What are the top reasons for moving home?

In this month's edition, we start off with offering our guidance to the self-employed and business owners who are looking to purchase a property. 

We also look into the most common reasons for people moving home, we detail what you need to consider if you're looking into purchasing a second home and finally, we investigate why Buy to Let remains to be a great investment opportunity for landlords and vendors. 

Buy to Let remains a great investment opportunity

 

Since 2016, there have been several changes to the property market across the United Kingdom – predominantly to the lettings sector. Despite these alterations to taxation, stamp duty and bureaucracy around rental properties, most buy-to-let investors are still finding the market to be lucrative, with stable returns.

With a number of landlords departing the market when initial government changes took place in 2016, competition in the marketplace is greatly reduced and the professionalism of the sector has blossomed.

Chris Baguley, Commercial Director at buy-to-let lender Together, said: “As casual owners exit the sector, buy-to-let is becoming ever more professionalised, as individuals and companies adopt a more rigorous approach to acquiring the right properties in the right areas, and getting them ready to rent within a limited time frame on a tight budget. Perhaps most notably in the housing sector, the balance of today, there is therefore notably less competition than there was before.

“Even if we don’t see the capital growth which has been evident over the past two decades, the income available from property investment can still be attractive compared to other asset classes.”

With rental incomes increasing – the Office of National Statistics announced this month that private rents rose 1.3% on an annual basis in May, increasing once more from April – the opportunities for buy-to-let investors are evident. Additionally, financing your properties has become easier with specific buy-to-let mortgages now offered by a plethora of lenders, who are fiercely competing with one another to keep their market share, providing investors with an opportunity to obtain extremely attractive rates.

A recent survey of more than 5,000 investors found that almost three-quarters of those surveyed considered buy-to-let to be the best, least volatile long-term investment. Indeed, some 83% of buy-to-let investors who were questioned stated that it was either unlikely or very unlikely that they would sell their property over the next year, with almost 60% going on to state that they had no intentions of selling for the next five years.

If you would like to discuss your rental investment options, then please feel free to contact us and we can advise you of the best local areas to invest your money in, as well as which property types and audiences are likely to provide you with the best possible rental yield.

How to purchase a property if you're self-employed

 

With 4.8 million people across the UK who are registered as self-employed, it may come as a surprise that many who run their own business or work freelance still view their chances of obtaining a mortgage as overly difficult. However, if you’re thinking of buying this year and you are self-employed, then there are a few things that you can do to maximise your chances of being approved for a mortgage.

Pre-2007, when the so-called 'credit crunch' hit the UK market, those who were self-employed and looking to obtain a mortgage would do so via a self-certification mortgage. These loans required very little paperwork in terms of proving income, however, and led to an abuse of the system with applicants over-stating their income in order to gain a larger loan amount. Due to this practice, these mortgage variants were banned and those looking for a mortgage application through the same routes as others who aren’t independently employed.

These days, if you are self-employed and looking for a mortgage, then the application process is the same as if you were employed externally, but there are some steps you can make to improve your chances:

An accountant will help you to get all of your finances together and will also be able to offer the best advice in terms of balancing the tax that you pay and the status of the business; some people who are self-employed pay themselves less in order to lessen their tax, but be advised that this may harm your mortgage application.

The structure of your business will also have a bearing upon the success of your mortgage application – so think about whether it will pay dividends in the long run to change from being a sole trader, to a partnership or limited company. Do keep in mind that the finance structure of your company will also be taken into account – for example, Director’s Loans (money that you have put into your business) will not be classed as income. The only considerations for a mortgage application are a declared salary and dividends paid out.

Being organised is, of course, tacit for anybody applying for a mortgage, but if you are self-employed then this becomes even more important. Depending on how long you have been self-employed for, you will have to be able to provide at least two years' worth of accounts. If you haven’t been in business for that long, then providing a strong previous employment history is an absolute must to prove that you are a safe place for a lender to give a mortgage to.

The fundamentals of mortgage application remain the same for whether you are self-employed or not. Maintain a strong credit history, and if you have blemishes on your record then work on improving these before you set about your application for a mortgage. Shopping around is also a must – different lenders will be able to offer you different mortgage structures, one of which may fit you best, so don’t be tempted to just say yes to your first mortgage approval. Finally, having a sizeable deposit will impact the rates which you end up paying on your mortgage, therefore waiting until you have a larger deposit to be able to put down on a property may be worthwhile in the long run.

What are the top reasons for moving home?

 

With the weather getting warmer, property market activity tends to see a rise as many look to get the home move done and dusted before their holiday or before the kids have to go back to school.

Whether you’re looking to upgrade, downsize, start a family or start a new career, a new survey has found that we Brits move home for a wide variety of reasons, but which is most common? The AA looks to answer this question after conducting a study to discover the most popular reasons for a change in location.

The research found that the most common reason for packing all of our stuff into boxes is due to a change of job, with almost 1 in 4 respondents (23%) stating that they were moving to a location closer to their new role.

As expected, the area in which the home is located holds great importance for homeowners, with 12% simply wanting to freshen things up with a change of scenery and another 11% looking to leave their current area as they’re not overly keen on their surroundings.

Some of the other top reasons for moving home was the 10% that wanted to live closer to their family and the same amount of survey participants that were looking for a quieter life in the countryside.

Also making the list was the 7% that felt they’d be better off in a smaller home, the 4% moving because of marriage or divorce and a further 3% that believed they could turn a profit from the transaction.

The survey also found that depending on the age group there are some differences. The younger demographic (18-24) had a strong focus on their careers and affordability, while the 25-34 year olds desired a larger home for family life. Those approaching retirement age (55+) were looking to fund their later years by downsizing, but also wanting to be as close to family as possible.

Director of Financial Services at AA – David Searle – commented “From a legacy of endless daytime TV shows, one can get the impression that buying and selling homes is just about making a quick profit on a property transaction. Our research puts this to rest as, beyond doubt, the reasons why and when people move are based on jobs, children, family connections and quality of life. A house is, after all, a home.

Whilst decisions about when to move are not really about money, the realities of running a family home often are. Our survey shows many people are concerned about how far their pay packet will stretch and being smart in making their disposable income go further.”

What to consider when purchasing a second home

 

Whether it’s a little country escape, a place by the sea or even somewhere abroad, who wouldn’t love a home away from home?

Whilst this may be a lovely daydream, the reality of owning more than one property can be complicated, with several extra factors to consider before making your dream a reality. We’ve put together some facts you should consider before taking the leap into second home ownership.

Why do I need this property?
You will need to have a serious heart-to-heart with yourself and your other half about the purpose of buying your second property.

It is important to bear in mind that you will need to go through the stressful process of buying a home, with the added stress of the property not being in your local area, as well as furnishing and decorating the property, and the end result is you own a property you will probably only visit a handful of times each year.

There are other options available to you depending on what your needs are, for example, if you’re dreaming of a holiday home why not look into a timeshare? Or if you’re a professional looking for accommodation in the city, you could consider renting.

Location, location, location
The location of your property will affect every aspect of your ownership. Whilst it is lovely to have a home that’s 150 miles away from all the day to day stress, that’s a 300-mile round trip every time you’re looking to visit.

If you are considering a holiday home and would like to act as a landlord when you aren’t occupying the property, then you will need to consider how you will keep tabs on the property when you are so far away. Little details like finding trustworthy tradesman become more complicated when you don’t know the area.

You should also consider whether you know the area you’re looking to buy in well enough before you finalise anything. For example, cheap property in the city might be in a student area. It’s worth doing some research before making the move.

The cost of running your second home
You will also need to consider the cost of running your second home. You will need home insurance, broadband, telephone, electricity, water and heating as well as paying the various taxes that come with owning property.

Whilst you won’t be paying the same rates (because you won’t be there all the time) however, certain bills (like the internet) will stay at the same rate no matter the amount of usage you get from the service.

You will also need to consider taking steps like keeping your heating on during the winter so that the pipes don’t freeze.

Mortgage
Second homes are not exempt from taxes like stamp duty and capital gains tax, which will add to the cost of purchasing your property. You will also have to decide whether to take a loan for your property or to remortgage your main home.

For any help or advice when it comes to property, speak to us. Our team would be more than happy to help you with the right information to get you started and can help you find a home to suit your needs.