Stamp Duty Relief Announced For First-Time Buyers, The Most Common Reasons Tenants Lose Their Deposits Revealed, Plus More

Welcome to Wood & Pilcher's December Newsletter.

In this month's edition, the government have announced stamp duty relief for first-time buyers and recent research has revealed how long it takes to sell a home.

Also this month, the average homeowner will spend over £10,000 updating their home and the most common reasons for a tenant losing their deposit have been revealed.

The Government Announces Stamp Duty Relief For First-Time Buyers

 

In a bid to improve homeownership throughout the UK, It was announced in the latest autumn budget that first-time buyers will no longer face the cost of stamp duty.

There were many changes announced by the government in the most recent budget, but the major headline was the scrapping of stamp duty for first-time buyers on all properties up to a value of &300,000.

This change will take effect immediately and could save first-time buyers a potential &5,000 in fees when completing on their home.

What is stamp duty?

Stamp duty is a tax applied to any property purchase priced at more than &125,000. The latest reform will see the minimum stamp duty limit increased to &300,000. This means that according to statistics, approximately 80% of first-time buyers will save money on stamp duty fees.

For first time buyers buying a property within the range of &300,000 to &500,000, they will pay less stamp duty as the rate has been set at 5%. While buyers in this price range won’t avoid the tax completely, buying a home valued at &500,000 will now cost you &5,000 less.

How could this move affect the market?

While it is still very early days and it may be some time before we see a reaction from the market to this reform, some experts are suggesting that vendors will simply respond by raising the price of their home.

The Office for Budget Responsibility shared this opinion saying that “…the main gainers from the policy are people who already own property, not the FTBs themselves"

Other experts believe that house prices are the real problem and while the scrapping of stamp duty will save first-time buyers some money, it doesn’t mean that they will rush to buy a home now that this reform is in place.

Tom Kibasi of the Institue of Public Policy Research commented, saying “Unaffordable house prices are the problem, not stamp Duty. For most young people, the stamp duty cut will make little difference. But it will help the beneficiaries of the bank of mum and dad.”

How Long On Average Does It Take To Sell A Home?

 

As any homeowner who has sold a home will know, the waiting is the hardest part, especially when the seller has unrealistic expectations of how quickly their property will go from for sale to sold.

Post Office Money and the Centre for Economic and Business Research carried out research looking into the amount of time it takes to sell a home in 22 of the major cities throughout the UK. On average, it was found that it takes 82 days to sell a property.

The findings of this research showed that Edinburgh is the fastest place to sell a home, with most properties only being on the market for an average of 41 days. Similar results were found elsewhere in Scotland as Glasgow was the 2nd fastest city to sell a home at an average selling time of 50 days and in 3rd place was the city of Bristol showing a 61 day average before agreeing on an offer.

It has been suggested that properties within these cities move so quickly due to their price range and are more suited to first-time buyers that are willing to be more flexible on the location of their first home.

The research found that Belfast was the slowest of the major cities to sell a home and average selling times were around 119 days. Liverpool and London also featured at the lower end of the table, averaging at 112 and 111 days respectively, as it seems the more densely populated areas of the UK present more competition amongst other homes on the market.

The market has seen a bit of a slowdown in activity in recent months due to the questions surrounding the UK economy as Brexit negotiations continue and property prices are still rising, showing a 5% increase throughout the UK over the last year. Both of these factors could be linked to some of the slower cities, more populated by second steppers possibly taking a more patient approach to the market.

Managing Director at Post Office Money, Owen Woodley offered his comments on the results. “Against a backdrop of muted but steady increases in house prices across the country and sustained demand from the FTB market, these movements in time to sell reflect the changes in the number of properties listed for sale in cities across the UK. We know from previous research that first-time buyers are taking a flexible approach to finding an affordable home, most especially towards location.”

Homeowners Spend £10k Updating Their Homes In The First Five Years

 

A recent study looking into the amount that homeowners spend on a new property has found that on average homeowners spend &10,743 within the first five years of moving into their new home.

This survey was conducted by Furniture Choice, surveying 1,000 homeowners and looked into the most common purchases for a new home and the average cost each of these items or upgrades.

According to responses, new homeowners spend just over &2,000 on basic furniture such as sofas (costing an average of &669), Beds (&381), wardrobes (&314) and dining sets (&308) meaning buyers need a little bit more than a deposit to get started.

The kitchen also appeared to be quite costly, as homeowners spent just over &1000 on white goods and cooking appliances.

It can be quite common for homeowners to run into unexpected costs such as faulty plumbing and electricals within the first few years in a new home also. These issues along with other general repairs came in at an average cost of &3,500 according to responses.

While some buyers are prepared to get stuck into a fixer-upper, some survey participants revealed that they still had to put some cash into upgrading a recently renovated home.

Survey participant India Benjamin, spent close to &2,000 fixing unexpected faults, showing that buyers need to be thorough when viewing a home and fully understand the costs involved. “The house was newly renovated when I bought it, but only on the surface. I had to replace the boiler within six months of buying the house; apparently, it was nearly ten years old, despite being in a brand new cupboard, and I’ve been advised my whole toilet cistern needs replacing.” Said Benjamin.

Furniture Choice's Tom Obbard, spoke on the findings of the survey, stating that “Buying a new property is stressful enough as it is, so it’s vital that potential buyers are aware that solely saving for a deposit isn’t enough anymore, especially when it comes to first time buyers."

“Budgeting for furniture can begin before you even look for a house; starting a Pinterest board or even a spreadsheet to get an idea of cost, as well as style, can really help to give an indication of how much you will need to save. Stick to the basics at first; a bed, sofa, and dining sets are always good to start with. Smaller items can be bought gradually if you’re on a tight budget."

“Some costs, such as repairing hidden damage, can’t be foreseen, but having an emergency buffer in place will help to limit any financial strain these problems have”.

The Most Common Reasons For Tenants Losing Their Deposit

 

The tenancy deposit is an essential part of safeguarding a landlord’s property during a tenancy. In the event of damage to the property or unpaid rent, the landlord can use the deposit to cover their losses. Most tenants will successfully reclaim their deposit at the end of their tenancy, providing they know what areas to take care of. In a recent survey, letting agents were asked to reveal the most common reasons for a tenant to lose some or all of their deposit.

Cleanliness
This probably won’t be too much of a shock. Lack of sufficient cleanliness proved to be the most common reason for tenants losing their deposit, with nearly nine in ten lettings agents saying this was a cause. The majority of the cost goes on getting the property professionally cleaned, so it is in a fit state for the next tenant. As long as you return the property in the same condition of cleanliness that is documented in the inventory, you won’t have a problem.

Maintenance
Nearly a half of all deposit claims go towards covering the cost of routine maintenance around the home. Over the course of the tenancy, ensure you are keeping the garden in-check and clear out the guttering on a regular basis.

Damage to the property and contents
This can range from easy mistakes like hanging pictures on the walls without proper permission, for catastrophic damage you might have caused, such as damage to fittings, structure or furniture. 39% of agents reported that some form of damage to the property was a common reason for tenants losing their deposit.

Unwanted personal belongings
Over one in ten agents reported tenants leaving behind unwanted personal belongings. Depending on the size and amount of belongings that have been left behind, the landlord may have to pay for them to be removed.

Sally Lawson, President, ARLA Propertymark comments: “When you’re leaving a property you’ve been renting, the general rule is to leave it as you found it. Make sure you haven’t left any personal belongings behind, and that the property is clean and tidy for the next tenants. You should flag any damaged items to your letting agent or landlord during the agreement so that when you leave, it doesn’t come as a shock. This will also help you develop a good relationship with them, which will be useful for any reasonable negotiations about the deposit”.