According the Financial Conduct Authority’s (FCA) Mortgage market study it is estimated that around 140,000 people were unable to change to a better deal on their mortgage. There are around 250,000 people in closed mortgage books or with firms that are not regulated by the FCA but with the new rules being bought in around 170,000 of these borrowers are up to date on payments and so would be eligible to switch.
The FCA have been working with lenders so that people who are mortgage prisoners with their current lender will have the option to move to a new lender and product subject to altered affordability checks as long as they are up to date on their current mortgage payment.
There are currently seven lenders now offering these products, which includes 3 of the largest lenders in the country and this should see Mortgage prisoners being able to reduce their interest rates and payments.
Lenders who are offering these mortgages will look to assess the affordability on their track record of making mortgage payments as long as they are not looking to move house or increase their borrowing amount.
With this development in the market it is likely that it will take time for people who are eligible to start the process. Once other lenders can see this in motion it is likely that more lenders will join this positive movement.
Speak to one of our advisers today to see if you could be eligible for these mortgage products.
Property prices in the South West are high in comparison to more northern areas of the UK with the average property price over the last year in Bath at £486,525 and £323,395 in Bristol. (https://www.rightmove.co.uk November 2020).
Property prices in Easton area of Bristol have seen the biggest increase across the UK in the last decade with an increase on the average price up 120%. (https://www.theguardian.com/uk, October 2020).
Despite the lockdown in the UK, the property market in the South West still remains very busy with a lot of people looking to upsize or make that step on to the property ladder. As of November 2020 Rightmove confirmed that there had been 195 properties sold over the last 6 month’s with the average price at £509,435.
There is speculation as to how long this property surge will continue for and a lot of this movement is credited to the current Stamp Duty relief in place across the UK. Although with the news bringing out lifting of the current lockdown restrictions and a vaccine which should ease the restrictions long term there are positive movements to indicate that we could be coming towards the start of a new normal. Rightmove statistics show that over the last year property sold prices in Bristol have been up 3% on last year and in Bath they are up 4% on last year as of November 2020.
If you are looking to move and would like to discuss your options for a mortgage our fee free specialist advisers will be able to provide you with all the information you require.
People are understandably concerned with the future of property prices in the current climate with the impact of Covid-19 across the UK. The Government has bought in incentives to help to the property market to continue to thrive such as the stamp duty relief and the release of the new Help to Buy scheme from April 2021. Nationwide’s latest house price index update showed that the annual house price has increased at the highest rate since January 2015 which indicated that the market is still very active.
House prices across the UK have continued to rise with the average price for property in the UK at £315,150 in November 2020 according to Zoopla’s house price data. The average house price has increased by 6.26% over the last 12 months.
The land registry’s property price update in October showed that mortgage approvals for house purchases climbed to 91,500 in September – the highest level since 2007.
A lot of people have been completing home improvements while spending more time at home. With more time being spent in their homes a lot of families are also looking to increase their floor space in their home or to upsize to a larger home.
The second lockdown has also seen improved conditions for the property market with Builders, tradesman, Estate agents, New build developers and Surveyors all remaining to work. This will keep the property market thriving and ensure that the house market can continue to move.
If you would like to look at moving properties you can submit your details in to our online form today to get an idea or how much you can borrow, the monthly costs, an agreement in principle an idea of the full purchase process.
Stamp Duty Land Tax (SDLT) is payable if you buy a property or land in England and Northern Ireland. This is Land and Building Transaction tax in Scotland and Land Transaction Tax in Wales.
Currently SDLT is only payable on residential properties over £500,000 as a relief through the government to keep the property market moving. This is in place until April 2021.
From April 2021 the threshold will be £125,000 for residential properties which is the same as before the relief was applied.
First Time buyers will still have a relief up to £500,000 (all parties purchasing must be first time buyers). If a first time buyer purchases a property over £500,000 the standard rate for stamp duty would apply.
The SDLT is based on the price you pay for the property, this will be arranged by your solicitor and payable to your solicitor prior to completion on your property.
If you purchase a new residential property but also keep your current property you pay a higher rate which is usually 3% on top of the standard rates. This does not apply if you are replacing your main residence as long as it is sold on the day you complete on the new property. If you sell your current property after completion on the new property you have 36 months to claim a refund if you sell your previous home.
The Help to Buy scheme is set up by Homes England to help first time buyers get on the property ladder.
It is available on Newly built properties and the builder will have registered with Help to Buy.
You need a minimum deposit of 5% and the Equity Loan from the government provides a loan of up to 20% of the property value (40% if you are in London).
A repayment mortgage is then taken for the remaining balance which needs to be a minimum of 25% of the property value.
The Equity loan is interest free for 5 years, you just pay £1 per month admin fee to keep the account open. From year 6 you start paying a monthly interest fee at 1.75% of the equity loan. This will rise every April by Retail Price Index (RPI) plus 1% until the loan is repaid. This payment is just the interest and does not repay the loan.
The Equity loan will need to be paid off by the end of the term, when you sell your home or if you pay off your mortgage. You can repay the equity loan at any time in full or at a minimum of 10% of the property value at a time. People often chose to do this through saving, inheritance or by looking to add this into their mortgage subject to affordability.
The equity loan stays as a % of the property value, so if the property value goes up or down the loan will mirror this.
The equity loan was previously available for first time buyers and home movers, however from April 2021 it will only be available to First Time Buyers (to qualify as a first time buyer you must not have own or have owned a residential property or land which a house could be built on anywhere in the world).
The second large change is that there is now a price cap on the maximum value of the property you can purchase using the Help to Buy Scheme based on the area of the country you are purchasing in.
Properties in England are most commonly sold as either Freehold or leasehold. A Freehold property is where the property owner owns the building but also the land in which it stands on, where as a leaseholder owns the property but not the land in which it is built on.
Leasehold property owners will pay a ground rent to the person or company who owns the land in which their property is built on. Ground rents can be increased at intervals leaving uncertainty for people who own leasehold properties, with the added risk of having to pay this on top of their mortgage.
The majority of flats are sold as leasehold properties, in comparison houses are more commonly freehold.
Prior to the reform, house leases can be extended by a maximum of 50 years and for flats this was a maximum of 90 years.
The current process to extend a lease is complex and expensive. The cost is based on a complex formula and you also have to pay for the lease owners legal costs. Large charges include things such as ‘Marriage value’ to represent the increase in property value from the extended lease.
On the 7th of January 2021, the Housing Secretary, Robert Jenrick announced that they would be making changes to the legislation around leasehold properties. The aim of the reform is to make things more secure and fairer for homeowners.
The reform gives 4.5 million leaseholders in the UK the right to extend their leases up to 990 years. When the lease is extended the ground rent will be set to Zero.
They also plan to cut the cost of increasing leases by removing elements than can be included, so that a simplified transparent calculation is available that will also be published online for people to see what the cost would be for them to extend a lease or purchase a freehold.
The government have also set out plans to establish a Commonhold Council, to prepare homeowners and the market for the widespread uptake of commonhold.
Commonhold is currently less apparent in the UK market but with the changes coming in this area, this will increase in popularity. Commonhold is where homeowners own their property on a multi-occupancy unit (typically flats). They share the freehold with the other property owners on the unit and through this they also share the responsibility for the common areas and services.
The leasehold reform will be through two pieces of legislation. The first will set future ground rents to Zero, although retirement properties will see a delay on this. The future reform will then look at the cost of extending a lease or buying a freehold. The plan is to abolish marriage value, cap ground rents to 0.1% of the freehold value and to give leaseholders of flats and houses the same right to extend the lease to 990 years with the ground rent at zero. There are also plans to enable leaseholders with a long lease to buy out the ground rent without extending the lease to keep the cost down.
Although this reform will take time to be put into effect, it will give hope to those people who are currently paying large ground rents and looking at their leases coming towards the end. The changes give homeowners the security of owning their own home without the worry of large ground rent increases and also without large excessive costs to extend their lease.
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