August Newsletter - Lenders predicting more approvals in Brexit run-up

In this month's edition, we start with a look at how much homebuyers can be put off by disrepair when viewing a property. 

We also detail what you need to know when considering a Joint Mortgage, lenders are anticipating higher levels of approvals in the run-up to Brexit and finally, we look at the potential impact that our new Prime Minister could have on the property market. 

How much does disrepair put off homebuyers?

 

When viewing a property, we’re all on the lookout for anything and everything that needs fixing or could use a bit of work.

While we’d all love to find a home that requires no work at all, chances are whenever you buy a property, it will come with its fair share of needed repairs.

But what type of damage to a home is most commonly a deal breaker for prospective buyers? Well, GoCompare has sought to find this out.

New research from the comparison site has quizzed people on which types of disrepair would lessen their enthusiasm for a home and what would completely kill their interest in a property all together.

It was found that damp was the biggest hurdle for buyers, with a huge 69% of survey participants stating that signs of damp on the walls and ceiling would force them to withdraw their interest in a home. This is understandable as damp left unchecked can lead to some very serious structural issues.

Not too far behind in the survey results was bad odours at 63% said that smells such as damp, food, cigarettes or pets would be a deal-breaker.

Rotten windows and peeling paintwork took 3rd place in the results, with 59% saying that they would not put in an offer if they spotted these blemishes on a home.

As expected, not having a space to park your car is a big issue for 56% of buyers and it is no surprise that in today’s always-online world that 53% desire a high-speed internet connection. The same percentage of participants would be put off a home if there was any work on the property that was uncompleted.

Some of the other negatives that made the list were neighbours with a messy garden (48%), a dirty interior (46%), outdated electrics (46%) and poor natural lighting (43%).

GoCompare Insurance spokesman – Ben Wilson – offered his comments on the findings of their research, stating: “Buying a home is a major investment and most people are put off by outdated properties or those in a poor state of repair. While dated décor can be remedied easily and relatively cheaply, major flaws from poor maintenance or badly botched DIY can be expensive to put right,

“A grubby home and untidy garden may suggest the current homeowners are not only bad at housework, but may have neglected essential maintenance to the property.”

Joint Mortgages - what you need to know

 

A joint mortgage is a common method for groups of buyers who are looking to share the costs of buying a home. Whether you are a couple looking to buy a home, family members, friends or business partners, a joint mortgage can assist you with dividing up the share of the property and spreading out the monthly mortgage repayment.

You don’t even need to be living with the other party. For example, children and parents will often take out a joint mortgage so that the parents can assist with the cost of buying a first home.

How do I go about getting a joint mortgage?
The process is the same as applying for a regular mortgage. Both parties will be required to attend the mortgage interview and you will both need to provide all the same relevant documents should a lender request them.

The only limitation you may face is if you are applying for a mortgage with more than three people.

How much can you borrow with a joint mortgage?
One benefit of taking out a joint mortgage is because it increases the amount that a lender will be prepared to advance.

Lenders will take both parties income and outgoings into account in an affordability assessment, with most lenders offer a calculator on their website for figuring out the cost.

So how is the mortgage split between the parties?
There are two ways that a joint mortgage can be split:

Tenants in common
Tenants in common allows each party to own a different share of the property. Each party is also allowed to decide who they leave their share to when they die. All parties are required to consent to a sale, with this type of policy typically suiting friends or family buying property.

Joint tenants
Joint tenants is better suited to couples looking to purchase a property. Each person has a 100% stake in the value of the property, but again, both parties must consent before the property can be sold. If one of the parties dies, the share of the property passes to the other owner.

What happens if one person stops paying?
Whilst both parties are jointly liable for a joint ownership, the lender won’t care whether the repayment is split evenly down the middle. The other party not paying their share won’t be accepted as an excuse for failure to repay.

It’s worth warning anyone considering the option of a Joint Mortgage that lenders aren’t interested in which of you has contributed more, they will just expect the payment.

A joint mortgage is a perfect solution for those looking to buy with a second party. Your rights as a co-owner are enshrined within the terms of the mortgage, meaning you won’t need to worry about the security of your share, you can get a bigger advance due to your combined income, and you have assistance with the costs of your mortgage.

Lenders predicting more approvals in Brexit run-up

 

With mortgage approvals at record levels, the outlook for those looking to purchase a property is extremely positive and with even more approvals being predicted to be approved in the run-up to Brexit, now could be a perfect opportunity to gain that all-important mortgage.

According to data from UK Finance, the number of mortgage approvals in June rose to 42,653 which is an increase from May, and nearly at the same level as April’s two-year zenith of 42,792. With such consistently high levels of approvals being seen in the marketplace at the moment, even when compared to the same time last year, the sentiment in the market is clearly positive.

Commenting on the figures, Andrew Montlake, managing director of mortgage broker Coreco, said: “Passing the March 29 Brexit deadline was a symbolic moment for the UK property market.
“Sentiment among prospective buyers shifted very quickly from apprehension to a more positive mindset.

“The sharp strengthening in demand for house purchases during the second quarter reflects this shift in sentiment, and the broader Brexit pragmatism that took root. Looking forward, lenders are clearly more optimistic than some about the trajectory of demand in the third quarter.

“If demand for house purchases remains unchanged given the potentially turbulent months ahead, then that will be a considerable achievement. We are at a pivotal point in the Brexit endgame and a no-deal Brexit is now looking far more likely.

“As we enter uncharted waters, the impact of a no-deal Brexit on demand for property is anyone’s guess.”

What will Boris Johnson do to the property market?

 

The United Kingdom now has a new Prime Minister which moves us on swiftly from Theresa May’s reign as our second-ever female leader. Love him or loathe him, Boris Johnson is now leading the country into a historic era in terms of relations with Europe and the rest of the world. With the appointment of Johnson comes a step change in political policy, but what does his appointment mean for the property market, if anything?

During the midst of his campaign to become Prime Minister, Johnson made some proposals which could have far-reaching consequences for the property market – many of which could be extremely positive.

One of the key proposals that the man dubbed Bojo has put forwards revolves around stamp duty; for properties that cost less than half a million pounds stamp duty would be completely cut, and at the other end of the scale properties valued at over £1.5m would see rates cut from 12% to 7%. This latter proposal, in particular, could have a welcome impact to housing in the capital city due to the higher values of property prevalent throughout London.

These changes would be welcome to all in the property sector and could potentially signal an upsurge in property transaction levels, should they come into place. For the lettings market also, which has been subject to many legal changes in the past few months, this incentive could lead to growth.

The new Housing Minister, Robert Jenrick, has decried his modus operandi for property as “We will focus relentlessly on boosting supply and home ownership,” adding that “As the Prime Minister has made clear, we’re determined to close the opportunity gap and give millions of young people the chance to own their own homes.”

As well as appointing a comparatively youthful Housing Minister (Jenrick is the first cabinet minister to have been born in the 1980s), Boris Johnson has also appointed Sir Edward Lister as Chief of Staff. With Lister’s former employment being as chairman of Homes England, he brings with him a wealth of property insight to one of the top cabinet positions, which may benefit the industry in the long-term.

It seems that the sentiment amongst estate agents is positive with regards to Johnson’s appointment with Iain McKenzie, the Chief Executive of The Guild of Property Professionals, affirming that: “I am in favour of anyone who is going to improve sentiment or confidence in the housing market. Current economic data is strong, but the uncertainty of Brexit has caused stagnation in the market. Mr Johnson’s commitment to ‘deliver Brexit’ on 31st October with a new ‘can do’ spirit is therefore very much welcomed.”