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Ten Things Landlords in Crediton Need to Know

If you’re contemplating becoming a landlord, here’s a helpful checklist explaining what it takes to let a property.

You may wonder why a checklist is necessary. After all, how hard can it be? You buy a property, find a tenant, and boom, you’ve got the whole landlord game figured out. Wrong! 

The private rental sector is subject to so many rules and regulations that even experienced landlords get caught out and make costly mistakes. 

Here’s what you need to know.

1 Legal matters – There are at least 175 laws that apply to landlords in the UK, covering everything from evictions to electrical checks. You need to be on top of all of them.Claiming ignorance (or that the dog ate your tenancy agreement) won’t get you off the hook if you get caught out.

2 Record keeping –It’s vital to maintain a clear paper trail so that if you get into a dispute, you have evidence to support your case. If you’re the kind of person who files important paperwork down the back of the sofa, consider getting someone to do it for you. 

3 Vigilance – No matter how nice your tenant seems to be, regular inspections are a must as they allow you to nip problems in the bud. Lax landlords run the risk of discovering that their property has been sub-let, trashed in a series of all-night parties or, holy smoke, turned into a cannabis farm.

4 Take out insurance – We’re not talking about standard home and contents insurance, but specific landlord insurance. (It’s usually a condition of buy-to-let mortgages.) Various policies are available, ranging from top-tier versions that cover almost every eventuality, to no-frills options.

5 People management –Dealing with people is a major part of being a landlord. Most tenants are reliable and honest, but some, unfortunately, can be infuriating. If a tenant falls into the latter category, you need to remain cool-headed when dealing with them. Good landlords make business decisions, not emotional ones.

6 Maintenance –Routine maintenance stops minor issues becoming major structural problems. It helps to have a network of reliable tradespeople who you can call on when you need work done.

7 Tenant selection – Invest time at the beginning of a tenancy to find the right tenant. Never rush the process when it comes to reference and credit checks.

8 Tax implications –The tax rules covering rental properties have been significantly reformed in recent years. It’s worth getting advice from an expert to ensure you understand what you need to pay and what you can claim back.

9 Understand the market –Successful landlords in Crediton understand the lie of the land, so that when it comes to setting the rent, they are bang on the money. Getting the price right means your property won’t be sitting empty for long periods.

10 Back-up – Good landlords don’t blunder their way through – they have back-up in the form of a reputable letting agent. If you want support dealing with complicated legislation, handling problematic tenants and managing day-to-day admin and maintenance, get yourself a good letting agent. Remember, mistakes can be costly.

Here at Helmores we can help you to become a successful landlord and to see healthy returns on your property investment.

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Evictions – An important update for landlords in Crediton

are buy to let landlords to blame

On Friday it was announced by the Government there is now an extension on the ban on landlords evicting tenants in England and Wales.

The new ruling means landlords will have to legally wait until 20 September to begin proceedings using the eviction process. Landlords will now have to give tenants six months’ notice of eviction, before the pandemic struck it was usually two months.

It was a last-minute measure by the Ministry of Housing, Communities and Local Government as the original deadline for evictions to begin was today, Monday 24 August.

The original regulations were put into place back in March shortly after the Covid-19 lockdown began. It was a move to protect genuine cases of tenants struggling to pay their rent due to the outbreak.

Speaking to the BBC on Friday, Housing Secretary Robert Jenrick, said: “I know this year has been challenging, and all of us are still living with the effects of Covid-19. That is why I am announcing a further four-week ban on evictions, meaning no renters will have been evicted for six months.

“I am also increasing protections for renters – six-month notice periods must be given to tenants, supporting renters over winter.

“However, it is right that the most egregious cases, for example, those involving anti-social behaviour or domestic abuse perpetrators, begin to be heard in court again. So, when courts reopen, landlords will once again be able to progress these priority cases.”

The final part of his statement was notable for landlords already under pressure. It means the prioritisation of the most serious cases, including those landlords who have not received rent for over a year.

At Helmores we’ve always believed and advised our landlords that taking eviction action is a last resort.

Over the past five months, we’ve been focussing on proven techniques to reduce the risk of landlords and tenants having to go through the stress, cost and anxiety of the eviction process.

We’ve been:

  • Keeping in regular contact with tenants to spot and help if possible, with any affordability issues.
  • Helping our landlords understand any rent insurance policies they have in place.
  • Talking with tenants about their legal responsibilities, which have remained the same during the lockdown and beyond.
  • Working with landlords and tenants to come up with acceptable payment plans if necessary.

There are several other things we’ve been doing behind the scenes as we work hard to avoid the worst-case scenario. But we are fully prepared and ready if it does get to that point.

If you are a landlord and have questions around what the eviction ban extension means to you, call us, and one of our lettings’ experts will be on hand to answer them.

Thanks for reading 🙂

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5 Common Mistakes Landlords Should Avoid

In this three-minute read, we look at the most common mistakes landlords make and share some simple, musical theatre-inspired tips, to help you protect your investment.

Hands up if you think this statement is true: Being a landlord is easy. You buy a property, find a tenant, and then sit back like Daddy Warbucks and count the cash as it rolls in!

If you raised your (jazz) hands, then we’ve got news for you. One of the most common mistakes new property investors make, is to assume that all landlords live on Easy Street. 

The reality is that letting a property comes with a host of legal responsibilities. If you mess up and flout the law, you could face hefty penalties in the form of fines and/or time in prison.

So, if your sole focus is on Money, Money, Money, it might lead you to screech Mamma Mia because there’s more to being a successful landlord than meets the eye.

If, however, you recognise that making it up as you go along is not a successful lettings strategy, then the team here at Helmores can help you realise the full potential of your property investment in Crediton (and of course all the villages across mid Devon). 

We’ve compiled a list of other common mistakes landlords make, which we’ve related to popular stage musicals to help you remember:

  1. Many landlords make the mistake of setting the RENT too high. This deters potential tenants who know the market and, as a result, the property sits empty – until the landlord drops the rent to a more realistic price. 
  2. When it comes to repairs and maintenance, always use professional tradespeople. The last thing you want is a FIDDLER ON THE ROOF or an unqualified jack-of-all-trades messing about with your electrics. A bodge job will end up costing you more in the long run.
  3. A laid back, ANYTHING GOES attitude to paperwork is a recipe for disaster. Always take the time to thoroughly check references and verify employment details before signing a contract with a new tenant. And once the tenant is in the property, follow up any conversations with an email or letter so that you have a clear paper trail should you find yourself in dispute later.
  4. As a landlord, you don’t want to be such a shadowy figure that tenants wonder if you are a GHOST. It would be best if you built a professional rapport with tenants through regular contact and inspections. That way, if there is a problem, you can nip it in the bud before it becomes a significant issue.
  5. Take maintenance seriously and keep your property in good condition – you don’t want it to be like a scene from LES MISERABLES. If your property looks and feels like a home, tenants are more likely to treat it as such. If it looks like shabby student digs, don’t be surprised if it gets trashed.

We hope the above tips give you a clearer idea of the potential pitfalls of being a landlord. But before we say So Long, Farewell, we want to stress that being a landlord can be financially rewarding, if you take a professional approach. 

If you don’t think you have the time or skills to dedicate to managing a property, then we can help. We’ll handle the day-to-day graft and take the pressure off you.

At Helmores, we’re lettings (and sales) experts, and we can help you navigate the demands of being a landlord. 

If that sounds like music to your ears, let’s talk – it all starts with a conversation!

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Where Landlords Currently Stand on Evictions

Handsome mature man

In this three-minute read, we look at the latest news on the evictions front and the moves needed to avoid legal action.

It takes flexibility, compassion, and stamina to navigate the eviction process at the best of times. But, due to Covid-19, it takes more careful and considered steps than ever to repossess a property.

Last week, Housing Minister Christopher Pincher gave more detail about how the process will work once the current ban on evictions, introduced back in March, is lifted on August 23.

Pre-action rules explained

These new guidelines are called ‘pre-action rules’ and will remain in place until the end of March 2021.

If a landlord wishes to evict a tenant, they will have to:

  • Inform the court and tenant in writing that they wish the case to proceed. Without this ‘reactivation notice’, the courts will consider the case dormant.
  • Provide the courts with any information they have on how Covid-19 has impacted their tenant.
  • Provide a full arrears history.

Fail to follow these rules, and judges can adjourn proceedings, something that will only drag the process out even further.

What Action Landlords Can Take

These changes will only exacerbate the existing backlog of cases. The housing charity Shelter estimates there could be as many as 200,000 in the pipeline.

Landlords in Crediton and mid Devon can avoid getting caught up in this legal nightmare, by treating eviction as the absolute last resort. Here are some tips to navigate your way through tricky situations and to hopefully avoid court action.

  • As they say, it takes two to tango. Don’t sit back and wait to hear from your tenant. You, or your letting agent, need to stay in regular contact with your tenant. That way, if they hit hard times, you can respond quickly.
  • If a tenant is struggling to pay their rent, don’t press the panic button. There are several strategies you can pursue, from rent reductions to flexible payment plans. Before you negotiate one of these options, please seek advice from us.
  • It’s easy to feel emotional or stressed when difficulties arise, but you need to remain cool-headed and pragmatic. What you do at the early stages of a dispute can be critical to recouping rental funds and determine the nature of the relationship in the future.
  • And of course, keep a record of all conversations and text and email exchanges.

These steps are the basics of managing tenancies during the Covid-19 crisis.

If you don’t feel qualified or comfortable doing all this yourself, we’re lettings experts and we can do it for you. We can take the lead, lighten the load, and make your life a lot easier.

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What’s Next for the Crediton Property Market?

There is no doubt that Coronavirus will affect the Crediton Property Market, but just how?

The ensuing economic challenges are going to impact the Crediton (and UK) property market, yet no one knows the real answer. The newspapers eulogise different opinions, but that’s all they are – opinions and everybody’s got a different opinion. The truth of the matter is we don’t know and won’t know for another few months at least, if not more?

There have been some outstanding Government supportive measures both for tenants, landlords, home buyers and sellers (including a pause on evictions for tenants, and for landlords and homeowners, mortgage payment deferments and stamp duty reductions to make buying a home cheaper), and whilst these are only temporary, they have done their job, meaning there is an astonishingly good level of activity in the Crediton property market.

A lot of that is pent-up demand from a couple of years of uncertainty because of Brexit. Also, we had the General Election in late 2019, so there have been so many reasons for people to sit on their hands. At beginning of 2020, it was like a water hose ready to burst with the Boris Bounce in January and February. Then, just as things were beginning to get going in the Crediton property market, we had everything freeze up for months during lockdown. Since lockdown has been lifted…

the Crediton property market is open once again for business  and there is unquestionably some impressive activity both in the sales and rental market.

So, back to the original question and where are we going? I think what we will see is a subtle change to where people want to live because of the pandemic. People working from home has shown that the need to be in the big cities has reduced and as employees have realised, they can work very efficiently from home, plus they are happier and have a better work/life balance. Their employers are also happy as they get more work out of their staff and can reduce their costly office footprint in the cities. The same goes for Crediton tenants as they are wanting more from their rental homes. Three trends we have noticed is there is greater demand for properties with gardens, greater demand for Crediton landlords who will accept pets (as they now can have them as they work from home) and finally, tenants willingness to pay top dollar for ‘top of the range’ properties, whilst more basic and uncared for properties without all the ‘bells and whistles’ need to go for a discount. There certainly has been a flight to quality.

Yet, what worries me is the fundamental future uncertainty in 2021 and beyond. What will things look like say in Spring 2021 when the Stamp Duty reductions are phased out? Any property sold needs to have completed by the end of March 2021 to take advantage of the tax holiday, meaning you need to have sold your property by November 2020 at the very latest to ensure your property purchase and sale deal goes through in time (as it is taking on average up to 17 weeks between sale agreed and completion). This is where the difference between a great solicitor, brilliant estate agent and awesome mortgage broker compared to average ones will show. Good ones, when all three are working together for you, can get the sale through in 6 to 8 weeks, not the national average of 17 weeks, meaning if you are cutting it fine, you might not be able to take advantage of the tax savings in the spring. Give me a call if you want to know who the best of the best in Crediton are to ensure you don’t lose out on those tax savings. 

The value of the average Crediton home currently stands at £284,400

So, what is going to happen to the Crediton property market? It really depends on the economy as a whole and of course the property market is a large part of that. I know one thing that buy to let landlords and home buyers don’t like is ambiguity and the British housing market has always lived and breathed on emotion and sentiment. People will only buy and sell property (and borrow the money to make those transactions happen) when they feel good. Are all these things like Stamp Duty holidays just putting off the inevitable? Are we heading for the mother of all property crashes?

Well, let me put sentiment and opinion aside for a second and look at the simple facts.

We have an increasing population, yet we don’t build enough houses

Since 1995, we have built on average 150,200 properties per year. The Barker Report said 2004 the country needed 240,000 per year to satisfy annual demand for new homes and whilst the number of new homes built in the UK last year rose 1% to a 13-year high, only 161,000 homes were built. That means over the last 25 years, with the difference between actual homes built and the targets set out in the Barker Report, we have an inbuilt shortage of 2,245,000 homes, meaning…

Since the Millennium, property values in Crediton have increased by 165.9%

Other factors have contributed to that. The average age of a person leaving their parents’ home in the UK is 24.4 years and that has been dropping for a few years meaning more homes are required. People are also living longer (in 2000 the average person lived until 77.7 years and now it’s 81.1 years – doesn’t sound a lot until one considers for each additional year the average person lives in the UK, we need an additional 356,500 homes). Finally, we have got immigration. In the year ending March 2019, 612,000 people moved to the UK (immigration) and 385,000 people left the UK (emigration) – meaning a net increase of 227,000 people (or a requirement of c.100,000 homes to house them in one year alone). All those factors in themselves mean…

we have more demand for Crediton property than we have supply and that’s not going to change any time soon

Property markets are driven (like all markets) by supply and demand so I believe Crediton property values can only rise in the long term. The question is whether Crediton people will have the sentiment and confidence to borrow money on a mortgage and invest in property, yet at the moment with ultra-low interest rates, borrowing money to buy a home has never been so cheap and if you are in it for the long-term (which you should be with property) then I think it’s good news.

One piece of good news is that mortgage lenders are willing to lend up to 90 per cent loan to value mortgages for first time buyers (and in some rare cases 95 per cent), albeit with a lot of strings attached … yet this is a good sign as the banks and building societies wouldn’t be lending at these levels if they were too scared.

Investing in property, be it for yourself to live in or buy to let is a long-term game. We might see an uplift in prices in the short term because of the demand mentioned above, then again, we might see a dip in 2021 yet again for the reasons mentioned above – until we start to build new homes to the scale of 300,000+ a year (something that has never been achieved since 1969), the long-term picture appears to good. Be you a Crediton landlord, Crediton house seller or Crediton buyer, you do have to be a lot more strategic and thoughtful about what you are going to do. If you would like to pick my brains, drop me a message on social media or pick up the phone.

So those are my thoughts, tell me your thoughts for the future of the Crediton property market?

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The clock is ticking for buyers and sellers in Crediton who want to get moving

In this two-minute read, we look at why the opportunity clocks are ticking for people wanting to make the most of the Stamp Duty holiday.

“Life is a Game” is a quote attributed to Mother Teresa, but it could be easily applied to property. As with all games, there are winners and losers when it comes to selling a home. Timing always plays a part in how successful you are, as does having a talented estate agency working on your behalf to get you a winning result.

The announcement earlier this month that Stamp Duty for properties under £500,000 is eliminated until March 31, 2021, means there’s now plenty of opportunity knocking on the doors of homeowners in Devon.

Buyers can save up to £15,000 during this window.

Opportunity Clocks

Depending on what source you look at, it takes on average (from a cold start) between 176 to 200 days to sell a home. This means the opportunity clock is now ticking before that March 31 2021 deadline.

The Stamp Duty holiday means:

  • Deals that were dead in the water over a difference in the value buyers and sellers were prepared to accept (especially between £15-30,000) are now potentially resurrected.
  • Having more to put down as a deposit is opening more of the mortgage market to buyers.
  • As is the decision by several lenders to reintroduce 90% Loan to Value mortgages.
  • If you’re thinking of selling, you’ll also benefit from the Stamp Duty removal if the place you’re buying is under the £500,000 bracket.

But it’s not enough to put your most valuable tax-free asset up for sale and hope the rising tide of a buoyant market mid Devon helps you achieve the premium price for your property.

You also need to remember the following five things, which we’ve related to classic game shows to help you remember:

Blankety Blank – Watch out for cheap and not so cheerful agents or agencies that promise the earth but can’t back it up with evidence and case studies.

The Price is Right – Overvaluing a property will mean it sticks, no matter what the market is doing or if stamp duty has been put on hold. Pricing it correctly to sell at a premium price is a skill experienced agents like us have.

Through the Keyhole – When you are on the market, your property gets put under the microscope so prepare it thoroughly so that viewers will feel like it’s a place they’d love to call home.

Countdown – Remember that date – March 31, 2021 – The sooner you start marketing your property, the better. The clock is ticking.

Bullseye – When you choose an agent with an excellent track record and fair fees who values your property correctly and can guide you on every aspect of the selling process, you’ve hit the bullseye. And you won’t be left thinking about what you could’ve ‘won.’

At Helmores we see working with a client to sell their home as a team effort. So, if you like the sound of our approach and are interested to know how we’d help you make the most of the Stamp Duty window of opportunity, let’s talk.

Thanks for reading!

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Every Crediton Homeowner & Landlord to Receive up to £5,000 Grant for Roof Insulation & Double Glazing from September

future green energy

The Chancellor announced on Wednesday 8th July in his mini Budget some interesting news for homeowners and landlords across the UK. Rishi Sunak is going to give ‘The Green Homes Grant’ of up to £5,000 to cover two-thirds of the costs of environmentally friendly upgrades to your property, with the homeowner covering the other third. There are also enhanced grants of £10,000 for the poorest households where 100% of the cost will be met by the Government.

This is nothing new mind you. The coalition Government in 2013 announced The Green Deal. That deal was in theory to have been a help for the builders, energy saving and home improvement industry, as the Government hoped many would take up environmentally friendly improvements to save energy (and ultimately greenhouse gases). Yet by the time it was brought to an end two years later only 14,000 households had applied, costing the taxpayer £238m (or £17,000 per household). That doesn’t sound good value to me – yet who am I to comment?!

Anyway, let’s not be negative, as improving our homes makes sense – after all, research shows Brits have the draughtiest homes in Europe. A recent survey suggests UK homes “leak” heat up to three times more quickly than more energy-efficient homes on the continent.

Data from 80,000 smart thermostats across the EU were reviewed to measure how quickly a home at 20°C inside cooled once the heating was turned off (when the outside temperature was 0°C). Within 5 hours, the average British home dropped by 3°C, the French came in second at 2.5°C yet the Germans came in at just 1°C, meaning British homes clearly need more heating (i.e. greenhouse gases) to keep them warmer.

The chancellor has allotted £2bn to the scheme, which pays for two thirds of the cost of the upgrade and stated that more than 650,000 homes would be upgraded. This could save those households a total of £195m a year in heating bills (or the equivalent of £300 a year per household), cutting greenhouse gases and saving jobs in the construction industry. The grant can be applied for from September and is open to Crediton homeowners and private sector Crediton landlords. Applications must be made before March 2021 and the Treasury have stated about half of the fund would go to households with the lowest incomes (how low is still to be announced), with an enhanced grant of up to £10,000, saving them up to £600 per annum each on their heating bills.

The average Crediton home annually produces 5.011 tonnes of CO2, compared to the national average of 4.101 tonnes

Due to the particular individual nature of the properties in Crediton and their construction type, with suitable improvements in insulation, double glazing and draught proofing, Government statistics state that this could be reduced to 2.748 tonnes for Crediton homes if suitable work (as per the Green Homes Grant) was carried out.

Why is this important? Well UK householders spend £34.735bn a year on their electric and gas bills – this is a lot of money. In fact, looking specifically at Crediton properties …

Crediton householders spend £814.40 per year on  heating their homes (compared to the national average of £669.34 per year)

Yet, if Crediton householders carried out the energy improvements that ‘The Green Homes Grant’ suggests their energy bills for heating alone would reduce to £570.26 per year … quite a saving over a decade and beyond (enough to buy a decent holiday – whatever one of those is!).

So, with Crediton homeowners and Crediton landlords being able to spend the grant on loft, floor and wall insulation, low carbon gas boilers, heat pumps, double or even triple-glazed windows, energy-efficient doors and low energy lighting … everyone should win – the environment, the economy and household budgets. More details on the scheme should be released by the Government in August. We’ll keep you posted on any updates!

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Crediton Home Buyers & Landlords Set to Save £580,970 in Stamp Duty Over Next Nine Months

The British are infatuated with owning their own property and politicians know that. Margaret Thatcher used it as a vote winner in 1979 when she allowed council house tenants to buy their own home. Coming to the present day, Boris Johnson’s Conservative government have anxieties that the Brits have not been buying nearly enough homes lately and, as with all countries in the world, the British property market was put ‘on ice’ for several months to help contain the Coronavirus, exacerbating the problem.

The Chancellor, Rishi Sunak, announced on Wednesday plans to boost the property market by momentarily scrapping Stamp Duty Tax (a tax paid by homebuyers) when they buy a property that costs less than £500,000.

Interestingly, Stamp Duty was originally introduced in 1694 as a way to raise funds for The Nine Years’ War (1688–1697) against Louis XIV of France and applied to property and some legal documents.

Why is this important? Well the Government recognise that when the property market is working well, the economy also tends to work well, yet one of the barriers to people moving home is Stamp Duty. Even before Coronavirus, Brits were moving 40.21% less than they were at the start of the millennium, and now with this dreadful situation, the natural reaction is for people to stay put in their own homes, meaning another potential nail in the coffin for the economy.

Stamp Duty has raised not an insignificant £166.53bn since 1998, impressive when you consider the NHS costs £129bn per annum. Looking at more recent figures, the Government currently raise £1.045bn per month from Stamp Duty Tax and this statement will remove a good chunk of that from the Chancellors coffers each month, yet the Government knows a healthy property market will help the wider economy.

As Stamp Duty is a transaction tax, it restricts labour market mobility, making people who are thinking of switching jobs think twice before moving. Stamp Duty also holds back elderly homeowners from downsizing to smaller homes, which is an issue for the UK, as we don’t have enough homes to meet supply and also curtails first time buyers as it forces them to use some of the savings on the tax, as opposed to using for a deposit.

Before the changes, the Stamp Duty thresholds were as follows: 

  • Zero percent up to £125,000
  • Two percent of the next £125,000 (the portion from £125,001 to £250,000)
  • Five percent of the next £675,000 (the portion from £250,001 to £925,000)
  • Ten percent of the next £575,000 (the portion from £925,001 to £1.5 million)
  • 12% of the remaining amount (the portion above £1.5 million)

and between the 8th July 2020 and 31st March 2021 the thresholds are:

  • Zero percent up to £500,000
  • Five percent of the next £425,000 (the portion from £500,001 to £925,000)
  • Ten percent of the next £575,000 (the portion from £925,001 to £1.5 million)
  • 12% of the remaining amount (the portion above £1.5 million)

Landlords and buy to let landlords will also benefit from these reduced rates yet will still have to pay their additional premium for second homes (as they have since April 2016).

To give you an idea how significant this is, if these rules had been in place exactly a year ago for Crediton properties purchased under £500,000 (i.e. between the 8th July 2019 and 31st March 2020).

Stamp Duty would not have been paid on 210 Crediton properties, worth in total £53,620,300

Anyone buying any home in Crediton over £500,000 are also winners in this, as they will save having to pay the first £15,000 in stamp duty (under the old scheme). This is because during these 9 months, stamp duty is only paid on the difference over £500,000 (so if you buy a property for say £620,000 – one only pays the stamp duty on the difference between £620,000 and £500,000 i.e. £120,000).

I’m all for reducing Stamp Duty, which is imposed progressively at higher rates the higher a property costs (as you can see from the tables above). Yet, short-lived changes to property taxation risk warping the property market and generating a ‘property market hangover’ in Spring 2021. I am part of a group of 2,500 estate and letting agents from the UK, and most of us were running at 150% speed before this announcement, coping with the post Coronavirus explosion in demand.

Now it seems that the ‘feast’ will continue until the end of March 2021 as many more people will move to take advantage of the cut in tax. However, some are suggesting this could lead to ‘famine’ down the line as it will stop people moving into the late spring and summer of 2021.

History tells us different stories on the influence on transaction volumes from changing Stamp Duty rates. In 1991 the Tory’s raised the Stamp Duty threshold at which house buyers started paying and Gordon Brown did so in 2008 when we went into the Credit Crunch. More recently, both George Osborne and Philip Hammond fine-tuned Stamp Duty so that landlords had to pay an additional Stamp Duty Premium after March 2016 whilst first-time buyers pay less Stamp Duty and the purchasers of more expensive homes (over £1.5m) pay more.

The Stamp Duty changes for landlords in 2016 affected the property market only for a short while and by the autumn, transactions levels had returned to normal. However, in 1991, John Major’s Stamp Duty change encouraged home buyers to bring forward home purchases but nevertheless the property market ground to a standstill again once the benefit ended (although the steps up the 1990’s Stamp Duty levels were much harsher as the tax applied to the whole purchase price, not the margin steps as it had in the 1990’s).

So how much money will Crediton people save when buying a home under £500k?

The average Stamp Duty paid by those Crediton home buyers in the 9 months between the 8th July 2019 and 31st March 2020 was £2,767.

Being objective, I can see why the Chancellor could see this as a suitable way to motivate spending because when people move home, they are more inclined to spend comprehensively on property renovations and the services of solicitors, home removal people, tradesmen and estate agents. So, drastically reducing Stamp Duty will undoubtedly help the UK economy, or at least contain some of the damage from the Coronavirus.  

Also, the experience of being in lockdown will have confirmed to many Crediton people that they need a bigger home or one with a bigger garden. I also suspect other people may be able to work from home on a more long-lasting basis, meaning there could be a shift from the larger cities to outlying towns and even a move to the countryside.

So, these are my thoughts, what are yours? I’d love you to post them in the comments below! 🙂

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We’re All Going On A Stamp Duty Holiday!

Confused about the new Stamp Duty holiday announcement? Check out our simplified 2 minute guide!

What is Stamp Duty?

Stamp duty is simply a tax paid by people buying properties. The amount of tax is based upon the purchase price of the property. In England and Northern Ireland buyers pay Stamp Duty, and there there are different schemes for Scotland and Wales.

The amount of tax you pay depends on the purchase price of the property and whether you are buying it as your main home, or an additional property, buy-to-let etc.

What’s Changed?

The Chancellor Rishi Sunak announced changes to Stamp Duty on 8th July meaning any buyer purchasing a primary residential property will pay no stamp duty on the first £500,000. This means the most property buyers will benefit from some whopping savings!

So, getting down to the nitty gritty of it: on a property purchase over the £500,000 threshold, buyers will pay a 5% Stamp Duty but only on the portion from £500,001 to £925,000. Then it’s 10% on the portion from £925,001 to £1.5 million and 12% on any portion over £1.5 million.

Some Examples

If you are buying your main home for £500,000 you would have paid £15,000 in Stamp Duty. Now you pay nothing.

If you are buying your main home for £750,000 you would have paid £27,500. Now you pay £12,500.

Second homes

There’s been a lot of confusion about purchasing a second home but we can confirm that there are large savings to be made here too. The higher additional rates remain, with a 3% higher rate on top of the new revised rates.

So, if you are purchasing a holiday home up to the threshold value of £500,000, you will pay 3% Stamp Duty.  If it’s over the threshold of £500,000 you’ll pay 8% on the portion from £500,001 to £925,000, 13% on the portion from £925,001 to £1.5 million, and 15% on the remaining portion over £1.5 million.

Visit gov.uk for more information

Why have the Government made these changes?

This move by the Government will keep the post lock-down property market momentum going strong and help the broader economy.

This is because when people move, they often spend thousands of pounds doing up their new home to suit their lifestyle and tastes. Think about it: when you move home, you often spend money on new carpets, curtains, kitchen units, and even new furnishings etc.

So when does all this end?

From 1 April 2021, the Stamp Duty holiday ends and the old regulations will revert to what they were before these temporary changes were announced, unless the Government decide otherwise, of course. We can live in hope!

Our thoughts on it all

The change means now is a great time to put your property on the market as we’re expecting a surge of buyers looking to make their move while they can save a large chunk of hard earned cash.

We’re primed and ready to take your calls and answer any questions you have around the new Stamp Duty changes. So, if you are thinking of buying or selling in 2020 the time’s never been better thanks to this news!

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Crediton Property Market – the Last 10 Years

One of my Crediton landlords contacted me last week after he had spoken to a landlord friend of his from Copplestone. He told me they were deliberating the Crediton property market and neither of them could make their mind up if it was time to either sell or buy property following Covid-19. His friend said he would wait to see what would happen to property prices following Covid-19, yet my landlord wanted to pick my brain in order to help him decide what to do.

I said the press are aware that bad news sells newspapers and the doom mongers are plying their trade on uncertainty in the world economic situation. Roll the clock back to the Credit Crunch of 2008/9, and there were quite a few landlords in Crediton who had overexposed themselves with high percentage loan to value buy to let mortgages, backing the hope they would make their money on the capital growth, yet fell foul of a drop in rents and thus got bankrupted (but who could blame them when the property market was rising at 15% to 20% a year in the early 2000’s and banks like Northern Rock were giving mortgages out to anyone with a pulse and note from their Mum).

Thankfully the Bank of England changed the rules on all mortgages in 2014 banning self-certification mortgages, tightening the rules around interest-only mortgages and the requirement around affordability to be checked plus a tough stress test if interest rates rose. It’s obvious we are going to enter into a recession because of Covid-19, yet this time the Crediton property market is better placed to weather the storm.

However, gone are the days when you could buy any old house in Crediton and it would make money. Yes, in the past, anything that had four walls and a roof would make you money because since World War 2, property prices doubled every seven years … it was like having a free cash machine.

If a landlord bought a Crediton terraced/town house in the summer of 2000, he or she would have seen a profit of £119,800 to its current value of £184,700, a rise of 184.7%

Nonetheless, if that landlord had bought the same property in 2010, that landlord would have only made £30,200 profit (a 19.6% increase). Yet since 2010, the country has experienced 31.5% inflation, meaning our Crediton landlord has seen the ‘real’ value of their Crediton property decrease by 11.9% (i.e. 19.6% less 31.5% inflation).

And this is my point. Nobody has been complaining about the property market in the last ten years, yet landlords are still worse off in real terms. If we do see a slow down in property prices because of Covid-19 (looking at the market at the moment I haven’t seen any indication of its slowing down from its post lockdown takeoff), but if we do, Crediton landlords need to realise property values aren’t the only indicator of whether the property market is good or not.

The reality is, since around the early 2000’s we haven’t seen anything like the capital growth in property we have seen in the past and it’s not predicted to grow at the rates it has previously done either. So, I believe it is high time for any landlord pondering investing in property to stop believing the hype and do some serious research using independent investment expertise. You can still make money by buying the right Crediton property at the right price and finding the right tenant.

Think about it, properties in real terms are 11.9% lower than a decade ago, so investing in Crediton property is not only about capital growth, but also about the yield (the return from the rent). It’s also about having a balanced property portfolio that will match what you want from your investment – and what is a ‘balanced property portfolio’? Well we discuss such matters in our Facebook group – it’s worth a few minutes of your time to join the group and have a look through the articles HERE