Tag Archive: Barnard Castle Estate Agent

What does the busiest property market in over a decade mean for sellers and buyers?

The first week of April saw a record number of visits to a leading property portal in a single day, 9.3m accessed Rightmove on Wednesday 7th April reinforcing the undeniable point that property isn’t just hot at the moment, it’s very hot!

The demand from prospective purchasers is voracious and shows no sign of fading despite the fact that for many new entrants they will simply run out of time for the stamp duty holiday deadline (unless of course it is extended further).

Across all our regions buyers are scouring the internet ready to pounce on the newest listings, frantically shuffling diaries to ensure they secure an early viewing in the fear that they will miss out on the opportunity completely. Agents who thought the weeks following the reopening of the market on 15th May 2020 was ‘incredibly busy’ are now seeing the true nature of a buoyant market.

So as Rightmove and the Office for National Statistics report that the average asking price of properties coming to the market is at an all-time high, that UK property transactions hit the highest monthly level since modern records began in 2005, that 145,000 instructions in April have not been enough to satisfy the national demand – what does that mean if you are looking to buy or sell a property and why has this happened?

The Why

Quite simply the pent up demand caused by the pandemic has been released and that fuelled by the economic incentives offered by the government, cheap mortgages, household desire to move to less urban environments and to properties with more space to offer flexible home-working options ultimately combined with the growing confidence that the ‘roadmap’ is both realistic and achievable has resulted in a surge of buyer demand. Unfortunately, that demand has yet to be met by sufficient properties coming to the market which has essentially ‘super-charged’ the market yet further.

The number of properties coming to the market is up 3% on the same period in 2019 so it’s not that potential sellers are holding back just simply that buyer demand significantly outweighs the current supply. The number of sales agreed is up 55% on the same period in 2019 resulting in the proportion of available property stock being at its lowest ever recorded by Rightmove.

What does that mean for Sellers?

In short, if you were thinking of selling then now is the time to do it. Don’t get too carried away with the surge in market activity when considering value, a reputable agent will be able to advise on an appropriate asking price for your property and combine that with a sound marketing campaign. Overcooking the price can be a risky tactic, if it pays off you achieve a higher margin than expected but if not then you risk missing the initial interest and buyers may then wonder why the property is still on the market i.e. ‘what is wrong with it?’

Prepare your property for the market both physically and also in terms of the documentation, the process could be extremely fast and all being well you could soon have buyers lining up to view and subsequently offer on your property.

If you are looking to buy yourself then start looking now if you haven’t already, also note that the rental market is equally buoyant so the plan to sell and move into rented accommodation whilst you look for your next ‘dream home’ may be a little more challenging than you initially expected.

What does that mean for Buyers?

Whilst for property ‘location, location, location’ is often quoted as being the key factor at the moment for buyers its ‘position, position, position’. A genuine cash buyer who is in the position to purchase without the distraction of property to sell or finances to arrange gives themselves a great opportunity of being in pole position. For those not fortunate to be in that position it’s about being prepared, being prepared:

  • with all financial arrangements in place as much as possible
  • for the need to move quickly to view a property
  • to work with the agent, whilst they are contracted to the client maintaining a positive and professional relationship will help your chances
  • to submit a realistic offer with all conditions and supporting information available
  • for the potential that with significant interest sellers/agents may opt for what is known as ‘a closing date/sealed bids’ so that the marketing process is not overly drawn out
  • with a ‘Plan B’ as you may not be lucky enough to secure the first property you attempt to purchase

Gemma Miller, Associate and Residential Sales Manager with our Northumberland team, comments “The market took a brief respite over the festive period, much shorter than usual, but has since come back stronger and busier than I have seen in the last 10 years. Not only have we seen the number of viewing requests soar, but they are often followed up by several strong offers all within days of launch.”

Speaking about the increased competition between buyers Gemma stated, “In the last month alone we have taken several properties to a closing date with sealed bids due to the amount of buyer interest and ultimately seen offers accepted that have an uplift of at least 20% over the asking price and in a select few cases 40%”, but went on to clarify further “whilst that is still exceptional, of the remaining sales over the last three months only two have not hit their original asking price, the key is setting realistic prices from the outset”.

Whilst there was an initial expectation that 2021 would see a busy first quarter in the property market before the market then tailed off the extension to the stamp duty holiday combined with the optimism that we are steadily coming out of the economic turmoil caused by the pandemic, many now hold the view that this year will see activity levels remain healthy, confidence will grow and ideally so will the number of the properties coming to the market – consensus is now that the year will end positively in terms of property price growth and activity levels.

If you would like to talk to our team about selling your property contact us on 0333 920 2220.

95% Mortgage guarantee scheme

In the Spring 2021 Budget, Rishi Sunak announced details of a scheme designed to ensure low-deposit lending was more widely available to property purchasers.

The scheme will come as welcome news to many first-time buyers but it is important to understand that it is not limited to that particular group of purchasers.

Chloe Riva from our Northumberland team looks at what the scheme means for the property market:
What is a 95% mortgage guarantee?

The Government hopes that by offering a plan to guarantee mortgages, lenders will be encouraged to reintroduce low-deposit lending. Many financial lenders ceased offering high loan-to-value (LTV) deals during the pandemic, clearly, they were concerned, as many were, over how Covid-19 could impact job security and the economy.

Understandably financial lenders will view high percentage mortgages as being riskier, since they’re vulnerable to fluctuating house prices, with borrowers potentially ending up in negative equity (meaning they owe more than their home is worth) should the market fall.

The aim of the Mortgage Guarantee Scheme is to provide both confidence to the financial lenders and also to stimulate activity from those wavering whether to venture into the market.

The idea behind the new 95% home loans – requiring a deposit of just 5% – is that they will provide a real boost for many would-be homebuyers who were finding it too much of a struggle to scrape together 10%.
This will hopefully mean that buyers previously financially excluded from the housing market will now have a route to climb the rungs of the property ladder.

“The chancellors’ confirmation that buyers will be supported by government-backed, 95% mortgages is welcome news,” says Chloe.

“A lack of high loan to value lending impacts access to homeownership, which was compounded in 2020 as lenders cut back on higher loan to value lending. This impacted first-time buyers’ share of all housing sales in 2020, which fell to 31% – the lowest level since 2016.”


So how much deposit will I need?

Instead of needing a 10% deposit – and having to save £20,000 to buy a £200,000 home – you will now only need a 5% deposit. This means only having to amass £10,000 to buy that same £200,000 property.

For those looking to buy a more expensive property costing £500,000, the required deposit will now be £25,000, as opposed to £50,000 prior to the scheme.

With the upfront costs now lower as a result of the scheme, the cost of getting onto or moving up the housing ladder has reduced.


Is the scheme subject to any upper limits?

With the Mortgage Guarantee Scheme, loans will be available for properties worth up to £600,000.

Given this threshold, more buyers will be able to take advantage of the scheme in areas where property prices are relatively low. By contrast, in less affordable areas, take-up may be lower.

Equally, while the aim of the scheme is to help those finding it hard to pull together a deposit, you need to bear in mind that deposits are only half the equation. The other factor is borrowing capacity – and this is dependent on how much you earn.

Under current lending criteria, the most that banks are typically prepared to lend is no more than 4.5 times a buyer’s annual salary.

Based on this, in order to purchase a property costing the maximum of £600,000, with a deposit of just 5% (equating to £30,000), you would need to be earning £126,667 a year (to get you to £570,000).

With this in mind, 5% mortgages may do little to help solo buyers, or those on – or below-average earnings.


When does the scheme begin and end?

The Guaranteed Mortgage Scheme is due to launch in April 2021 – and will run until December 31, 2022.
Why is it being introduced now?

The Chancellor has said the move is about ‘unlocking’ homeownership. The hope is that this scheme – together with the stamp duty holiday extension – will offer a welcome boost for first-time buyers and those with smaller deposits.

There are also hopes that these initiatives will, in turn, offer a big boost to the property market, as well as the economy as a whole as it is accepted that the property market is a significant catalyst for the wider economy.


Which banks are taking part?

So far, lenders including Lloyds, Santander, NatWest, HSBC, and Barclays have all said they are looking to offer 95% mortgages once the scheme begins and it is expected that further lenders including Virgin Money are expected to follow suit soon after.


What sort of interest rates can borrowers expect?

As yet, no details of actual rates have been revealed, but generally speaking, rates on low-deposit mortgages tend to be higher than those on mortgages requiring a bigger deposit.

As a guide, given that you can currently expect to pay well over 3% for a mortgage at 90% LTV, it’s likely that 95% mortgages could be even more costly.

All you can do for now is wait and watch. But in the meantime, what we do know is that buyers will be able to fix their rate for ‘at least’ five years if they so wish, giving borrowers some sense of security that their rate won’t go up over the short term.


What are the risks with a 95% mortgage?

The big worry with lending at such a high LTV is that buyers risk over-stretching themselves.
Given these concerns, it’s important that lending is responsibly targeted, and that only those who can afford the repayments get access to the low-deposit deals

While more details are yet to be revealed, the expectation is that borrowers will still have to pass the usual strict affordability checks to ensure they are financially able to bear the risk.


Does the scheme only apply to first-time buyers?

Unlike similar schemes that have gone before, the Government Mortgage Guarantee is not limited to first-time buyers – nor just to new-build homes.

This means that both first-timers and home movers can take advantage of the low-deposit deals – though the scheme is likely to be most popular with those taking the first step onto the property ladder.


Who else could benefit?

Other buyers who could potentially benefit include existing homeowners wanting to trade up, or those looking to remortgage to release equity.

Will the scheme benefit the housing market by keeping things moving?
The expectation is that Government-backed 5% mortgages will help drive activity as the stamp duty holiday and Help to Buy scheme are wound down.


Could the scheme push up house prices in the long-run?

While the Mortgage Guarantee Scheme offers a welcome boost for buyers, the Government will clearly be monitoring the impact on house prices as well as other economic stimuli as we continue along the roadmap and beyond.

There are concerns that unless the supply of affordable housing is there to meet the increased demand, there’s a risk the scheme could inflate prices further – potentially pushing prices even further out of reach for some of the very people it was designed to help.


What does the Government say about the scheme?

The Chancellor says this is about turning Prime Minister Boris Johnson’s pledge to transform “generation rent into generation buy” into a reality.

Rishi Sunak told MPs: “Lenders who provide mortgages to homebuyers who can only afford a 5% deposit will benefit from a Government guarantee on those mortgages. This is a policy that gives people who can’t afford a big deposit the chance to buy their own homes.

Chloe summarised the scheme, saying: “In supporting those with small deposits the chancellor recognises that unlocking that particular group of buyers is key to widening homeownership for a part of the mortgage market that has been under-served and this will help to stimulate the market up through the price chain.”

“Our belief is that the northern housing market will see the greatest benefit with lower-value housing stock on average compared to that in the south of the country.”

Online Estate Agents Vs High Street: The Differences

Choosing the right agent is key to selling your property. We have seen an increase in online estate agents in recent years and there has been discussion as to whether sellers should sell their home with an online agent or stick with an established high-street estate agent. We share our views on high-street and online agents.

How Do Online Estate Agents Work?
One of the biggest advantages that come with opting for an online estate agent is the savings that you can make on your overall fees. But how do they work?

When it comes to valuing your property, an online estate agent will use online data, and then market your property on popular platforms such as Zoopla, Rightmove and On The Market, etc and the quality of images that they will use to market your property is just as professional as those of a high street agent.

Most online agents will arrange the viewings on your behalf, and keep in touch with you via phone or a dedicated online portal just for you, however, an online agent wouldn’t normally attend the viewing. This would have to be yourself.

What are the advantages of online estate agents?

The Cost:
You can typically save a lot of money in fees by opting for an online estate agent.

An online estate agent will display their fees clearly and transparently on their website, including any VAT charge. They will also display the entire process of their involvement clearly online, from creating the marketing placement to finding a prospective buyer and every step in between.

You Have Control:
Your property will still feel like your property when you use an online estate agent. You maintain control over managing everything online and deciding when viewings are convenient for you.

Flexible Fee Packages:
By opting for an online estate agent, you have the freedom to choose the right package for you that ticks your boxes, delivers the services and knowledge you need, and matches a price that you can afford.

What are the disadvantages of online estate agents?

Upfront Costs:
In most cases, when it comes to opting for an online estate agent you will have to pay your fees upfront, whereas if you opt for a high street agent, you pay on the completion of your sale. If your property does not sell, or you wish to switch agents, you will then lose your money.

Property Valuations:
As everything is conducted online, you cannot be 100% guaranteed that ‘local property experts’ to your area are actually experts in the area that your property is located. Carrying out property valuations based heavily on data can be inaccurate and therefore it is recommended that even if you opt for an online agent, you ask a high street agent to carry out a valuation for you to get an accurate valuation.

Control / Responsibility:
When you opt for an online estate agent, you do manage everything yourself, whereas if you opt for a high street agent, they take the heavy responsibility off your shoulders. You need to make sure that you have the time available to take this on before you lose out on your upfront fees.

Conducting Viewings:
As mentioned above, an online agent will not carry out the viewings on your behalf. This is something that you should consider when choosing which style of agent you wish to choose.

How Do High Street Agents Work?
A high street agent will take care of the sale of your property from marketing the property, to finding prospective buyers, carrying out viewings and completing all legal formalities necessary to exchange.

What are the advantages of high street estate agents?

Personal Service:
Probably the most obvious advantage of opting for a high street agent, the service you receive will be personal to your property and situation. You will be working closely with an actual person, as opposed to someone online, which provides a lot of reassurance for many when undergoing such a large and personal task as selling a property.

Accompanied Viewings:
Your high street agent can carry out viewings on your behalf, or accompany you on the viewings – whichever is your preference.

Experience / Knowledge:
When you opt for a high street agent, you opt for experience. Many local estate agents have a wealth of knowledge in the area they specialise in, meaning that they have great experience of the local property market. Not just that – they know exactly what to look out for, what to ask and the signs to pick up on during a viewing.

What are the disadvantages of high street agents?

Expensive Fees:
The most common – high street estate agents are a lot more expensive than online agents. They will more than likely charge greater fees as they have greater overheads than online agents, for example their storefront rent, staff, business rates, and so on. (The usual commission for a high street agent can be between 0.75% and 3% of the final selling price.)

Limited Hours:
High street agents will only work the hours that their store is open. Usually 9-5, and shorter hours during the weekends. This can be tricky when it comes to holding viewings or needing to get in touch with your agent out of their working hours if you yourself work long hours.

Online Estate Agents vs High Street Estate Agents: What Should I Choose?
The option lies totally with you and your situation and circumstances. If you wish to maintain most of the control of your property sale and don’t need to rely heavily on the services of your agent, then an online agent is the best option for you.

However, if you wish to rely on your agent, and let them take care of the process, then a high street agent will be best. Melissa Lines, Senior Associate and Branch Manager from our Durham office, comments “High-street estate agents offer a full service. The internet-only estate agent does not normally offer the full range of essential services required by sellers and landlords without charging additional fees for those services. For example, conducting accompanied viewings.

“This full service includes substantial online marketing for each property via property portals and other internet-based marketing channels. Additionally, it may also include significant promotion in newspapers and magazines, which consequently attract purchasers from different sources. Plus, they will have local property knowledge and will only get paid if the house sells at an acceptable figure.”

Talk to us today to arrange your free market appraisal, call 0333 920 2220.