How to climb your way on to the property ladder
Bypassing the traditional housing market and estate agencies could help you find your dream home.
Saturday 17 July 2010
if you are one of the thousands of homebuyers or sellers trying to work out when best to throw their hat into the property ring, the latest price surveys won't have helped.
In the past week, the Department of Communities and Local Government has claimed that house prices rose by 0.7 per cent in May, contradicting almost all the other major indices.
Then the Halifax reported a drop in prices of 0.6 per cent in June. Finally, the Royal Institution of Chartered Surveyors (Rics) said 10 per cent more surveyors had reported a rise than a fall in property prices over the same period – down from a net balance of 22 per cent in May.
Buyer numbers are, unsurprisingly, waning as we all take a step back to watch and wait. But more and more people are bypassing the housing market altogether, and some of them are making huge savings.
Private house sales
For vendors, making the most out of a property is becoming a challenge in this climate, especially when estate agents take their 1.5 to 2 per cent cut if you do sell. But with a dramatic rise in the number of private home sales websites, thousands of owners and buyers are shunning estate agents in favour of do-it-yourself transactions and pocketing the savings in fees and charges. You could list your home on tepilo.co.uk and pay absolutely nothing, although you will need to plan your advertising, create your advert, take photos and arrange viewings and negotiations yourself.
Alternatively, homeowners can buy advertising space on private sites such as thelittlehousecompany.co.uk from as little as £89. This includes the listing itself, four photos of your property and live viewing statistics. Details of the property are sent to registered users and you can edit your advert at any time. For £359, you will also get an independent valuation, energy performance certificate, a for-sale board and a floor plan.
If you are thinking of going it alone, the most daunting decision is what price to put on your home. One online research site – houseladder.co.uk – offers free listings of prices of homes sold in your area. Although it is tempting to ask for a high price, specialists suggest it is better to be realistic and prompt action from potential buyers.
If that doesn't appeal, online estate agency packages can take care of almost everything for your. The Little House Company's full service, priced at £499 plus VAT, includes multi-agent advertising, management of negotiations and completion. Tesco has also waded into the private sales market recently with its iSold service at tesco.com/isold. The premium package –including professional photos, a virtual tour with your listing and open house events – costs £1,298.
Buying at auction
About 300,000 properties are sold at auction every year. Numbers rose during the recession partly because of the high level of repossessions. While the property market is now stabilising, the growing profile of auctions has meant that many vendors now choose them as a mainstream way of selling a property, especially corporate sellers such as housing associations or local authorities.
"Auctions are becoming an increasingly popular way of buying and selling property in the UK," says James Cokayne, the director of Mustbesold.com. "In recent years, auctions have become more widely accepted as homebuyers look for alternative routes to get on to the property ladder. For buyers, buying a property at auction has grown in popularity as they allow for a fast sale and also the guaranteed nature of the transaction that you do not get when buying by private treaty through an estate agent. This means there are no opportunities for gazumping or sellers changing their minds."
Interested buyers must contact the auction house for a catalogue and arrange the usual viewings and surveys beforehand. The key difference is that bidders must have a 10 per cent deposit to hand over on the day and the remaining balance within 28 days. There may also be administration costs of about £150, and a buyer's premium paid to the auctioneer of up to 1 per cent.
Even with these costs, advocates claim that buyers could save up to 40 per cent on the purchase, but David Hollingworth, head of communications for London and Country Mortgages, warns that auction rooms are not for the faint hearted. "The process is much the same in selecting a product as it would be normally," he says. "However, the real difference is that once the hammer falls then the buyer is committed to the purchase, parting with a deposit and usually expected to complete within the month.
"It is therefore vital that a buyer does their homework in advance of the auction and has surveyed the property before bidding. This will of course carry cost and the bid may not be a winning one. However, a worse outcome would be that the property has major problems and a mortgage lender will not even lend against the property."
Buying with friends and family
Most lenders will accept up to four borrowers on a mortgage, so pooling your money (particularly your deposits) will open up more borrowing options at better rates.
"Clubbing together and buying with friends and family could be the solution struggling first-time buyers need to get on the housing ladder," says Melanie Bien, a director at the mortgage broker Private Finance. "More of you will contribute to the deposit and monthly mortgage payments, making it more affordable. But it is important to think carefully about the practicalities before taking the plunge."
If one owner wants to pull out of the deal, the others may be able to buy out his or her share, but if not the property may have to be sold. Make sure you get a legal document drawn up stating how large a financial contribution everyone is making and setting out what will happen if one of you wants to sell up, Ms Bien adds.
Then there is the question of how the property will be owned. "The borrowers will be jointly and severally liable on the mortgage, which means the lender can chase each borrower for the full amount," Mr Hollingworth notes. "However, the property ownership can be structured as a joint tenancy or 'tenants in common'. Friends [buying together] may prefer tenancy in common because shares can be specified and their share can be passed by will rather than survivorship."
Of course, building your own home is not a decision to be taken lightly and shouldn't be considered simply as a solution to short-term house price fluctuations. However, the average self-built home – typically a detached house – costs £147,000 to build, with about one third of the total budget spent on the plot of land, according to the land agency SelfBuildabc.co.uk. It claims that on average a self-build property appreciates by 25 to 30 per cent as soon as it is completed.
It goes without saying that a lot of work, planning and research goes into a self-build, including when it comes to funding. "Self-build mortgages will generally release the funds in stages once the build reaches specified points," says Mr Hollingworth. "This means capital will be needed that can be ploughed into the project so as to reach the required point for further funds to be released. This can often mean the current home needs to be sold in order to release the capital to fund the new build. The borrower will therefore need to think where they will live during the build.
"Different lenders release funds at different times – some can lend against the land while others will want the building to be well under way before releasing funds."
'I thought it would be a hassle but it was very quick'
Emma Armitage, 30, from Glasgow, recently bought a two-bedroomed flat at auction through www.mustbesold.com The property, part of a Victorian terrace in Darvel, near Kilmarnock, East Ayrshire, had been valued at £38,000 but Emma paid just £28,000 for it.
"I had never bought at auction before and I was worried it would be a hassle," she says. "But I have really changed my ideas since doing it myself because the process was very quick compared with buying on the open market.
"I'm planning to live in the property myself and hope to make a profit when I decide to sell it. I'm interested in property developing for some extra income, and once I sell this one I think I will look at doing the same thing again."
* The Essential Information Group offers a property auction search service at www.eigroup.co.uk
* To find an independent financial adviser operating in your area, visit www.unbiased.co.uk
* Buildstore is a specialist in self-build homes and can offer loans with advance payments. For further details visit www.buildstore.co.uk
* A helpful, independent advice portal for sellers is at www.theadvisory.co.uk
* The government website www.directgov.uk offers more information about the buying or selling process, as does the National Association of Estate Agents, www.naea.co.uk
Independent Partners: Get fee-free expert mortgage advice and find the right mortgage deal for you.
- 1 Cyclist who knocked down three-year-old girl says his life has been 'destroyed'
- 2 Chelsea victory parade: Chelsea mocked on Twitter as 'tens of fans' pack the streets of London
- 3 US warned by Chinese media to stop meddling or 'war will be inevitable'
- 4 Woman, 21, dies after taking contraceptive pill that 'caused fatal blood clot'
- 5 Isis burns woman alive for refusing to engage in 'extreme' sex act, UN says
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
The day that Britain resigned as a global power
SNP fury as HS2 finds 'no business case' for taking fast train service to Scotland
A nation of inequality: How the UK is failing to feed its most vulnerable people
EU referendum: David Cameron to deny EU migrants and under-18s the chance to vote
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...
Day In a Page
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof