The pain threshold

Thinking of moving home?
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The Independent Online
It has had more comebacks and subsequent knockdowns in recent years than Frank Bruno. But this time the housing market might - just might - be on the verge of a genuine recovery.

Analysts and lenders are now predicting a rise in average house prices this year, albeit of the order of a modest 2 to 5 per cent. "Rarely have there been so few clouds on the housing market's horizon," says the City investment bank, UBS. It recently more than doubled its forecast of the likely 1996 price rise, adding that it expects prices to rise 20 per cent or more over the next three years.

Birmingham Midshires building society, in a similarly optimistic vein, based on findings from its regular survey of estate agents' confidence, says: "The housing market is springing back to life."

But home owners should not celebrate too soon. Estate agents warn that a shortage of suitable properties for sale could slow the predicted recovery. Black Horse Agencies' regional director, Alan Gottschalk, says: "We believe there is a trickle recovery in the numbers of houses being sold, but that doesn't necessarily mean prices will increase."

However, while it does not make sense to follow the 1980s property boom approach of buying a house purely as an investment, the conditions do look much more favourable for people wanting to move. "Sellers who price their properties realistically stand a good chance of finding a buyer within four weeks, which is better than it's been for many years," Mr Gottschalk says.

Around one in 10 of us hopes to move this year. But moving home is easier said than done. It is an expensive process, especially if you are selling to buy; fees to the estate agent, solicitor, surveyor and lender, plus stamp duty, mean that costs can easily top 5 per cent of the value of your current home.

Then there is the buying and selling process itself to contend with - a system that has been condemned by Hugh Dunmore-Hardy, chief executive of the National Association of Estate Agents, as "archaic and antagonistic". Until contracts have been exchanged, there is legally nothing to stop either party walking away from the deal.

This lassitude has led to practices such as gazumping - now making a comeback in Greater London and the Home Counties, according to Mr Dunmore- Hardy - and contract races, where more than one set of contracts is sent out to would-be buyers' solicitors.

Add in phenomena such as chains of buyers and sellers, which have an in-built tendency to break down, and it is easy to see why moving house has come to be regarded as one of life's most stressful experiences.

One way of arming yourself for this legal and financial minefield is to buy the right to sue virtually everyone else concerned in the move. A policy launched last month, Home Buyer Legal Protection, which is underwritten by Europ Assistance, covers home buyers for up to pounds 25,000 of legal costs for suing the vendor, his or her solicitor, lender, surveyor or removal firm for up to three years after the move.

Simon Tyler, a director of London-based broker Chase de Vere Mortgage Management, which is offering the policy for a discounted one-off premium of pounds 29.99, says: "It's a negotiating tool, like being bullied in the school playground and being able to call on a big brother to help out. Remember that most people are at their most unpleasant and avaricious when buying and selling houses. From top to bottom of the housing chain, they behave in an abominable manner."

However, there are also fairly straightforward ways to help reduce some of the financial pain of the move:

Always get more than one written quote. This applies to estate agents (for sellers), solicitors, surveyors, removal firms and, of course, mortgage lenders. Check exactly what fees cover. With estate agents, for example, check whether the fee is inclusive of VAT or not, and to what degree it might be reduced if you agree to give the agent sole agency rights for a limited period of, say, six weeks.

It is important to shop around for your mortgage. Home loans in general may be as cheap as they have ever been. But a mortgage is still most people's single biggest financial commitment, the difference in cost between good and bad can easily amount to thousands of pounds over the lifetime of a mortgage, and identifying the "best" deal can be very subjective.

Fixed-rate deals are edging up in price, but the level of initial discounts is still as high as ever. A good starting point for comparing the range of deals on offer is to get a free copy of Moneyfacts magazine by phoning 01692 500765.

As a rule of thumb, the discounts on offer can amount to about 6 per cent of the size of your loan, although they may take several forms. The flipside of the discounts is that lenders are looking to tie in borrowers with hefty redemption penalties after the discount period - when the mortgage reverts to the standard interest rate.

Quoted interest rates can be misleading, so get quotes of what you will actually pay, both during and after any discount period. Be wary of mortgage offers from estate agents - commonly, agents are linked to particular insurance companies and/or lenders. Mortgage brokers offer to take away much of the hassle of mortgages, but this will normally mean additional cost to the borrower - typically up to 1 per cent of the amount borrowed.

As a buyer, decide what

kind of survey you need and budget for having to pay for more than one before you get the house you want.

If you are taking on a mortgage, you will normally have to pay for a valuation for the lender. However, this is just a basic check on the likely market value of the property - it will not pick up structural defects.

So at the least, it is usually best to pay for what is called a home buyer's report (which is still less than a full structural survey) as well. The cost varies according to the value of the house but allow, say, pounds 150 for a pounds 45,000 house. If you are buying an old or unusual property, you may want to pay extra for a full structural survey.

Do not pay over the odds for conveyancing. It can be difficult to gauge what constitutes a "fair" price for the paperwork and legal checks done by a solicitor or licensed conveyancer. A Law Society spokesman refused to give any indication of typical conveyancing fees, saying: "It's an open and competitive market and most solicitors will try and provide a quote."

However, when the society lobbied (unsuccessfully) earlier this year for a statutory minimum charge, it cited research indicating that three- quarters of home buyers paid less than pounds 300 for conveyancing, excluding VAT and associated charges.

Nigel Ewart-Evans, of the Society for Licensed Conveyancers, says that his members (who number just 300) will typically charge around pounds 200 to pounds 300 per purchase or sale.

Bear in mind that the cheapest option is not necessarily the best one. David Quayle, the Corporate Estate Agents Ombudsman, warned recently that it was "impossible to ignore the number of cases in which it would appear that the standard of conveyancing has fallen well below the acceptable".

Allow for "extra" charges. The solicitor or conveyancer will pass on for payment a number of statutory fees, including: stamp duty of 1 per cent on purchases over pounds 60,000; Land Registry fees, which vary according to the value of the property - a pounds 65,000 purchase costs pounds 120 to register; and charges for local authority and other searches, which are likely to cost at least pounds 100.

A useful book, published by the Consumers' Association, is Which? Way to Buy, Sell and Move House (pounds 10.99).

Jean Eaglesham works for 'Investors Chronicle'.

Checklist

1. Put your own property on the market - either appoint an estate agent or place adverts etc if selling yourself.

2. Once you've found a house you like and can afford, make an offer. Meanwhile, shop around for mortgages and get a loan agreed in principle. Choose solicitor/licensed conveyancer.

3. Accept a subject-to-contract offer on your own house (assuming that an acceptable one is made) - note, it is likely to take any buyer several weeks to get to step 6. Confirm it in writing.

If your offer is accepted:

4. Complete the mortgage application and arrange with the lender to get a valuation and survey/home buyer's report done. Getting a mortgage fully agreed can take two weeks or more.

5. Assuming survey and checks by your solicitor are okay, pay deposit and exchange contracts for both purchase of new and sale of old house - both contracts should have same completion date.

6. Get quotes from, say, three removal/DIY van hire firms.

7. Arrange buildings and contents insurance for new property. You may be able to transfer your existing policies. If not, remember to claim a refund on old policies after the move.

8. Warn car insurer about the move - you may have to pay a higher premium. Fill in change of address sections of vehicle registration form and your driving licence and send to DVLA.

9. Contact both current and future local authority to avoid being asked to pay double council tax.

10. Warn electricity, gas and water companies. Arrange for meters to be read directly before and after the move at both houses.

11. Arrange to switch phone number (if wanted) and billing, giving at least two weeks' warning. Ring BT free on 150.

12. If renting TV or video, check whether you can take it to your new home; if not, cancel the contract. Fill in change of address form on TV licence and take it to a Post Office. Also notify PO if you have any Premium Bonds or National Savings certificates or are drawing a state pension. You can arrange for your mail to be forwarded automatically by the Post Office for pounds 6 for a month.

13. Advise your bank of the move as well as tax office, any lenders or professional advisers.

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