Many landlords require their tenants to have renter’s insurance policies and will request proof of them before you sign your lease. Not all of them will require it, however. If there’s one thing to take from this article, it should be that all renters should have a policy in case something happens.
Renter’s insurance does more than protect property: it offers protection for costly circumstances that you may not be able to foresee. Renter’s insurance should be part of any savvy renter’s game plan. Knowing what renter’s insurance policies cover can help anyone decide how much they need, even though there’s no-set-in stone answer. Everyone’s situation is different, so their need for this insurance is different too.
What Is Covered by Renter’s Insurance?
If you’re wondering, “How much renter’s insurance do I need?” you need to know why people need these policies in the first place. The main reason people opt for renter’s insurance is to protect their property. Personal belongings outside and inside your apartment are covered by renter’s insurance, but that’s not all.
In the event that you have to leave your rental home or apartment for a while, renter’s insurance policies also cover your living expenses while you’re staying in another place. These circumstances may not be foreseeable and could include an infestation, a fire, or other damage. Living expenses can become untenable in these situations without renter’s insurance.
How Much Renter’s Insurance Should You Get?
The first step to figuring out how much renter’s insurance you need is to calculate the value of your personal possessions and compare it to your budget. At that point, you can compare the quotes of several insurance companies to the value that you calculate in your personal property.
From a policy as low as the average renter’s insurance plans, which cost around $15 per month, you can get tens of thousands of dollars of personal liability coverage and property coverage.
The first step to figuring out how much renter’s insurance you need is to calculate the value of your personal possessions and compare it to your budget.
What Types of Coverage are there?
There are three types of coverage included in renter’s insurance policies. To what extent a policy includes each type determines its value. These coverage types include personal property, loss-of-use, and personal liability coverage. Ask yourself: how much of each type does a typical policy contain? This is important to know so you can spot plans that are expensive for their coverage amounts and those that are a true value.
The average renter’s insurance policy offers around $30,000 in personal property coverage, 40% of the personal property’s value in loss-of-use coverage, and $100,000 in personal liability coverage.
Deductibles are another important factor when choosing a policy. If you don’t already know, a deductible refers to the amount of damage you have to pay for yourself before an insurance policy kicks in. These exist in healthcare policies and it’s no different for renter’s insurance.
An average or acceptable deductible for these policies would be around $500. These policies are considered the best value for those that want renter’s insurance for coverage but aren’t necessarily worried about a specific accident. Those that want a lower deductible should expect to pay a much higher per month premium.
The disadvantage of cheaper policies is that the deductible is much higher, which is fine until you have to pay it. There’s also not much of a drop in the price per month for losing 50% or more of your coverage amount. A few dollars less a month will lower your coverage amounts considerably. This is why policies priced at or near the competitive average are often the most desirable.
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The Takeaway
Renter’s insurance policies involve three different types of coverage, including personal property coverage, personal liability coverage, and loss-of-use coverage. Knowing how much renter’s insurance you need depends on the value of your belongings compared to the needs of your situation.
Since the value of renter’s insurance policies decreases drastically with only a small reduction in the cost per month, average renter’s insurance policies are often the most desirable. Use this information to conduct more research into available companies to find the right renter’s insurance policy for you.
Renovations and improvements are the best ways to raise your asking price without scaring potential buyers away. We spoke to property experts Zoom Property Buyers who help people sell property in London.
Zoom Property Buyers are a premier cash real estate buyer and gave us some great tips to make your property more saleable and get the best price and return on your investment. If you are running a property renovating company, selling for cash is also a fantastic way to move business quickly and efficiently with no estate agent fees and a super quick sale helping the business move forward.
Here are some simple things you can do with your property to increase its value without breaking the bank.
Paint your living room
The living room is where families spend most of their time together. It facilitates bonding and will hold many fond memories. You can use this to your advantage and invoke some emotions in your potential buyers. A fresh coat of paint can go a long way in making your living room more appealing. Recent trends suggest that taupe paint might be the way to go. It's the right combination of contemporary and soothing. You'll love it, and your potential buyers will love it, too.
Resurface your cabinets
The kitchen is one of the most attractive and valuable parts of a home. Unfortunately, remodeling a kitchen can also prove to be quite expensive. If you don't have the money to remodel your entire kitchen, stick to your cabinets. Resurfacing your cabinets can add significant value to your kitchen. Plus, the look of a new, clean layer of wood on your cabinets can speak volumes about the condition of your entire kitchen.
Resurfacing your cabinets can add significant value to your kitchen.
Change the colour scheme of your kitchen
While we’re on the subject of kitchen value, changing the colour scheme of your kitchen can also raise your asking price. Current trends in real estate have it that lighter upper cabinets and darker lower cabinets are the way to go. The scheme is called tuxedo cabinetry, and statistics show that it can raise the value of a property by as much as £1,500. You may admire your current uniform colour scheme, but if you want to add real value to your home, you should swap colours.
Replace your carpeting with wood
Carpets are add-ons, and while you may find yours appealing, your prospective buyers can be turned off by them. Instead, remove the carpets and expose your hardwood floors. Besides the fact that a wood floor adds character to a home, wood is durable and easy to maintain. If your home doesn’t have a wooden floor, laying one can be an excellent investment. You can even spend less on engineered or laminated wood. You can get them at a fraction of the cost.
Get some steel entry doors
Steel entry doors may give off the appearance of additional security, but that’s not why they are on this list. Steel doors can improve the appeal of your curb. If you’re selling an inherited house, you may want to replace the old doors with steel ones. They are sleek and come in various kinds of paneling and finishes. Also, steel entry doors are incredibly durable, so you won’t have to worry about them for a long time, even if you change your mind about selling your home.
If you’re selling an inherited house, you may want to replace the old doors with steel ones.
Upgrade your light fixtures
If you’re living in an older house, you’ll definitely need to pay attention to some of the details. As industry trends move to more modern styles, so should your home's decor. You can begin with your lights. If your home has the construction-installed thick and round mounts, you need to upgrade to new, sleek ones. The good news is that you can get fixtures in various price ranges, and they will all add significant value to your home. New light fixtures are basically the building blocks of a modern style.
Reorganise your garage
Most people hate this task, and they hope they never have to do it. But then, think about it. If you hate it, your buyers will probably hate it as well. Nobody is going to want to pay top dollar for a home with a cluttered garage. You should take out a day (or a week depending on how cluttered your garage is) to reorganize your garage. Since the garage is basically the home’s storage space, you should invest in some shelves or hangers for the stuff in your garage. It will definitely clear up the room and make it look more appealing.
Paint the garage floor
Now that you can see the floor, how about adding a new coat of paint? Paint is relatively inexpensive, and a new coat of acrylic paint made for floors will go a long way. Very rarely do people have lots of space in their garage. A shiny floor will only add to that impressive feature of your home and impress your potential buyers. While it might not raise your properties value by thousands, it will make an impact on whoever sees it.
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Trim your trees and edges
According to UK Forestry, trees can raise the value of a house by up to 20%. However, if your tree is unkempt, it can have the opposite effect on your property value. The good news is that you even need a contractor to take care of your trees. Simple tasks like applying tree fertiliser, trimming and pruning, and even spraying can keep your property value where it should be. The same thing goes for hedges and bushes. They make a home more attractive, but not if they look jagged and overgrown. If you don’t want to do it yourself, you can pay a gardener a few pounds to trim the hedges. Your property will thank you.
Pay attention to minor repairs
If you’re serious about raising the value of your property, then the chances are that you've already started making some repairs around the house. Replacing broken windows and dented door jambs, and filling cracked plasters are projects you've probably done already. If you haven't, you should consider doing so. Little cracks and imperfections can send unwanted signals to potential buyers. They can make the home appear older than it is, or diminish its overall appeal.
It might even be worth getting a loan to pay for the renovations, as the value added will make the investment worthwhile.
Paresh Raja, CEO of Market Financial Solutions, examines the impact of the SDLT holiday so far and the importance of reinvigorating the property market.
With a value of £1,662 billion, the UK’s real estate market is a vital contributor to economic growth and productivity. That’s why the government’s plan to support the UK’s post-pandemic recovery has focused so heavily on real estate. After all, it was one of the first sectors to benefit from the initial easing of social distancing measures, ensuring that buyers and renters were once again in a position to move homes and initiate new property transactions.
Most recently, Chancellor Rishi Sunak took the bold step of announcing a new Stamp Duty Land Tax (SDLT) holiday applicable to all property transactions until 31st March 2021. The government estimates that this will see average SDLT bill cut by £4,500, with nine out of 10 buyers purchasing a main residential home exempt from the tax.
The move aims to encourage buyers back to the real estate market, and so far, it has been having measured success. Estate agencies have noted a spike in enquiries – importantly, these enquiries range from first-time buyers to non-UK residents seeking a buy-to-let property. While it is too early to tell whether the holiday will bring about a stable and sustained increase in real estate transactions, the fact prospective buyers have acted immediately following the SDLT holiday announcement is promising.
With a value of £1,662 billion, the UK’s real estate market is a vital contributor to economic growth and productivity.
Unlocking the full potential of the SDLT holiday
The SDLT holiday provides the financial incentives needed to reignite interest in property, but one feels it will only have limited success. This is because homebuyers will still struggle when it comes to finding the right type of finance needed to complete on a sale.
When lockdown measures were first introduced, mainstream mortgage providers decided to retreat from the market by limiting their product and service offerings, freezing new applications and delaying the deployment of mortgages already agreed to in principle. This had dire consequences for those in the middle of a property transaction, increasing the risk of chains collapsing.
In response, brokers and borrowers turned to established specialist finance providers who remained committed to meeting the needs of the market. Bridging loans became a popular option due to their speed, flexibility and ability to be tailored to the individual needs of each borrower. While transactions did decline during lockdown, a proportion of those completed was due to specialist finance.
Now, banks and mortgage providers are once again returning to the market. However, the range of mortgage products available is still limited. There are also fears that these traditional lenders will only deploy loans for a handful of cases in order to minimise their risk exposure. Indeed, there are already reports of banks not deploying mortgages to borrowers who take advantage of the COVID-19 loan repayment holiday scheme.
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Just like we saw in the aftermath of the global financial crisis (GFC), it is during times of economic recovery that the need for creative solutions that support growth and stimulate investment are needed. And similar to what we witnessed in the months and years following the GFC, specialist finance is rising to the call by ensuring that homebuyers are able to act confidently and quickly.
At this critical moment, it is important that buyers and property investors have access to the finance needed for new home purchases. This requires research and a full appreciation of all the products and services available beyond just the high street.
Failing this, there is a real risk of the SDLT holiday only having limited success.
Alpa Bhakta, CEO of Butterfield Mortgages Limited, offers Finance Monthly her predictions for the future of the UK property market.
The introduction of the Stamp Duty Land Lax (SDLT) holiday on 8 July by Chancellor Rishi Sunak has been heartily welcomed by the UK’s property sector. Investors were thankful, especially given that treasury leaks ahead of the announcement suggested it would only apply to a certain type of buyer and would be officially unveiled as part of the autumn budget later in the year. What’s more, it came into force immediately after the chancellor’s speech and applies to the first £500,000 of all property sales in England and Northern Ireland.
Thus far, it seems to have been successful in stimulating further housing market activity. Property listing site Rightmove recorded an “unexpected mini-boom” in the week following the holiday’s introduction—with the average asking price of homes listed rising by 2.4% when compared to March figures pre-lockdown, and inquiries being 75% higher year-on-year.
How effective is it likely to be?
This is not the first time a UK government has introduced an SDLT holiday to kickstart the economy. Following the 2007-2008 global financial crisis, the lower threshold of SDLT liability was raised from £125,000 to £175,000—a move designed to support the lower end of the housing market at a time where the dreaded “credit crunch” meant much market activity had ground to a halt.
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Back then, the holiday was later expanded to cover all property transactions after not having the immediate positive effect intended. In the end, it resulted in an 8% increase in transactions for the homes that were covered by the holiday.
This current holiday, conversely, already covers nine out of ten homebuyers. In theory, this means we should be expecting a sustained increase in property transactions during the holiday period. However, the COVID-19 pandemic is not that simple; nor is the property market.
Of all the sections of the property market, the prime central London (PCL) offers valuable insight. Its size and attractiveness to international investors means we can assess overseas sentiment towards the UK as an investment hub while also determining how many buyers at the higher end of the market are returning.
The SDLT holiday and prime property
Estimates suggest that those purchasing high-end property in the nation’s capital can expect to save approximately £15,000 through this new tax relief holiday. This substantial discount, accompanied by other factors, means the PCL housing market could expect an influx of new buyers as property investors look to take advantage of discounted opportunities.
Estimates suggest that those purchasing high-end property in the nation’s capital can expect to save approximately £15,000 through this new tax relief holiday.
The importance of overseas investors in the PCL property market cannot be understated. In 2019 alone, such buyers accounted for 55% of all PCL housing purchases. While COVID-19 naturally brought the majority of transactions to a standstill, it has been clear that appetite for prime property has not diminished. Estate agency Beauchamp Estates sold over $374 million worth of property in the capital between December 2019 and June 2020.
Aside from the current SDLT holiday, an additional factor that will no doubt fuel future purchases is the SDLT adjustment announced by Chancellor Rishi Sunak back in March 2020. The chancellor stated that in April 2021, foreign buyers of UK property would have to pay an additional 2% SDLT surcharge. Many of the prime property purchases we are likely to see over the coming months by non-UK residents will no doubt be made in order to avoid this added cost.
Given what’s discussed above, I believe this SDLT holiday will facilitate a great resurgence in the PCL property market. Of course, I must mention that a second spike in COVID-19 cases or the reintroduction of lockdown measures in the capital would delay this recovery considerably. However, as it currently stands, I look forward to the PCL housing market leading the way for a strong UK property market resurgence sooner, rather than later.
When searching for your dream home, you will often require a large amount of money to ensure a quick purchase.
If, for example, you intend to move to a new house and have found the home you want at a bargain price, but your current home is not selling as fast as you would have liked and you don't have the deposit for the new purchase until the existing home sells. This can put you in a sticky situation, and you are likely to lose the house to another buyer unless you can find the money quickly.
So, what can you do? If friends and family are not an option, the answer is to get a loan. You can try to go to the bank for the loan, but the process may take weeks due to the red tape. Another solution is getting a bridging loan.
Hanan Shapira, director of Property Finance Partners says "bridging loans in the last few years have begun to be more popular for homeowners looking to purchase a new residential property."
What are they and how do they work?
Bridging loans are specialised short term finance, typically acquired for between 3 months to 12 months. One of their advantages is the speed at which an application is processed. One can go from applying for a loan to money in the bank in as little as a week.
To get a bridging loan, you will have to have a property to be put up as security against the loan. You can borrow up to 80% loan to value (LTV) on the equity within your property.
Bridging loans are specialised short term finance, typically acquired for between 3 months to 12 months.
There are many uses of bridging finance such as developments, buying a property at an auction, buying uninhabitable properties or properties that require refurbishment for businesses and for buying residential homes.
How does it work for buying a home?
When you obtain the loan, you can use the money to put down a deposit for the new home, and then once your existing home is sold, you can then repay the loan. This is known as "bridging the gap." It is a common use of bridging loans and works well in the right scenarios.
Regulated vs unregulated bridging loans
If the security offered is your current residence, the loan is automatically a "regulated" bridging loan. That means the loan is regulated by the FCA (Financial Conduct Authority). Regulated loans carry an extra level of protection; consumers are protected under the MCOB(Mortgage Code of Business) rules.
If the bridging loan is obtained against commercial property, it is likely to be unregulated.
Where can I get a bridging loan?
Your first thought may be from the bank, but the majority of high street lenders don't offer bridging loans. The banks discontinued offering bridging loans after the crash in 2007-08, due to stricter regulations on unregulated home loans.
There are specialist lenders who provide bridging loans in the market, made up of hard money lenders and private funds. You will need to approach one of these lenders and package an application to them.
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Costs of bridging loans.
Something to take into consideration is the costs involved in bridging finance. Relevant fees are broken down below:
- Interest Rates - Bridging loans carry an interest rate from 0.30% - 1.5% per month.
- Valuation Fees - You are likely to pay a valuation fee of about £700 on a £500,000 property.
- Arrangement Fee - The arrangement fee can be 1% - 2% of the loan amount.
- Legal Costs - You will levy the bill for your legal fees as well as the lenders
- Administration Costs - In some cases, you may have to pay an admin fee; it depends on the lender.
- Exit Fees - There may also be an exit fee involved, again this depends on who you are getting the loan from.
The bridging loan market is quite a competitive currently in the UK, which has lowered interest fees considerably. It is advisable to find a few lenders and to check what they have to offer.
One way of saving you time and money is to use a broker. A broker can package your application in the right way as well as find you the best deal in the market, as they will have access to many lenders.
Those operating in the mortgage and specialist finance industry have felt the squeeze in recent weeks and many bridging lenders have had to turn down any new business during the coronavirus lockdown.
With over 50 bridging lenders and hundreds of intermediaries, the industry has seen very slow growth with hundreds of staff put on furlough and limited funding due to no construction work, surveys or auctions taking place.
However, with restrictions easing, the thousands of households and property developers that use bridging finance each year will start to purchase properties again and getting their businesses back on track.
Bridging finance is often seen as an alternative to traditional mortgages, allowing those to avoid traditional property chains and access funds in a matter of weeks, rather than months.
“It has been a testing time for the bridging industry,” explains Dan Kettle of Octagon Capital, a bridging loans broker based in Moorgate.
“Our products are often used as a quick way to buy properties and avoid mortgage chains, but the lockdown has meant that almost all deals were put on hold and we could not acquire any new business.”
“However, with restrictions easing, we are in a good position to resume funding again. Many people and investors will be excited to start building and buying property again and with mortgage lending even tighter than before, we could see positive growth and a good Q4.”
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During the 10-week lockdown period, bridging providers were in suspense over whether they could offer mortgage holidays to their customers and what the terms they could offer to customers.
Bridging finance is often used for a maximum of 24 months, but with so many construction jobs halted, this increased the chance of deals expiring and challenges for customers in terms of repossession or refinancing.
Nicholas Wallwork of the Property Forum explained: “The vast majority of building sites have come to a standstill. As a consequence, those working against tight bridging loan finance repayment dates will struggle. The property/project, if work does not restart very soon, would likely be worth nowhere near their target value. As a consequence, they would not be able to raise as much traditional finance as expected which would usually be used to pay off the bridging loan. Indeed, when you also factor in the potential reduction in property prices on the whole there could be a huge shortfall.”
However, with restrictions easing and the Prime Minister looking to open all non-essential retail by 15 June, there is more confidence in the specialist finance and bridging industry and many will be delighted to hear this news.
The impact of the COVID-19 pandemic on businesses worldwide has been nothing but staggering, and not in a good way. No industry in the global economy is left untouched and a recession is imminent now. This means that money transfer companies are going to suffer through some major downtime. The question is whether they will be able to get through it and how they will have to change.
On the other hand, the pandemic has caused a major increase in the demand for fintech solutions. This means that money transfer companies with a wide range of additional services might get an opportunity to increase their customer base.
How Do Money Transfer Companies Make Money?
To understand the implications of the COVID-19 pandemic and its impact in the money transfer industry one needs to understand how that industry operates. Online money transfer platforms and brokers have been growing rapidly in number and popularity over the last few years. The reason for this is the increased rate of globalisation.
However, the growth of such businesses is also one of the reasons that make this rate of globalisation possible. These services made international money transfers affordable. This means that cross-border financial transactions became available for small businesses and investors.
Not so long ago, bank wire transfers and a few money transfer corporations (Western Union and MoneyGram) were the only options for transferring money abroad. The problem with them is that both charged high rates. They also use a high markup on foreign currency exchange rates.
Online money transfer platforms and brokers have been growing rapidly in number and popularity over the last few years.
Overall, a single transfer to or from abroad could cost up to, and sometimes even over, 10% of the amount. Small businesses with their tiny revenue couldn’t afford such transactions. Therefore, they were denied the opportunities offered by using cheaper services and materials delivered from abroad.
The situation is like this because those fees and markups are what banks use to make money. However, online money transfer companies are completely different. They do not transfer money physically across borders. Instead, the customer deposits the amount they need to the company’s account in their country. Then, the company transfers an equal amount to the recipient from its account in their country.
This approach allows businesses to minimise transfer costs. And money transfer companies that operate in such a manner make their profit from the volume of transfers they process. Therefore, it’s more beneficial for them to keep their fees as low as possible to attract more customers.
Impact of the COVID-19 Pandemic on Money Transfer Companies’ Customers
Unfortunately, due to the crisis caused by the pandemic, money transfer companies have fallen on some bad times. Even #1 companies like TransferWise struggle because of the reduced flow of transfers. These companies largely depend on small businesses, which are failing at an alarming rate.
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It’s not a surprise because even big international corporations are struggling today. For example, the reduction in international travel, has already caused the near-collapse of Virgin Atlantic. With huge companies like this failing to survive, the majority of small businesses have no chance whatsoever.
The other major group of customers for money transfer companies is small property investors. Cheap transfers made it possible even for people without huge fortunes to purchase properties abroad. This rapidly developed into a major industry as easy international transportation made the tourism industry boom. However, with travel restrictions and lockdowns in many countries, the hospitality sector has been hit greatly. The reduction in buyer capability will also affect the real estate market all over the world.
COVID-19 Pandemic Repercussions for Small Businesses
Small businesses have been hit the hardest by this situation. Their main problem is the lack of free funds to tide them over through the lockdown. There are some lending programs from governments that should help these types of enterprises. However, those are hardly sufficient. They are also not available worldwide.
Because of the enforced hiatus, small businesses have reduced the volume of their international transfers. The situation should change for the better when the world gears back after lockdowns are lifted. However, this would be a slow process.
In the interim, money transfer companies will suffer the same fate as small businesses. Those among them that do not have the funds to get through the downturn will perish.
Future of the Real Estate Industry Post Coronavirus
The real estate market worldwide is pretty much frozen at the moment. It’s starting to reanimate in some places, but this process is even slower than the small business restoration.
The good news is that the housing market in many countries has been on the rise in recent years. On the other hand, the pandemic has severely decreased people’s ability to actually buy properties. This means that the current slowdown of the market will be followed by a bigger dip. The real estate industry will recover in time, but this won’t happen fast.
The good news is that the housing market in many countries has been on the rise in recent years.
Meanwhile, investors are sure to reduce their transfers. Again, money transfer companies will lose a major contributor to their cash flow, but offering assistance and hedging tools to the existing investors today can help tide them over.
Will Money Transfer Companies Recover after the Pandemic?
The situation for money transfer companies and brokers is grim today. However, there is no doubt that it will improve. Moreover, this industry should recover faster than some others. That’s because this type of service has been in great demand even before the pandemic. But after this world-shaking event, it will be even more needed.
As mentioned before, even big corporations now struggle to stay afloat. Therefore, they will be looking for every way to cut costs and boost their efficiency. International deals and cheap money transfers are both essential for succeeding in this.
Admittedly, governments are doing what they can to support businesses and therefore reduce the negative impact of the pandemic. However, their success is limited, and it’s only a few countries that can make any big difference for small businesses.
Therefore, money transfer companies will have to wait for a while until their customer traffic is restored. The ones that can make it will definitely grow rapidly. Also, businesses that expand to online banking on top of offering international transfers have a better chance. Those are already in high demand as the world is going digital even faster than before.
All in all, for all that it seems bad now, the situation for the money transfer industry is very promising.
Many are choosing to wait out the trouble and see what happens rather than selling their home for somewhere new. But with Brexit resolved (at least on paper), and the country coming to terms with lockdown and looking forwards the future, there may be a level of certainty soon returning to the market now could be the perfect time to look into selling again. If you are planning on selling up, here are some key things that you need to know.
The Fallout of COVID-19
It can’t be denied that COVID-19 has been disastrous for the housing market. It is not so much that demand has seen a dip, rather that the market has gone into deep freeze - everyone looking to buy or sell is looking to wait until some sort of certainty returns. However, life goes on and increasingly it will be necessary to understand how to get on with things in spite of the coronavirus.
It seems that lockdown won’t actually have a huge effect on house prices - demand for properties is still there, it is just currently frozen. So if you are thinking of selling, you need to be getting ready in spite of the restrictions of lockdown. Things can change quickly, and it may soon be the case that the market returns to a level of normality.
The Brexit Effect
It might seem like a lifetime ago, but no matter what you think about Brexit, there is no doubting the uncertainty surrounding the UK since the vote to leave. This has created a great sense of trepidation in terms of people being interested in investing their money, and buying property. Now the UK is officially leaving the EU, we can expect to see the market stabilise and confidence return.
Over the course of deciding the terms of Brexit there have been instances of house prices falling and people being reluctant to buy. The return to certainty – whether it is good in the long-term or not – should provide some relief to the property market, and make 2020 a good time to sell.
Now the UK is officially leaving the EU, we can expect to see the market stabilise and confidence return.
Consider a Range of Estate Agent Options
In 2020, the range of estate agent options that you have available is larger than ever. In general, estate agents now fall into two separate categories: those with a physical presence in the form of high street stores, and those who operate purely online.
There is no doubt that online agents generally offer a cheaper service – some, such as Purplebricks, charge a simple one-off fee and do not take commission. However, it is important to understand that you will get less in the way of services from them. Standard estate agents charge more but will typically do more to get your property sold.
Set a Realistic Asking Price
In the past, we have seen many homeowners take a ‘wait and see’ approach to selling their property. This sees them listing it at a very high price, hoping that someone will fall in love with the property and pay over what it is worth.
However, if you are looking to make a sale, this isn’t a wise move. It is a much better idea to set a realistic asking price. The process of selling can be drawn out enough without the challenge of overcoming an overly high price tag.
Kerb Appeal Matters
First impressions matter when it comes to selling a home, so there is no doubt that you need to think about the exterior of your property. Your home needs kerb appeal – when someone sees it for the first time, are they impressed or disappointed? If it is the latter then you need to prioritise making changes.
There are actually many ways to enhance your kerb appeal. But it is important to think about the specifics of your property – what really needs changing? Some homes could do with a new paint job, others would benefit from replacing an old, rusty garage door. Take a look at your home objectively, and ask yourself what is detracting from the overall look.
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Upgrade Your Kitchen
65% of homeowners renovate their kitchen before they sell. There is a good reason for this. The kitchen is seen as the focal point of the home, and it is somewhere that buyers will be drawn to, and will want to inspect. If your kitchen is looking a bit tired, now is the perfect time to make upgrades and improve the value of your home.
If you only have the budget to make home improvements in one area of the house, then it is definitely worth making that area the kitchen. Your budget will go a long way – replacing cupboard doors and handles can freshen up the whole look of the kitchen without breaking the bank.
Final Thoughts
The property market is certainly looking up, so now could be the perfect time to put your home up for sale. Be sure that you present your home in the best possible way – you might be surprised just how much of a difference this makes to the amount of money you can get for it.
The coronavirus pandemic is affecting every sector of the economy in a manner not witnessed since the 2008 financial crash. However, not every sector is equally vulnerable, and there are still plenty of reasons to be optimistic that UK property will remain a viable asset throughout this current global crisis. Despite the now-quashed hopes that a ‘housebuilding revolution’ would be well underway this year, the government is still showing that it understands the needs of property investors and that it will support them through these dire times.
Paresh Raja, CEO of Market Financial Solutions, outlines the implications for the UK property market.
The economic repercussions of COVID-19 have hit the UK at an interesting time for our sector. Although Brexit uncertainty led house prices to fluctuate throughout most of the last half-decade, the election of a majority government in December 2019 facilitated an impetus of new-found confidence in the market. This was reflected by the increase in UK property prices in January 2020 of 1.9%, which was seen as part of the ‘Boris Bounce’.
Alongside this, the shifting value of the pound also resulted in international investors capitalising on UK property as a result of their increased purchasing power. Mention of a future stamp duty surcharge for such buyers in the 2019 Conservative party manifesto led to further activity as individuals rushed to complete deals to avoid this potential added cost.
All of these factors contributed to market which was showing good signs of recovery – but has this growth been entirely stilted by COVID-19?
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Understanding the Resilient Nature of the Property Market
As it stands, not yet. Property deals that were scheduled to close in the last week have, for the most part, still gone through according to reports. From this, we can assume that we will not be witnessing a massive knee-jerk backing out of such purchases as a result of pandemic scare.
The question, then, becomes to want extent the industry will suffer due to the ‘social distancing’ measures installed by the government. House viewings, agent meetings, and contact signing all require a level of physical presence – so some fear a lack of ability to accomplish such face-to-face meetings will lessen sales completed, and therefore dampen the market resurgence many had hoped for.
In reality, property has shown remarkable resilience in the face of economic uncertainty before, and I am confident that it will continue to do so. During the global financial crisis, market activity did decrease but there were still over 898,000 UK property transactions in 2009, and 876,000 in 2010. Even when banks were adopting stringent lending practices, people still endeavoured to buy and sell property. This is also when demand for specialist finance providers began to rise significantly, with investors looking to take advantage of fast finance solutions.
In reality, property has shown remarkable resilience in the face of economic uncertainty before, and I am confident that it will continue to do so.
Putting COVID-19 in Context
The last two UK property corrections, namely the 2008 financial crisis and the early 90s recession, were both the result of purely financial pressures. One could argue a pandemic-related issue may not hit the markets as hard. This is of course a speculation and should not downplay the seriousness of the issue at hand.
Importantly, we are also seeing the industry adapt to these challenging conditions. The Financial Times reports that estate agents are already beginning to offer remote, online-only house viewings to prospective buyers to ensure there’s no delay in matching customers with their ideal home.
The government has also announced a three-month mortgage ‘holiday’ for those whose income has been affected by COVID-19, and interest rates are now at a record low of 0.25%. It is positive to see lenders also addressing the needs of their clients by offering online meetings and consultations, particularly in the bridging sector. It is this type of creative thinking and resilience that makes me confident that the UK property sector will be able to overcome the initial challenges posed by COVID-19.
With ten-year fixed-rate deals now at their lowest ever levels, it may be a good time to consider remortgaging. According to Moneyfacts, rates for decade-long fixed-rate mortgages have dropped to a 2.76% average in the past year.
With these recent drops, long-term fixed-rate mortgages may be growing in popularity. With this growing popularity in a period of great uncertainty, people are wondering whether to remortgage or whether to seek alternative financial solutions.
Also, reassuringly in recent times, with the Financial Conduct Authority (FCA) placing strong emphasis on compliance for mortgage and financial advisors with the likes of the Senior Managers and Compliance Regime as a customer, you can be more assured that the advice you receive is more trusted. In previous times, where ‘sales tactics’ may have been deployed more often than not as a primary strategy, rather than explaining the product, things were often confusing for many customers.
What is Remortgaging?
In its most basic term, remortgaging is the process by which borrowers switch from their current mortgage deal onto a new one. This is typically done to reduce monthly repayments, or to borrow more money against the property. Typically, mortgage providers will offer attractive initial rates to draw borrowers in. However, these rates will often only last for a few years before the provider puts them onto a Standard Variable Rate (SVR).
By remortgaging, homeowners can borrow more money against the equity of the property. This money is typically used to make home improvements, which can subsequently increase the value of the property. Whilst remortgaging can be a great way to access finance, it does mean paying more back in the long run. Therefore, it’s important that when considering remortgaging you are fully aware of any and all costs that will come along with this.
Should I Remortgage Now?
If your current deal is coming to its end, it may be good to consider a remortgage. There are a whole host of reasons why people decide to remortgage, some of the main ones being those as follows:
- To reduce monthly repayments
- To borrow a larger sum of money
- To be able to make overpayments
People may also be considering to remortgage due to the great deals that are currently on offer throughout the UK, with 10-year fixed-rate mortgages now being an average of 2.76%, with the lowest in the UK being a mere 2.2%. Whilst the long-term, fixed-rate mortgage deals do often some with higher rates than the standard fixed rate deals of two years, these have been discovered to have an average difference of only 0.36%.
With such low rates for long term mortgage deals, now may be a better time than ever for borrowers to remortgage. However, before going through with a remortgage, it’s important to understand all charges that may apply to the switch, such as exit fees and early repayment charges.
With such low rates for long term mortgage deals, now may be a better time than ever for borrowers to remortgage.
When Not to Remortgage
Remortgaging can be a great way for people to borrow more money against their property, however it isn’t always the best option for this. For those who are already happy with their current deal, or perhaps have a long while left on their current plan, remortgaging may not be the best move.
Thankfully, there are some alternatives to remortgaging where borrowers can still access finance secured against their homes, one of which being a second charge mortgage.
What is a Second Charge Mortgage?
A second charge mortgage, commonly referred to simply as a second mortgage, is a type of loan homeowners can take out. This loan is secured against the equity people have in their property. Essentially, as the name suggests, it is a second mortgage attached to your property.
These loans typically range from £10,000 to £2.5 million for a period of 3 to 25 years. They can also usually lend higher amounts of money than remortgage providers. Due to their diverse nature in size and length of term, second mortgages can be a great means of finance for numerous different things.
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What is a Second Charge Mortgage Used For?
Second mortgages are usually taken out for a variety of different reasons. People use them to make improvements to their homes, pay for their child’s school fees and more. Another very popular reason for taking out a second mortgage is to help grow a business or commercial venture.
For example, you may have a retail business whose premises need updating. Although a retail design agency will cost the business owner more money, updating the shop may provide a very strong return on investment (ROI) through a better retail experience and better presence at trade shows and exhibitions and so a lender may look positively upon this and be willing to lend against a property.
Second charge mortgages can also be used for debt consolidation. However, this may mean paying more back overall in interest. It can also make losses more severe by converting unsecured loans into secured loans and using your home as collateral. If repayments cannot be made, borrowers could face having their home repossessed.
The data collected shows that consumer debt amongst those on low incomes is growing at the fastest rate since the financial crisis in 2008.
This is specifically the case for low-income households. Overall debt levels have remained the same prior to the financial crisis (approximately 15% of total income) but for the poorest households, the level of consumer debt was approximately 62% of total income.
This represents a rise of 9% between 2016 and 2019 which is also higher than prior to 2008.
High-income households also affected by growing debt
Households with higher levels of income have also been impacted by growing consumer debt and are representing a higher amount of debt overall.
However, this is more likely to include mortgage debt and this is usually not the case for low income households.
In addition, those with mortgage debt are more likely to benefit from high levels of competition with mortgage lenders. This is alongside the fact that mortgage rates have remained low since 2017.
Consequently, falling mortgage costs means that overall debt has reduced for many high-income families, and something that many low-income households have not been able to benefit from.
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Higher rates on different types of debt
Mortgage rates have remained reasonably low but other kinds of debt have increased. This has notably been the case when it comes to credit card debt and borrowing from direct lenders in the last two years. For example, the average credit card annual percentage rate has risen by 2.1% since 2017.
The research has also revealed that there has also been an increase in the number of low-to-middle income households with no savings.
This poses a concern, as it means that low-income households with no savings are more likely to be reliant on high-cost financial products including credit cards, overdrafts and rent-to-own products, and are also more susceptible to financial shocks if they occur.
Kathleen Henehan, Policy Analyst at the Resolution Foundation, said: “Britain is a long way from the levels of debt that drove the financial crisis, despite repeated claims to the contrary. Falling mortgage costs have also reduced the costs of debt for many, mainly higher income families. However, the use of often high-cost consumer credit has risen over the past decade, particularly among low-income households.
“Access to new credit can be hugely beneficial for low-income families, but with many also reporting that they have no savings to fall back on, these high debt repayment pressures are a sign of stretched living standards.
“The risk is that this leaves them far too exposed to future financial shocks, reinforcing the need for policy makers to focus on the living standards of those on low and middle incomes.”
If you bought property while living abroad for a few years for example and did not want to immediately sell up, you could test the water to see if any tenants may be keen to occupy it as you move back home. Furthermore, you may have purchased a holiday home and renting it out may be more advantageous than ultimately leaving it empty for months on end.
Of course, there are many things to consider once you do decide to establish a rental business, with a key one being just how you will receive rent. Here we have pulled together three different approaches you could take on the matter as you look to make a little bit of cash from your property interests.
1. Post-dated cheque
As AccountingCoach.com explains, a post-dated cheque is essentially a cheque which is written out and includes a date in the future on it. When it comes to paying rent, a tenant would agree with a landlord that the cheques in question would not be cashed or deposited until after the date which is stipulated.
The use of post-dated cheques is quite common in a number of areas across the world. For example, as this property website explains, it may be something people come across if they are looking for flats to rent in regions such as Sharjah. The practice of making rental payments through four to six post-dated cheques is used often in the area, which borders Dubai and has become a popular option due to its affordable rents when compared to the neighbouring city.
2. Online payment platforms
A more modern approach to the issue of rent payments may be to accept online methods such as PayPal or more specialist services. Payments through such services tend to be processed very quickly, while a major benefit is that their use is common across the world.
For example, as this website outlines, there are a host of online rent payment services available for landlords with property interests in the US. The likes of Cozy, Avail and PayYourRent include a range of features designed to ensure payments are received swiftly and easily.
3. Bank transfers from a local account
Alternatively, you could simply ask tenants to transfer rent from their bank account into one which you have established in the country or region where your property is based. The method is popular in many areas and, as this website explains, is commonly used to pay rent on property in Spain.
This may be a straightforward step to take as it would mean there could be the option of direct debits and standing orders too. However, that approach would, of course, mean you would need to manage and decide on how you access those funds, which would be held abroad.
Remove stress and concern
Renting out property can be a real money-spinner for those who are fortunate to have homes in a host of desirable and in-demand locations. Furthermore, having access to the right payments can help to take a lot of stress or concern out of managing or owning such properties.
The approaches listed above should hopefully give you some ideas on how you could address this issue as you get started with your own rental business.
