A Guide to Joint Ownership, Second Steppers Require Assistance From Parents, Plus More

Welcome to the July edition of the Wood & Pilcher newsletter.

This month, we reveal why 24% of households will be privately renting by 2021, we share our guide to joint ownership, we investigate what draws a buyers eye during a viewing and we discuss why second steppers are getting financial assistance from their parents.

24% of Households to Rent Privately by 2021

The housing landscape continues to change as homeownership levels fall, more young people seem interested in renting long term and the build to rent sector continues to grow.

It is no surprise then that a recent report from Knight Frank suggests that 1 in 4 households will be living in private rented accommodation by 2021.

There currently approximately 5 million UK households (21%) in private rented accommodation. Due to rising house prices, renting is the only option for some and more and more of the younger generation are now considering renting long term as a suitable option for their needs. The number of renters has doubled over the last 10 years and the latest report from Knight Frank estimates that the number of private renters will grow by around 800,000 over the next five years to 5.79 million (24%) renters.

According to the most recent annual report from the estate agency, there are currently 14.3 million owner-occupiers in the UK, along with 4.3 million social tenants.

This research was carried by YouGov on behalf of Knight Frank and surveyed over 10,000 tenants and 26 major investors. It was found that although three-quarters of renters in the UK are currently living in homes owned by private landlords, they will increasingly rent from large-scale corporate landlords such as City firms and property companies.

The survey found that 68% of renters believe they will still not own a home in 3 years time. 21% of respondents not only felt that renting suited their lifestyle, but it wouldn’t be possible for them to save enough for a deposit.

It was also found that 8% of participants of the survey were not interested in the responsibility of owning a home, followed by 6% stating that their career requires the flexibility that comes with renting.

Head of Residential Capital Markets at Knight Frank, James Mannix, spoke on the current state of the Private Rental Sector (PRS) sector, stating that “The strength of the UK PRS sector has grown demonstrably in recent years. As consumer demand for affordable, flexible accommodation continues to rise, PRS is firmly establishing itself as a key opportunity for institutional grade investment, due to its long-term potential. In order to enhance Build-to-Rent specifically, the main hurdles of planning policy and land supply must be addressed. With both issues being recognised in the recent Housing White Paper, we hope to see the government encourage more Build-to-Rent and help to better identify developable land.”

A Guide to Joint Ownership

There’s no point in beating around the bush. A property is the single biggest purchase you will ever make. You will pour obscene amounts of money, more than you’ve probably ever seen or ever will see again, into a deposit for your very own slice of land. It’s a complicated process, that’s made even more complicated if you’re buying with a partner/loved one/friend.

Before you get started, as unromantic as it may seem, it’s important that you seek advice from a solicitor before purchasing a home. You need to understand your rights in the event of death or separation.

1) Firstly, you have to choose between the two types of joint ownership. Joint Tenants each own an equal share of the property, however when you die, your share goes to your partner and you can’t bequeath your share in a will. Tenants in Common can each own a different share of the property, however, it allows them to pass on or gift their share in the property, and your share doesn’t automatically revert to the partner in the event of your death (unless you want it to).

The type of tenants you are will be defined by a solicitor, making the eventual sale of the property more streamlined.

2) Should you be buying a house with the intention to put it on the rental market, you’ll want to consider the type of joint ownership carefully. With Joint Tenants, the split of the rent is 50/50 like the split of the share. If it’s Tenants in Common, you may have less of a share of the income.

3) It is possible to swap between the two joint tenancies. Many choose to switch from joint tenants to tenants in common to allow for greater flexibility in the event of a divorce or separation. Mutual consent isn’t necessary as one partner can serve the other with a “notice of severance”.

4) Joint ownership is also helpful for buying a second home, on which Capital Gains Tax is payable. Capital Gains Tax is a tax levied on the profits of the sale of a property or investment. Both owners can take advantage of the &11,100 limit on the tax when selling a property. Should there be any doubt about a partner’s ability to make a legal decision based on their mental capacity, then the other owner will have to apply to the Court of Protection before he or she can sell the property. This means you’re protected from being forced to sell a property through dishonest means.

What Do Buyers Focus On When Viewing a Property?

 Are you selling your home? Got a viewing coming up? Make sure you get rid of any clutter as it could be the downfall of a potential sale.

Anglian Home Improvements recently conducted some research using eye tracking technology to discover where buyers' eyes are drawn to when viewing a property. During this study, a variety of homebuyers wore eye-tracking glasses while viewing a home so that it could be determined what aspects of a home captured their focus.

According to the findings of the study, the largest concern for buyers and taking up 27% of the buyer's focus, was furnishings and décor, closely followed by clutter and mess, which attracted 24% of their focus during the viewing. Although the clutter and mess were not always mentioned when passing on feedback to the agent, it still caught their eye.

Perhaps the most surprising statistic from this study was that only 4% of the viewing time was spent on the property's layout.

The results also showed that personal items of the seller such as family photos often distracted the viewer from other aspects of the room.

It was also revealed that there were some differences depending on gender as men were more focused on the exterior of the home (32%) while women were more concerned about the interior (16%). It also seems that clutter and mess is less of an issue for men as they only spent 20% of their time focusing on it, while women averaged 28%.

Head of PR at Anglian Home Improvements, Melanie McDonald, said: “It was very interesting to learn that so little of the participant's behaviour was focused on the building and structural features, apart from the things that needed to be fixed.”

McDonald went on to say that “Although it is easy to forget to mend that broken light switch or socket, the fact that all the participants lingered on the badly installed light switch in the study just goes to show these little things are noticed during house viewings and will make the idea of them living in the property seem much further away.

“With nearly a fifth of the house hunters’ time spent looking out the window, one of the top tips from this experiment is to make sure the view from your windows is up to scratch.”

Even Second Steppers are Having to Rely on the Bank of Mum and Dad

It was no surprise when it was reported numerous times over the last year that first time buyers were relying heavily on their parents to take that first step onto the ladder, but now there are reports that even those buying their second home are using the Bank of Mum and Dad to get them across the line.

According to a new report from Lloyds Bank, 32% of them need financial support from relatives to take their second step onto the property ladder. These buyers were either gifted or borrowed &21,131 on average.

It was also found that roughly half of the second steppers had previously been given just over &20,000 on average from relatives to get them across the line when buying their first home, with 41% of these buyers overpaying on their mortgage to increase their equity.

The research from Lloyds Bank determined that there was a &126,000 price gap between the average home for a first-time buyer and the ideal home for a second-time buyer. On average, second steppers will only have &105,068 equity in their first home, leaving a gap of just over &20,000.

The response from participants showed that just over a third (35%) of potential buyers can’t afford to move and almost a quarter of them (23%) having decided to delay having a family until they own their own home. It was also revealed that 13% of respondents had changed their careers in order to help with buying a second home.

Mortgage Director at Lloyds Bank, Andy Mason, spoke on the statistics from the report, he said “Parental support continues to play a vital role in helping young people to get on the property ladder. However, it is clear that despite improved conditions for this part of the housing market, second steppers will still rely on the Bank of Mum and Dad, with hard-pressed parents being once again called on for financial help.

“Without this extra financial support, second steppers believe that they wouldn’t be able to make the next move on the property ladder for some time.”