all-important deposit can be rather daunting. However, the key to saving for that lump sum is simply good financial preparation and making a few changes to your outgoings which should reap big rewards. Take a look through our handy hints and tips and you’ll be in that new home in no time.

Speak to an expert
If you have made the decision that you are ready to buy a property, then an excellent first point-of-call would be to speak to an expert, be that a financial planner, mortgage advisor or a savings expert in your bank. It is important to get a detailed overview of your personal finances and speaking to an industry expert will provide you with tailored advice which suits your lifestyle, as well as being given some proven strategies to help you to save. Whether you’re a saver or a spender, it is important to get in to the right mindset to save and starting the process by speaking to an expert is a sensible first step.

Make a move
With the cost of renting often leaving many with little money to save for a deposit, making a temporary move can be a key factor in achieving a sufficient deposit. More and more people are moving back in with their parents for a period of 6 to 12 months; often paying no rent and economising through saving on laundry and food costs. If living with your parents is a truly unbearable prospect, then finding a lodger to live with you will also aid you in that all-important quest for a deposit.

Know your options
Did you know that you could buy a property with just a 5% deposit? Knowing what schemes and grants are out there will most certainly help you to achieve a house deposit. The Help-to-Buy shared equity scheme allows you to purchase a home with as little as 5% deposit and the government or developer (this is available for new homes only) lends you the rest of the deposit. Shared ownership schemes involve purchasing part of a property and then renting the rest, and although you would still need a deposit to get a mortgage for the part of the property you are buying, the deposit would be considerably lower; for example, to get a 90% mortgage on a 50% share of a £150,00 property, you would need only £7,500 for the deposit.

Make your savings work harder
Naturally, any changes you make will have one similar goal – to help you in saving more money more quickly and making these savings work for you should be a top priority. Open an ISA and use your yearly cash allowance so you don’t pay unnecessary tax. If you don’t already have one, open a savings account and save what you can, even if you think the amounts you are saving are inconsequential, they will soon amount to a worthwhile value. Shop around and see which bank offers the best interest rate on your savings, don’t just take one out with your current banking provider as finding a good interest rate could go a big way to helping you reach your goal faster.

Saving for a deposit can seem like a tall order, so making some sound financial decisions will be the key in to being approved for a mortgage and taking a step on to the property market. Get yourself into the right mindset where you are aware of why you are making some financial changes, remember that they are all short-term, and you’ll see those savings growing faster than you could have ever hoped.

Eco-Visionaries at the Royal Academy

A slightly different offering from the Royal Academy to normal, this thoroughly modern exhibition looks at artists and architects doing their bit in the fight against climate change and other assorted horrors facing the planet.

Click here to read Eco-Visionaries at the Royal Academy.

Pretty Woman: The Musical

Every hit romcom is destined to become a musical, and while the whole it’s-about-a-prostitute-who-falls-for-her-client, er, thing possibly stopped 1990 enormo-smash ‘Pretty Woman’ being adapted earlier, the inevitable has now happened.

Click here to read Pretty Woman: The Musical.

Eco Friendly Homes Playing an Important Role

Climate change has received immense attention recently with urgent calls to reduce the contributing factors to carbon emissions, rising sea levels, and rising temperatures. The UK has committed to reduce its CO2 emissions to net zero by 2050; and this commitment cascades to all markets, including property. This commitment is a great achievement for the UK, with it being the first first-world country to pass law to such a commitment.

Sadly, the amount of greenhouse gasses produced from heating properties has increased since 2014. Heating our homes accounts to a staggering one seventh of overall UK emissions. Our increased use of fuel can be resultant from heat escaping from properties through walls, windows and ceilings during winter. Luckily, the Government have called an end to the rise in fuel consumption and are devising a plan to battle the emissions producing more energy efficient homes. They are behind an initiative called Future Homes Standard, which is planned to be in full operation by 2025.

Having more energy efficient homes is a great ambition for all. It will lead to lower carbon emissions, reduced energy bills, and upgraded housing. In 2025, all new build homes will have to abide by the initiative to have clean technology to heat homes instead of the current fossil fuel burned for gas boilers. The construction sector and developers are at the heart of this revolution with their designs crucial to meeting this goal.

The Housing Minister, Esther McVey, said that “industry has told us some homes built using modern methods can have 80% fewer defects and heating bills up to 70% lower. Homes built using modern methods can be of higher quality, greener and built to last. I want to see a housing green revolution.” 2020 is set for an environmental transformation, with the property market a strong contributor to this.

Does Anything Really Change now that Brexit has Started?

After nearly fifty years of membership, Britain has officially left the European Union and we are now in what is known as the ‘transition period’, which is scheduled to last until the end of the year when we fully depart from the EU. Now that we have left, does anything really change?

Essentially, not much changes for the next 11 months whilst a fully fleshed-out trade deal is brokered. The United Kingdom will be less involved in EU affairs, which means no more MEPs (Members of European Parliament) and no more EU summits, but for the majority of us no change will be seen.

Something that will change, and that has been well-publicised, is the return to blue passports rather than the current burgundy version. These blue-and-gold passports were first introduced nearly a century ago, and will be phased into production throughout the year, although burgundy passports will continue to be valid.

Alongside the new passport designs will be a series of commemorative coins, the first of which is a 50p coin now in circulation bearing the inscription “Peace, prosperity and friendship with all nations”. There are also further plans for other commemorative coins to be released in circulation, so check your change to see if you have one of the three million newly released coins.

Aside from these fairly trivial items, nothing palpable will really change this year in terms of travel, healthcare or working abroad.

British nationals may still queue in the “EU Arrivals” sections in airports, and no visas or extra documentation will be required for travel to Europe. Whilst in Europe, the European Health Insurance Card (EHIC) will still be valid up until the end of the year, however from 2021 this will no longer be valid.

The exit at the end of last month from Europe was more politically significant than having any day-to-day ramifications.

Orchids festival at Kew Gardens

Kew Gardens’ celebration of the orchid returns for its twenty-fifth year, this time with a focus on the plant life of Indonesia.

Click here to read Orchids festival at Kew Gardens.