UK Property Blog by HIP-Consultant.co.uk

UK Property sales have slowed or as some describe ‘died’ and mortgage applications are at the lowest acceptance rates for years. The UK property market can seem to be in a tail spin at present and it is hard to look anywhere without apparent bad news emerging. Though, is it bad news for everyone?

For those people on fixed rate mortgages that are coming to an end with a high Loan-to-value (LTV) mortgage deal there are without doubt; unfortunately going to be difficult times ahead and the possibility of securing a mortgage with an attractive interest rate seems to be reducing.

However, to bring some positivity into the current market it does present attractive buying opportunities for some. Lets take our young couple who entered the property market 5 years ago and successfully obtained a relatively small mortgage in todays standards and have made their mortgage repayments since then on time.

For arguments sake, lets say that their starter 2 bedroomed home was ‘worth’  £100k a year ago and the 3 bedroomed semi-detached property they have been saving towards and aspiring to since their intial purchase at that time was priced at £150k. So in this simple example we can see the cost to ‘upgrade’ was £50k.

As we are are witnessing the property market is returning to more sustainable levels that have been forecast by some, such as the people over at HousePriceCrash.co.uk and Alice Cook at UK Bubble. To return to our example, property prices continue to fall as is widely predicted and ‘our’ couples home is now worth £80k.

‘Ouch’ i hear you cry, ‘they have lost £20k’ but is this the truth and is it really such a bad situation in reality? No, not for our young couple and here is why…

If the couples home is now worth £80k and in affect has lost 20% of its value, that means it is likely that the 3 bed semi-detached has also lost 20% of its value. and is now worth £120k and the magical, important figure to upgrade is now £40k. In comparison to the previous calculations our couple have saved £10k which will be ever so gratefully received and used with the new baby they have arriving.

The ‘truth’ is……

For those looking at upgrading to a more expensive home in the near future with the ability to secure a mortgage within the falling market, it is maybe not such a bad time after all to be active in the current property market. Now where are the details for my local estate agent and that good property website i came accross?

The final part of our Property Purchase Completion Guide we take a looka what happens when things dont go as planned.

Completions that don’t happen on the day

There are occasions when, for a number of reasons, completion does not happen on the day. Obviously this can cause serious difficulties however there are a few things that you can do to help mitigate these difficulties and any financial losses:

• Make sure you are available to speak to your lawyer and to the selling agents at all times. Find out what time your lawyer will be finishing for the day and see if there will be anyone staying later who could deal with any last minute issues

• If you are also selling a property do not hand the keys to your purchaser or allow them to move their belongings in unless your lawyer has advised you to do so

• If you are employing a removal company and they have already emptied your property then as soon as you become aware that completion may not take place enquire of the company as to whether you will be able to store your belongings with them overnight (or over the weekend). If not you should make provisional alternative storage arrangements. Try not to commit to spending any money but do not leave it until everyone is closed.

• If you have not yet vacated your property check with the movers how long they can wait past the time you have booked them for – they may have other jobs to do that day.

• If you have vacated arrange some alternative accommodation as soon as possible, whether with friends or relatives or in a hotel. If the latter try to keep costs as low as reasonably possible.

• Keep receipts for everything that you spend – if the late completion is not your fault you may be able to recover any losses from the defaulting party. Any losses however must be reasonable, do not stay in a 5 star hotel and expect to be compensated in full.

Potential costs associated with late completion

There need not be any additional costs associated with late completion. Provided it goes through on the day and no party suffers any financial loss it is quite possible that noone will take any action for breach of contract.

The contract will provide that if completion does not happen by the contract time the lawyer for the non-defaulting party may serve notice to complete on the defaulting party, for which he will be entitled to charge a fee (usually around £100 - £150 plus VAT). In addition, if completion does not take place on the day, the contract will provide for interest to be paid for every day completion is late. The rate will usually be 4% above the Bank of England base rate, so at the the time of writing the daily interest charge on a purchase price of £100,000 would be : ((100,000/100)*8.5)/365=23.29 per day.

If the buyer in default and the seller has a mortgage then the buyer will be liable for the additional mortgage interest, though any contract interest paid should be deducted from any additional compensation.

We hope you have found our guide informative and look forward to your comments and feedback.

Home Inspector (HI) and Domestic Energy Assessor (DEA) training has had claims attached to it of large potential earnings for those qualifying and practicing in this field.

In response to a high levels of comments left on the article (at time of writing nearly a 100 comments) ‘Should I train as a Domestic Energy Assessor (DEA) ?’ we felt it would be beneficial to specifically explore the Home Inspector (HI) qualification and its potential further.

The Home Inspector qualification was designed to fulfill the Home Condition Report (HCR) requirement within the Home Information Pack. Initially, it was planned that the HCR would be a mandatory component within the HIP though was in fact made an optional document. Professionals within the industry and none more so than those that qualified as a Home Inspector near its’ inception will tell you that there has been very little to no demand for the HCR due to it being made voluntary.

Today, the Institute of Domestic Energy Assessors (IDEA) released research and figures that have not been widely publicised by the Communities and Local Government (CLG).

“Figures recently revealed by CLG officially disclose that up until the 18th of October this year a total of 1,824 Home Condition Reports (HCR’s) have been lodged with Landmark. To put this figure in context, for the same period over 1 million Energy Performance Certificates (EPC’s) were lodged with Landmark.”

This figure is as most within the industry would have imagined. It is envisaged that a large proportion were undertaken in the early days of the Home Information Pack implementation.

Jim Gillespie the chairman of IDEA stated “This figure will not come as a shock to those individuals, myself included, who trusted this Government when they sold the prospect of training as a Home Inspector as a “gilt edged” opportunity back in 2005/6. When Yvette Cooper made the now infamous “u turn” announcement back in July 2006 there were approximately 3,500 individuals training towards the NVQ level 4 Home Inspector qualification and at the time Government went on record as saying that 7,500 Home Inspectors would be required. Mass confusion ensued thereafter as many trainee Home Inspectors simply walked away from this sorry mess feeling conned and duped by the Government”

Based upon the figures above, only 1 in 2 Home Inspectors would have actually completed even one HCR.

However, the Home Inspector training course is still being widely advertised and this is understandably causing concern towards those considering investing substantial sums of money, in the region of £6,000.

Jim Gillespie said “An unregulated training provider regime resulted in a plethora of training companies springing up nationwide to cash in on this “lucrative” new industry. Once more the Government were reluctant to intervene when it quickly became blatantly obvious that far too many people were now being trained as DEA’s. Once more accurate figures from Government have been hard to come by but I am lead to believe that we have a situation whereby as many as 14,000 people have commenced a DEA training courses since they began. It is obvious that many of these individuals quickly learnt thereafter that the career path they had dreamed of before commencing their training was not actually the reality as only approximately 7,300 of them then went on to accreditation which is mandatory before they can trade as a DEA.”

As one can imagine; many training providers are not supplying this information to those enquiring about the viability of becoming a Home Inspector and it is felt by many that some continue to ’sell’ the course as a viable ‘money making’ possibility.

HIP-Consultant.co.uk are pleased that this issue is being brought to light further and it is evident that those that do their research prior to enrolling on the course can amongst the training providers’ adverts find the ‘reality’ of the situation.

But what else can be done?

Jim Gillespie expressed, “Unbelievably, with this backdrop of u turns, false promises and shattered dreams there are still training providers who continue to recruit and train prospective Home Inspectors or DEA’s to this day. IDEA continues to lobby Government and liaise with the Advertising Standards Authority in an attempt to stop these training providers encouraging people with no industry experience or existing professional contacts to commence training as an Energy Assessor and particularly as a Home Inspector as the fact that only 1,824 HCR’s have been carried out to date is surely irrefutable evidence that as long as the HCR remains optional the general public are simply not interested in paying for them.”

HIP-Consultant.co.uk welcomes and looks forward to your comments.

The property completion proceedings are further discussed in Part 2 of of our guide; including some of the obstacles that you may encounter when buying your next home.

Events on the day of completion

In the normal course the completion monies will be sent by your lawyer early on the day of completion to the account of the seller’s lawyer. If you are also selling a property then your lawyer will need to receive the funds from your purchaser’s lawyer first which obviously means the monies would be transferred to your seller’s lawyer later in the day.

Your property purchase is considered completed when the seller’s lawyer receives the completion monies and when the seller vacates the property. As the lawyers cannot control what time the funds will reach their destinations there is no guarantee as to what time completion will take place. However, generally  it will be around lunchtime.

The contract will incorporate a latest time for completion. This will either be as per the standard conditions of sale, in which it will be 2pm, or it may be varied. It is very rare that it will be later than 2pm but it is quite common for it to be earlier, perhaps 1pm or even as early as 12. If the matter has not completed by this latest time then the party who has caused the delay in breach of the contract (see below).

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Property completion is the day that you get the keys to your new property and that the money is paid over to the seller’s lawyer. The date will have been agreed between you and the home seller prior to exchange of contracts and will be a fixed date on which both you and the property seller are contractually bound to complete. Over the next week we will be publishing our 3 part guide to Property Completion.

Agreeing a completion date

Before your lawyer exchanges the contract you will be asked for a completion date. There will usually be at least one week between exchange and completion to allow time for the mortgage funds to be ordered from your lender and final searches to be completed (though this can often be done quicker if required) and it must be a weekday but other than that you and your seller are free to agree a date that suits you both.

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The doom and gloom that pervades in the UK economy at the moment is exerting a heavy impact on the housing market – in fact, there are many who cite the wilful granting of excessive mortgages as the core of the current financial crisis.

This is somewhat unfair as, although it is clear that banks have been lax of late in controlling lending, the root of the problem lays with general mismanagement, with the housing market a convenient scapegoat.

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Choosing the right lawyer can be an important decision when buying and selling a property. It is said that buying a house is the 3rd most stressful thing most of us will ever do and if you don’t have confidence in your representation it can be made all the worse. There are a few points to consider which might help you make the right decision and these are covered below.

Solicitor or Licensed Conveyancer?

When instructing a lawyer to deal with a house sale or purchase you can choose either a solicitor or a licensed conveyancer. The latter deals exclusively with conveyancing and so will probably have the more streamlined procedures which in turn could facilitate a speedier transaction. Many solicitor’s firms however have specialist conveyancing departments and they often have the advantage of being able to provide you with advice on other areas of law such as wills and disputes resulting in litigation. That said, solicitors that do not specialise in conveyancing may not be as quick and are likely to be more expensive.

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I think it’s fair to say that we’ve all been hit by the credit crunch in some way or other, if you haven’t, lucky you. What seems to have taken the biggest loss is the value of our humble abodes; the press would have us believe that property prices are falling at a staggering rate, so where does that leave the home owners that are still desperate to sell. Its dog eat dog, so how do we add value and make our homes more appealing without it costing us the earth.

First impressions are of paramount importance so if the front of your house is looking a little worse for wear it’s maybe time to update and refresh. Start with the front door, if it needs a lick of paint get the brush out, if not, hot soapy water and some elbow grease should do the trick. Pull out any unsightly weeds, sweep the path, mow the lawn, check the security light works and if the pocket can stretch get some planters to brighten the place up.

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The Bank of England recently reduced interest rates by 0.5% and many home owners looked forward to a reduction in their mortgage repayments, however has this been the case?

Some lenders have not immediately reduced their interest rates on existing mortgages as most were hoping for as the property market continues to struggle.

For banks’ customers with tracker mortgages guaranteed not to be greater than the defined gap between interest rates and mortgage rates; are likely to see the biggest interest rates cuts and will be seen on their repayments on their house loan in the coming weeks or months, dependant on their individual mortgage terms and conditions.

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In part 2 of our property conveyancing guide we look at what is involved in the closing stages of the home buying and selling process. You may wish to read Part 1 of the Property Conveyancing Guide here.

Signing the contract

Once your lawyer is satisfied that all of his enquiries have been dealt with; he has seen satisfactory search results and he is in possession of his copy of the formal offer of mortgage you will be invited to sign the contract and various other papers. This will either be in person or through the post. You should also receive a report, often called a “property report” at this stage which will set out any salient points arising from the searches and enquiries.

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