Government Response to Starter Homes Consultation

27Feb

Government Response to Starter Homes Consultation

Over the last twenty years the proportion of under 40 year olds who own their home has fallen by over a third, from 61% to 38%.

The Housing White Paper, Fixing Our Broken Housing Market, sets out the Government’s plan to help over 200,000 people become homeowners by the end of the Parliament through its programmes.

To coincide with the release of the housing white paper, the Government also released the results of its consultation on starter homes.

For young aspiring home owners who would be unable to obtain a mortgage for the full market price of a home, the Government is committed to ensuring there is a range of affordable homes to support their aspiration to buy. Starter homes will be an important part of this offer.

Starter homes are targeted at first-time buyers, between 23 and 40 years old who are unable to get a mortgage for the full market price of a home. Sold at least 20% below market value, the Government’s aim is for starter homes to be sold to those who are genuinely committed to living in an area.

The average market price for homes bought by first time buyers in November 2016 was £180,000 across England outside London and £422,000 in London. After discount, each starter home will cost no more than £250,000 outside London and £450,000 in London. The Government expect starter homes to be entry level properties priced in line with the local first time buyer market.

In May 2016, NAEA Propertymark responded to the DCLG consultation on starter homes, questioning the affordability of Starter Homes, despite their 20% discount. We also raised the issue that there was no reference in the consultation to the size of starter homes and therefore local authority planners should consider policy to reflect the changing demographic of first time buyers.

The Government has decided not to implement a compulsory starter homes requirement on councils at this point in time. The Government said they will commence the general duty on councils to promote the supply of starter homes and bring forward regulations to finalise the starter homes definition and monitoring provisions.

Consultation results

The Government will restrict the sale and sub-letting of starter homes following initial sale and will set out its plans in regulations. NAEA suggested that the restrictions on the sale and sub-letting of starter homes for the planned 5 years following initial sale should be longer.

Government have carefully considered the arguments for a longer repayment period and as a result, the restricted period will be 15 years (a period of between 8-15 years was suggested in the consultation). The Government will also incorporate a mortgage requirement through the regulations. This would require a minimum 25% mortgage and enable the use of home purchase plans in this requirement.

Flexibility will be given over the age restriction to joint purchasers looking to buy a starter home. When one purchaser is under 40 years old but the other is older than 40 and both are first-time buyers, they will be eligible to buy a starter home. Injured military service personnel and those who partner has died in service will be exempt from the age restriction.

The starter homes requirement and off-site commuted sums

The Housing and Planning Act 2016 allows for off-site commuted sums to be made in lieu of starter home provision. This would mean that local planning authorities must agree to an off-site contribution for purpose built private rented sector housing and specialist older people’s housing.

NAEA Propertymark were among the supporters for the use of commuted sums to deliver starter homes where the local planning authority agrees.

Monitoring and reporting

The Government will include a monitoring requirement on the number of starter homes granted planning permission. Local planning authorities will have the option to annex the starter homes monitoring requirements to their Authority Monitoring Reports (AMR). Reports will be required to be published on an annual basis, however to allow more flexibility, Government have not yet specified the date for the production of the first report.

Housing White Paper

Following a consultation in December 2015, the Government will change the National Planning Policy Framework (NPPF) to allow more brownfield land to be released for developments with a higher proportion of starter homes.

Through the Housing White Paper, the Government are consulting on proposes to amend the NPPF to introduce a clear policy expectation that suitable housing sites deliver a minimum of 10% affordable home ownership units. It will be for local areas to work with developers to agree an appropriate level of delivery of starter homes, alongside other affordable home ownership and rented tenures.

The Government are also consulting on their intention to make clear through the NPPF that starter homes should be available to households with an income of less than £80,000 (£90,000 for London).

The housing white paper consultation is open for responses until 2 May 2017.

What's next?

The Starter Home Land Fund will be committed to supporting the preparation of brownfield sites and development in rural areas – 30 partnerships with local authorities were announced on 3 January 2017, with further partnerships to be developed in due course.

Starter homes now sit alongside the Government’s efforts to build other affordable home ownership tenures (shared ownership, Help to Buy and Right to Buy). The result of these changes mean that the Government has changed its focus from starter homes, to a wider range of affordable homes.

Housing Minister Gavin Barwell said:

“This government is committed to building Starter Homes to help young first time buyers get on the housing ladder. This first wave of partnerships shows the strong local interest to build thousands of Starter Homes on hundreds of brownfield sites in the coming years. One in three councils has expressed an interest to work with us so far.”

SOURCE: NAEA PROPERTY MARK

WRITTEN BY Katie Griffin Read more

Feb 20 2017

How to find a tenant quickly and avoid a void period

20Feb

How to find a tenant quickly and avoid a void period

No one wants an empty house. One of the main worries that many landlords experience is the possibility that a month or more will pass between lets without any rental income. It is crucial to minimise void periods where possible by acting fast and making sure you get the next tenant for your property. It is inevitable that circumstances will change and people will move on but there are quick and easy steps to reduce void periods.

Advertise online

This is one of the cheapest and most effective ways to finding a new tenant. Most people have access to some form of internet, whether it is on your mobile phone or laptop. Using a letting agent is an easy way to get your rental property noticed without having to do all the work yourself. This means your property will be promoted by them, which should help you gain interest from potential tenants.

Word of mouth

An old-fashioned way of finding a suitable tenant, word of mouth can still be surprisingly effective. Talking to people living close to the empty property or your friends could lead to finding someone who might be interested in renting your property.

Setting the right rent

It’s always good to do a little research into competitive rental rates. Make sure that the property is good value for money and all repairs are up-to-date as potential tenants will always do a thorough search before making their choice. You want to make sure that your property is at the top of their wish list.

Social media

It may be worth posting about your vacant property on social media sites such as Facebook, Instagram and Twitter. One of your contacts may know of a person who is looking for a property to rent.

Finding the right tenants

Trying to fill the void period may be quite time consuming, but it is worth spending time trying to select tenants that will be delighted to call your property their new home. Make sure you have the correct references and requirements from the new tenant before having them sign the contract to rent your property. It is important to see whether the tenant can pay rent on time and continue to do so without occurring late rental charges.

Do you have a property that is for rent? Are you looking for your next tenant? Contact us now on 01364 652652.

WRITTEN BY Katie Griffin Read more

Feb 18 2017

How to Buy a Forever Home

18Feb

How to Buy a Forever Home

Is a ‘forever home’ a myth? Your personality, or perhaps your finances, may well dictate whether you find a forever home or a ‘for now’ home. There are people who know exactly what they want and stick to it, but it will take a lot to settle on one property and stay with it.

To find a property to last a lifetime, consider these 5 main points:

1. Flexibility
Being realistic is what makes a home last forever – the demands you make on your space will change. The current trend for open plan living spaces could work in your favour as you will be able to zone the space differently according to your needs; dining space can soon become a play area, for example.

Think about the style of the property, not so much the décor but the structural elements; sleek, modern lines maybe give you thrills now, but could mean sharp edges for small children. You want a property that suits you, but one that you could also suit you in 20 years. You don’t need to be psychic to know that when something is appealing to you because it's the trendiest place you’ve seen and your friends will love it, it may not be the best choice for a forever home.

Thinking too far into the future can be scary, but what if your grandfather needed to come and live with you in the next couple of years? Think about how your older relatives navigate the space and use that as a guide for the practicality of a home.

Something else to consider is whether you might need to rent some, or all, of the space out. What if you want to travel or your children emigrate? Thinking about the space in these terms will help to see how applicable it will be to your changing life.

2. Location

This is always a huge factor in finding the right home. But when it comes to your forever home, taking a closer look at all your needs will allow you to future-proof, as far as possible at least. Education from pre-school through to sixth form should be factored in.

Lasting homes should be well facilitated too - from bus routes to shops, the more local amenities available, the more robust your home will be for whatever circumstances appear on the horizon.

Like this post? Read more about how to find the right property for you here.

3. Costs

An efficient home will make a great deal of difference. A sprawling mansion with tennis courts and a pool may seem like it will cater for every eventuality, perfect for children’s parties and social gatherings, but space often equals costly maintenance.

What’s more, buying a drafty old property that you never properly repair, one that’s always in need of a little mending here and there, will fritter your money away. Choose a home you can afford to fully repair if necessary, or stir towards a cost-effective home you know you can heat through the winters.

In short, for longevity find an efficient house!

4. Can you sell it?
This is important: things change, you may want to move! Forever rarely means forever these days and we find more and more that change isn’t so hard – getting bored with you property can easily be fixed. So, don’t think only about your life in a property, ask yourself who would want it if you put it up for sale? Don’t pick, or develop, a property which is too niche.

WRITTEN BY Katie Griffin Read more

Jan 03 2017

A USEFUL GUIDE TO JAPANESE KNOTWEED

03Jan

Green Door

How to Spot and Tackle Japanese Knotweed

The discovery of Japanese Knotweed (Fallopia Japonica) can jeopardise the sale of a property, so it makes sense to be one step ahead, saving you a lot of hassle and making sure the sale goes ahead.

All too often, the plant is discovered by the mortgage surveyor resulting in delay, price renegotiation and even the loss of sale. So, what do you need to know and how is best to deal with it ?

Here’s our eight top tips on what to look out for and what to consider if you believe Japanese Knotweed exists on your property or the property you are looking to purchase.

Learn how to identify it

Japanese Knotweed looks quite different at its various growth stages throughout the year and can be quite difficult to identify. If in doubt, ask an expert to confirm your suspicions.

How big is the problem?

Japanese Knotweed may look small and contained but don't underestimate the scale of the potential problem. The plant has an extensive rhizome system extending 2 - 3 metres laterally from the visible plant and up to 3 metres deep. Ask an expert for a pre-sale site survey to confirm the extent of the problem and the cost of dealing with it. If a purchaser is faced with cost of eradicating the Japanese Knotweed, they will negotiate it off the price.

Can Japanese Knotweed damage the property?

Yes. In its quest for water and light, Japanese Knotweed can exploit any weakness in the fabric of a building - for example expansion joints in concrete, cavity walls, weaknesses in broken mortar between paving slabs or bricks. It can also damage drains and sewers. While structural damage is rare in most residential situations, if left unchecked, a mature infestation of Japanese Knotweed can cause damage. Get an expert to assess the situation as soon as possible.

What should I do about a site survey?

An initial discussion with a Japanese Knotweed eradication expert should help to clarify the extent of the problem and in most cases, photographs will be enough to quote for a solution. For larger areas and commercial development sites, a good contractor will be keen to come and see the site for themselves before quoting.

What are the treatment options?

There is more than one way to deal with the problem and the right solution will depend on a number of factors such as the site conditions, future plans for the site, budget and time scales. The available methods fall into two broad categories: in situ herbicide treatment and physical removal. An expert will outline the pros and cons of all the options fully - they can vary greatly in terms of financial cost and environmental impact as well as in time taken and efficacy.

Can the sale of the property proceed without treating the Japanese Knotweed?

It is virtually impossible to secure finance on land or property with Japanese Knotweed on or adjacent to it. In most cases this means there's no deal until the problem is dealt with. UK banks and lending institutions are usually satisfied if an approved contractor can guarantee their treatment of the problem. It is in your interests to deal with the problem to avoid it ruining your chances of buying your prospective property.

Is the work guaranteed?

Most companies offer a guarantee but do read the small print - these guarantees are not yet insurance backed although may rely on professional indemnity insurance if things go wrong. Even more importantly, make sure you have a detailed post treatment management plan agreed with their chosen contractor. It's easy to negate a guarantee or warranty by disturbing the soil within a year of herbicide treatment, for example.

Will it come back?

Depending on the treatment method and notably with herbicide treatments, there is a possibility of some minor regrowth but this should be covered in any post treatment management plan. Any regrowth is initially weak and if dealt with swiftly and correctly, should not pose any lasting problem.

Source: NAEA PROPERTYMARK

WRITTEN BY Katie Griffin Read more

Jan 02 2017

Property jargon buster – a glossary of terms

02Jan

PROPERTY JARGON BUSTER - A GLOSSARY OF TERMS

The property world is full of words and expressions that may be unfamiliar to anyone who is not regularly buying, selling, letting or renting a home. This updated guide from OnTheMarket.com will help to shed light on what they all mean.

Absent landlord

A landlord described as “absent” is one who cannot be contacted. If the lessees wish to create a Right To Manage Company but are unable to contact the landlord, they are free to make a legal application to acquire the right to manage.

Acceptance

The document you need to sign when accepting a lender’s mortgage offer.

Administration fee

A payment which is charged to cover the costs of processing a property rental application. This is paid by the tenant and will be taken from the initial monies once the tenancy starts.

Annual Percentage Rate (APR)

The total cost of a loan, taking into account interest charges, arrangement fees and other costs, shown as a percentage.

Agreement fee

A payment which is charged to cover the costs of drawing up a tenancy agreement. This is usually shared between the landlord and tenant.

ARLA

The Association of Residential Letting Agents, the UK’s foremost professional body for letting agents.

Arrangement fees

These are fees charged by a mortgage lender or broker to arrange a loan.

Assign

To transfer the right or interest in a property from one person to another.

Assured shorthold tenancy (AST)

A widely used rental agreement where the tenant is an individual and net rent does not exceed £25,000 a year. It covers a fixed period, so both parties know the date the property will be vacated.

Base rate

The rate of interest which the Bank of England charges for lending to other banks. These banks then use it as a benchmark for the interest rates they charge when lending money to consumers, often stipulating an interest rate “X% above the base rate”.

Break clause

A clause sometimes agreed between the landlord and tenant to be inserted in a fixed term agreement, typically if the initial fixed term is for a year or more. A break clause will usually allow either landlord or tenant to give written notice after a particular date or period of the tenancy in order to end the tenancy earlier than the original fixed term.

Bridging loan

A temporary short-term loan enabling someone to purchase a property before selling his or her existing property.

Building inspection/Structural survey

A report on the physical condition of a property. The surveyor will look at all accessible parts of the property and give a written report on defects or issues affecting it. See also HomeBuyer Report. Not to be confused with a mortgage valuation (see below).

Capital

Capital, also known as equity, is an asset that is less liquid than cash. It represents the amount of money you have put into a property, investment or deposit.

Chain

A chain is formed when several property sales and purchases are inter-dependent. A chain can be complicated but a good estate agent will be able to help keep it moving.

Completion

The point at which the sale of the property is concluded and the buyer receives the keys.

Completion statement

A document which your solicitor or conveyancer will provide as a record of all the financial transactions and costs.

Conditions of sale

The specific items in a sale contract that govern the rights of the buyer and the duties of the seller.

Contract

The legal document detailing the agreement of terms between the seller and buyer. When a sale is agreed, a draft contract is sent to the buyer by the seller’s legal representative and at exchange of contracts both parties are bound to a date on which to complete the sale.

Contract race

Where two or more purchasers are given a draft contract and the first one to exchange contracts buys the property.

Conveyancer

A representative, solicitor or licensed conveyancer, who deals with the legal aspects of buying or selling a property. The buyer and seller will each appoint their own conveyancer.

Conveyancing

The legal process of transferring the ownership of a property.

Covenants

Rules governing the property in its title deeds or lease.

Credit search references

References requested for a tenant applying to take up rented accommodation. Many agents and individual landlords use external companies who will contact the applicant’s employer, landlord and check the tenant’s credit history, providing a report on their financial suitability to rent.

Deeds

The legal documents that prove the ownership of the property.

Deposit

When buying: The amount of money paid by the buyer on exchange of contracts, usually 10% of the purchase price.

When renting: A monetary sum held by the landlord or agent for security against damage to a property or a breach of the tenancy terms. This is usually the equivalent to six weeks’ rent but may vary. If the deposit is for an Assured Shorthold Tenancy (AST), then it must be protected by one of the approved tenancy deposit protection schemes.

The Deposit Protection Service

The DPS is the only custodial scheme authorised by the Government; it is free to use and open to all landlords and letting agents. It requires a tenant’s deposit to be paid over to the DPS for the duration of the tenancy. This amount is then paid back at the end of the tenancy when an agreement between both parties has been reached.

Dilapidations

Items that have been damaged during a tenancy. The tenant is usually responsible for the cost of repair or replacement.

Disbursements

The items in addition to legal fees in conveyancing. These may include Stamp Duty Land Tax, Land Registry fees, search fees, mortgage redemption costs and any other expenses. All conveyancers should be able to estimate the likely level of disbursements before the transaction commences.

Draft contract

The initial version of the contract. This may be amended during the course of the sale but becomes final at the point of exchange of contracts.

Easement

A right that affects a property – such as the right of neighbours to pass over an access path or the right of the water company to have their pipes and drains running under the property.

Enquiries

Questions which are raised by the buyer’s conveyancer, often about survey or property information forms.

EPC

The Energy Performance Certificate (EPC) shows the energy efficiency and carbon emissions of a property and gives an indication of the fuel bills. It is displayed as two graphs – the energy efficiency and environmental impact of the property. Each is graded from A (the best) to G (the worst).

Equity

Your equity in your property is how much of it you own. It is the difference between the value of your home and the mortgage you still owe. Negative equity occurs when you owe more to your lender than the sale price of the property.

Exchange of contracts

The buyer and seller both sign the contract for sale and at a certain time and date the conveyancers action the exchange. At this point, the sale is binding and no terms may be altered.

Fixtures and fittings

When buying: Fixtures are items that have become part of a building or land and are therefore included in the sale. Fittings are not attached to the building or land and so are not included in the sale unless otherwise agreed. The seller will complete a fixtures and fittings form that will confirm what is included in the sale, what isn’t included, and what is for sale separately.

When renting: Items usually provided in a letting that may include curtains, carpets, blinds, light fittings, kitchen units and appliances. In some cases it may also include furniture. It is advisable to check what is provided and not to assume that items will be provided.

Freehold

The broadest form of property tenure guaranteeing that occupation continues for an indeterminate period of time. This contrasts with leasehold, which is always subject to a specified period of occupation.

Gas safety record

A certificate that states all gas appliances, pipework and flues are safe. It is a legal requirement for all landlords and must be provided every year by a CORGI registered engineer after a safety check.

Gazumping

Where a sale is agreed to a buyer at a certain price and then the seller accepts a higher offer from another buyer. Note that until contracts are exchanged estate agents are bound by law to tell a seller about any offer they receive for a property.

Gazundering

Where a buyer reduces their offer just on the point of exchanging contracts.

Ground rent

The annual charge levied by the freeholder on the leaseholder of a property.

HomeBuyer Survey/Report

A report designed in a standard and easily read format that tells a buyer about the physical condition of a property. Lists defects and grades their seriousness and need for attention. Not as detailed as a structural survey. Not to be confused with a mortgage valuation (see below).

Inventory

A list of the contents of a rental property. The inventory will note the condition of items and will form the basis of a dilapidation report at the end of the tenancy. It often includes photographs of specific items and existing damage/defects.

Land Registry

A government office which is responsible for holding records of land ownership and any charges, including mortgages, against the property.

Land Registry fee

A fee charged by the Land Registry to record the change of ownership of a property.

Lease

The legal document governing the occupation by the tenant of a premises for a specific length of time. At the end of the period the property reverts to the owner.

Leasehold

The use and occupation of a property by way of a lease agreement for a certain period of time. A lease is frequently applicable to flats but can also apply to houses. The term of a lease varies but is commonly 99, 125 or 999 years.

Listed building

Buildings of special architectural or historic interest. A listed building may carry certain obligations and restrictions governing its use, repair, and maintenance.

Local authority search

A buyer’s conveyancer makes a formal enquiry to the local authority to find out if there are any matters affecting the property that is being purchased.

Maintenance charge or service charge

Many leasehold properties (especially flats) are subject to such a charge which pays for items such as the insurance and maintenance of the building.

Maisonette

A flat with its own private entrance.

Mortgage valuation

Very commonly and incorrectly referred to as a “mortgage survey”, the mortgage valuation is carried out by a surveyor acting on behalf of a lender to provide them with a professional report stating the value of the property. The purchaser usually pays the fee for this valuation.

Multiple agent instructions

Where more than one estate or letting agency firm is instructed by a seller or landlord to offer a property for sale or to rent.

NAEA

The National Association of Estate Agents, the UK’s leading professional body for estate agency.

Negative equity

Where the sale value of a property is less than the amount outstanding on the mortgage.

Open house (or open viewing)

A process, normally managed by an estate agent, where several house hunters are given a time of a few hours when they can all go and view a property for sale instead of separate, private viewings.

Open market value

The likely sale price of a property assuming a willing seller and a willing buyer, with a reasonable period of publicity and marketing and no special factors affecting the property.

Peppercorn rent

A very low sum of rent or ground rent. In the past it was, literally, a peppercorn.

Preliminary enquiries

When a sale is agreed, the buyer’s conveyancer will send the seller’s conveyancer a standard list of questions about the property.

Property auctions

A sale conducted at a certain time by an auctioneer, either online or at a physical location, where competing buyers bid openly for a property and the highest bid wins. The purchase is binding on the fall of the hammer.

The Property Ombudsman

The Property Ombudsman offers a free and independent service for resolving disputes between sales and letting agents, which are members of The Property Ombudsman, and buyers/sellers of residential property in the UK.

Purchaser

The person buying a property.

Repossession

If a mortgage is not paid over a period of time, the lender may ultimately take ownership of the property by the process of repossession.

Searches

These are conducted by your lawyer to check if there is anything that might affect the current or future value of the property. It is compulsory to have a local authority search before exchanging contracts.

Share of freehold

This is when the freehold of the property is owned by a limited company and the shareholders are the owners of the property, usually the owners of flats within that building.

Sole agent

Where only one estate or letting agency firm is instructed by a seller or landlord to offer a property for sale or to rent.

Sole selling rights

Where an estate agency or person is granted “sole selling rights” by the seller of a property, they will be able to claim an agreed fee regardless of who actually introduces the buyer.

Stamp Duty Land Tax (SDLT)

The tax paid to the government by the purchaser of a property. Rates of SDLT can vary. Changes in December 2014 mean that the tax rates are “banded” progressively in the same way as income tax. Nothing is payable on the first £125,000 of the purchase price. From £125,001 to £250,000 2% is payable and from £250,001 to £925,000 the rate is 5%. £925,001 to £1.5 million is 10% and over £1.5 million it is 12%.

Subject to contract

Where contracts are still not exchanged and nothing is yet legally binding on either seller or buyer.

Survey

This is a report prepared by a qualified building surveyor to check the structure for any faults. Home owners can choose from three main types of structural survey, depending on how much information they want.

Tenancy

Possession of a property by a tenant under the terms of a lease.

Tenancy agreement

The legal agreement governing the occupation of a property by a tenant.

Tenancy Deposit Scheme (TDS)

An insurance-based scheme run by The Dispute Service Ltd. for the protection of tenancy deposits and the resolution of disputes between landlords, agents and tenants concerning the return of deposits at the end of a tenancy. It is one of three schemes approved for tenancy deposit protection.

Tenant

The person who has temporary possession of a property under a lease or tenancy agreement.

Tenure

The mode of holding ownership of a property: for example, leasehold or freehold.

Title deeds

Documents detailing and confirming the legal ownership of a property.

Transfer document

The final legally binding document that transfers the property and all its rights from the seller to the buyer.

Under offer

A property becomes “under offer” when a seller accepts an offer from a buyer and the legal processes of the transaction begin.

Valuation (or market appraisal)

A term often used by estate agents to cover the process of them giving an opinion of the open market value of a property.

Vendor

The person selling a property.

Source: Onthemarket.com

WRITTEN BY Katie Griffin Read more