UK Property Transactions to Become More Efficient, Five Tips For Making Your Property Search Easier, Plus More

Welcome to the Wood & Pilcher April Newsletter. This month we investigate how experts want to revolutionise the property transaction process, we break down stamp duty to its simplest terms, we reveal Nationwide's family mortgage offer and we share our five top tips for making your property search easier.

Until next time!
Wood & Pilcher

Are UK Property Transactions Set to Become More Efficient?

It has been said countless times that selling or buying a home can be one of the most stressful times of your life, however, the Conveyancing Association (CA) is now aiming to reduce the time of the sales transaction and create a more efficient process for all parties.

Most property transactions, provided there are no unexpected speed bumps along the way, take 12 weeks on average to reach completion, but the Conveyancing Association believes it can deliver significant improvements to this process through their new strategic plan that involves more effective communication and fraud protection.

There have been similar efforts from previous governments to simplify the transaction process through the Home Information Pack (HIP), but now the CA is looking to launch new E-Home reports, designed to provide all of the necessary information that is required to put a property up for sale.

The CA is also calling for reforms to leasehold transactions, to reduce the amount of delays usually associated with these types of transactions and hopefully reduce costs. In addition to this, the association is also looking to make the conveyancing process much more efficient by taking full advantage of modern technology.

One of the other key aspects of the Conveyancing Association’s strategy is to streamline the lending process by improving the communication between buyers and lenders, reduce post offer queries and give buyers the opportunity to get a reliable decision in principle.

Director of Delivery at the CA, Beth Rudolf, spoke about the objectives of this new strategy and its aims to improve the steps in the transaction that make the biggest impact, with some improvement already underway as the government recently committing to a review of leasehold tenure.

Rudolf said that “This strategic plan provides an overall guide for us to follow and focuses us on the job ahead. We will be looking for further involvement from many practitioners, affiliates, stakeholders and other organisations, to make these ambitions a reality,”

The CA is also looking to pilot this new strategy with some of its members before lobbying government.

Stamp Duty Explained

It’s a phrase that landlords and buyers fear. But many do not understand how the tax works and how it applies to your property transaction. Simply, Stamp Duty Land Tax (SDLT) is a tax paid on any property purchase of more than &125,000.

The History of Stamp Duty
Stamp Duty was introduced in England in 1694 during the reign of William and Mary. It was used as a transaction tax to raise money for war against France and was applied to goods including hats, newspapers and patent medicines. Eventually the tax would only be levied on property transactions.

Stamp duty was instrumental in the outbreak of the American War of Independence which was encompassed in their slogan “no taxation without representation”

Modern Day Stamp Duty
Up until 1997, home buyers only paid 1% tax on properties costing more than &60,000. Former Prime Minister and then-Chancellor Gordon Brown introduced a system of bands, meaning a higher percentage of stamp duty depending on the value of a property. At the time, the highest band was set at &500,000.

In the intervening decades, the lower and upper thresholds have been raised in response to rapidly rising house prices.

The biggest shock to the property market came in December 2014, when George Osborne abolished the slab structure and introduced progressive charges and increasing the levy on homes costing more than &937,000.

Whilst the government claims 98% of home buyers now pay less stamp duty than in the past, the new bands have been blamed for the slowdown of the property market.

Stamp duty must be paid within 30 days of buying the house, with talk of shortening the period to 14 days.

First Family Mortgage Offered By Nationwide

Nationwide has revealed its latest mortgage, perfect for supportive and generous families.

The Nationwide Family Mortgage is designed both for parents looking to help their first-time buyer children and families looking to help older members downsize.

Family members can now borrow against their own home to raise money so they can “gift” a deposit on their first property.

It allows any family member to take a mortgage up to 80% of the value of their home, the proceeds of which are then given to and used by another family member to use as a deposit on their own purchase.

Whilst Nationwide is not the first bank to offer a mortgage designed to support parents who wish to support their child, the family mortgage they offer is more flexible.

Many family mortgages are strict on the role the family member fills (I.e. they must be a parent). With the Nationwide mortgage, it’s not just parents and children who qualify - grandparents, siblings, aunts, uncles and step parents can also fund another family’s member’s bid to buy a home, or re-mortgage an existing property.

Nationwide’s head of mortgages Henry Jordan said: 'We've launched this in recognition of customer demand for a flexible and accessible way to use the wealth tied up in people’s homes. The aim is to help not only first-time buyers but also home movers to secure their own property.'

The recent analysis performed by Nationwide suggests a large portion of recent mortgage lending, involves a deposit which was either partially or wholly gifted.

The Council of Mortgage Lenders has revealed that the average deposit for a first time buyer in the UK is now &28,200 whilst in London, its &65,600

'We know that trying to raise a deposit can be the most significant barrier to becoming a home owner,' said Jordan. 'This Nationwide range will enable families to give mutual support to each other and provide new options for home ownership.'

How does a family mortgage work?
Both the family member raising the money for a deposit and the family member accepting it have to take a mortgage with Nationwide, however they are free to choose from any of the deals available.

WHO QUALIFIES AS FAMILY

- a spouse
- civil partner
- parent
- brother or sister
- child
- grandparent
- grandchild

or someone whose relationship with the applicant has the characteristics of a family relationship such as a step child or partners.

In order to qualify, both parties looking to borrow must meet all of Nationwide’s standard credit criteria. They should also be able to prove that they can afford the monthly repayments. It is also possible to re-mortgage with Nationwide, even if you have your current mortgage with another lender.

Five Ways to Make Your Property Search Easier

We all know that searching for a home can be quite a long process. Studies have shown that it can take up to 3-4 months, viewing a total of 8 houses on average before most buyers find the house that’s right for them. The only way to make it easier for yourself is by doing a little research and preparation before you dive in. We’ve put together 5 simple steps to make your hunt for a home that little bit easier.

Figure out your finances
Before the search begins you absolutely must figure out exactly how much money you have to play with, taking into consideration the full cost of buying a home. It’s not just the cost of the property, but also the cost of surveys, stamp duty and more.

There is no such thing as ‘too early’ when it comes to looking at mortgages and speaking with financial advisors. While setting up meetings and discussing your finances with a mortgage advisor can be time consuming in itself, once you’ve determined your maximum spend it allows you to greatly refine your search and also puts you in a stronger position further down the line when it comes to negotiating.

Separate your wants from your needs
You probably already have an idea in your head of what your dream home looks like, what features it has and the type of area its located in. Unfortunately, for most buyers finding your dream home takes a lot of luck or a lot of money so you need to decide early on which features are the ‘must haves’.

Every buyer’s criteria is different, whether it is the size of the kitchen, being close to a good school or the number of bedrooms. A successful home search does require a little bit of compromise so separating your wants from your needs allows you to begin your search with a lot more focus, saving you time in the long run as you won’t need to head out all the time for endless viewings.

Take advantage of all the information available to you
In the past a lot of property information such as how much it previously sold for, floor plans and general statistics for the area were not as easily accessible as they are today. There are plenty of websites that allow you to do that extra bit of research, allowing you to make more educated decisions throughout the process.

Find out what the average price is for homes in your favourite area, take a look if a home you have your eye on has a surprisingly high flood risk. With buying a home being the biggest purchase you’re ever going to make, the extra research you put in could not only protect you from hidden disasters in the long term, but also means you’re able to be a little more brutal with your shortlist as you take advantage of the wealth of information available online.

Get in touch with us!
While the internet does hold plenty of useful information on the property market, if you’re looking for in depth knowledge of the local area, then your local estate agent is always your best bet. By speaking to your estate agent you can get some more information on the current state of the local market, which is incredibly valuable information if you’re moving to a new area.

If your essential property criteria include the commute to work or the good local schools, a good agent will be able to bring even more focus to your search and help you avoid any homes that are unsuitable to your needs.

Be thorough, be brutal
Once the viewings begin it’s important that you gather as much information as possible during your time in the property. Take notes, take photos and ask plenty of questions. After a few viewings you may find that all the properties begin to blur together in your memory, so the more information you collect the first time round, the more time you save from not having to go back again and again to feel the place out.

At this point you’ve already made a list of the things you can’t live without, so to speed up the process, you should also create a list of things you can’t live with. If your shortlist only contains 3 or 4 properties, then it may be best to take a slightly more lenient approach when discovering a room will need completely redecorating. However, if your shortlist of homes is in the double digits, you’d be wise to be thorough and spot any deal breakers early as a long list of homes will require you to be brutal, unless you want to spend months going from viewing to viewing.

Overall the key to a successful property search is to make sure you’ve done your homework and have as much information as possible to make an educated decision when you see ‘that’ property and your heart takes over. Being able to determine exactly what you want early can be a massive help and by combining the online information with the knowledge of your local expert, you can make finding a home a much smoother process.