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A History Lesson: How the UK Property Market Went Boom & Bust in 2008

Property Market Crash

Today, we’re going to take a fun and casual trip down memory lane to the year 2008. You remember 2008, right? The year when financial markets around the world had a bit of a meltdown, and the UK property market was no exception. So grab a cuppa, sit back, and let’s take a look at why the UK property market crashed in 2008. Fear not, we’re going to keep things light and easy to understand, just like we do here at Helmores!

The Bubble

Before we dive into the details, let’s quickly discuss what a “bubble” is. A bubble is a situation where the price of an asset (like houses) increases rapidly, far beyond its true value. Eventually, this bubble bursts, leading to a rapid decrease in prices. Think of it as inflating a balloon until it pops – that’s a bubble!

Now that we’re all on the same page, let’s explore the factors that led to the UK property market crash in 2008.

10 Key Factors That Popped the UK Property Bubble:

  1. Loose lending practices: Banks and other lenders were practically giving money away, with little regard for borrowers’ ability to repay their loans.
  2. Low-interest rates: The Bank of England maintained low-interest rates, making it cheaper for people to borrow money and buy houses.
  3. Excess liquidity: There was too much money floating around, chasing too few assets (like houses), which drove up prices.
  4. Relaxed regulation: Financial institutions were not closely monitored, which allowed them to engage in risky lending practices.
  5. Speculation: Investors were buying houses not as homes but as investment opportunities, hoping to flip them quickly for a profit.
  6. Buy-to-let frenzy: People were buying properties to rent them out, further fuelling the housing bubble.
  7. Media hype: The media played a significant role in convincing people that property prices would never go down.
  8. Fear of missing out (FOMO): Everyone wanted to get in on the property market before prices skyrocketed even further.
  9. High levels of personal debt: The UK population was accumulating huge amounts of debt, which made them more vulnerable to economic shocks.
  10. Global financial crisis: The US subprime mortgage crisis in 2007-2008 spread globally, leading to a domino effect that eventually hit the UK property market.

The Crash:

As we now know, this bubble couldn’t last forever. In 2008, the UK property market finally crashed. The global financial crisis, triggered by the US subprime mortgage crisis, led to a sudden and severe tightening of credit conditions. Banks stopped lending as freely, and people found it harder to get mortgages. This, in turn, led to a sharp decline in property prices, as buyers dried up and sellers struggled to offload their properties. At its worst, the UK property market fell by around 20%.

The Aftermath:

The UK property market crash of 2008 had severe consequences for homeowners, investors, and the broader economy. Many people found themselves in negative equity, meaning their homes were worth less than the mortgages they had taken out. Some were even forced into foreclosure, losing their homes entirely. The knock-on effects were felt throughout the economy, with rising unemployment and a deep recession that took years to recover from.

But fear not! As we’ve seen over time (and as our experience at Helmores can attest), house prices soon bounced back. Negative equity isn’t necessarily a problem unless you have to sell your home. As long as you can afford your mortgage payments and don’t need to move, you can ride out the storm until the market recovers. And that’s precisely what many homeowners did.

By the early 2010s, the UK property market began to recover, and prices started to rise again. Homeowners who were patient and held onto their properties eventually saw the value of their homes increase, allowing them to move on from the negative equity situation.

Frequently Asked Questions
Q: Was the UK property market crash of 2008 unique?
A: While the circumstances leading to the crash were specific to the UK, similar property market crashes occurred in other countries, such as the US and Spain.
Q: How long did it take for the UK property market to recover?
A: It took a few years for the market to fully recover. By the early 2010s, house prices began to rise again, and the market regained its strength.
Q: What lessons can we learn from the 2008 property market crash?
A: The crash taught us the importance of responsible lending, tighter regulations, and the need for a more cautious approach to property investment.
Q: Can another property market crash like 2008 happen again?
A: It’s difficult to predict, but the financial industry has learned many lessons from the 2008 crash. Stricter regulations and more responsible lending practices have been put in place to help prevent a similar situation from happening in the future.
Q: How can Helmores Estate Agency help me navigate the property market?
A: At Helmores, we pride ourselves on our expert knowledge, transparency, and personalised service. We can guide you through the process of buying or selling a property, helping you make well-informed decisions based on your individual needs and the current market conditions.

Conclusion

The UK property market crash of 2008 was undoubtedly a wild ride. But as the years have passed and the market has recovered, we’ve learned valuable lessons about responsible lending, financial regulations, and the importance of a measured approach to property investment. Here at Helmores we’ve seen the market change many times over the years and we’ve got the experience to help you navigate the ever-changing property market with confidence and ease. So whether you’re a first-time buyer, a seasoned investor, or simply curious about the market, don’t hesitate to get in touch with me and our friendly team at Helmores 🙂

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Stamp Duty 101: Navigating the Tax on Your Dream Home

Helmores stamp duty guide

So, you’ve found your dream property and you’re ready to take the plunge, but wait – have you considered the elephant in the room? No, not the noisy neighbours, but the Stamp Duty Land Tax (SDLT).

If you’re buying a property or land in England or Northern Ireland that costs more than a certain price, you’ll need to pay this little beauty.

What is Stamp Duty Land Tax?

SDLT is a tax that comes when purchasing a new home in Crediton, like a house or flat, that costs more than £250,000. The amount of SDLT you pay depends on the purchase date, property price, and whether you’re a first-time buyer eligible for relief.

Thresholds for Residential Properties

Here’s the breakdown of the current SDLT rates:

  • 0% for the first £250,000
  • 5% for the next £675,000 (the portion from £250,001 to £925,000)
  • 10% for the next £575,000 (the portion from £925,001 to £1.5 million)
  • 12% for anything above £1.5 million (the portion above £1.5 million)

For first-time buyers, you’re in for a lucky break, as the rates are discounted as follows:

  • 0% up to £425,000
  • 5% for the next £200,000 (the portion from £425,001 to £625,000)

But, if the price is over £625,000, you cannot claim the relief as a first time buyer.

So an example of this if the purchase price of a property was £750,000, the calculation of the SDLT for someone who is not a first-time buyer and who doesn’t own another home would be as follows:

  • 0% on the first £250,000 (£0)
  • 5% on the portion from £250,001 to the purchase price of £750,000 (£25,000)
  • Total SDLT £25,000

Higher rates for additional properties

But wait, there’s more you should know. If you already own a property, you’ll have to add an extra 3% to the SDLT rates. But don’t worry, if you’ve already sold your main residence, or if you sell it within 36 months, you should be able to get a refund.

How and When to pay Stamp Duty

You’ll need to send an SDLT return to HMRC and pay the tax within 14 days of completion. Your solicitor/conveyancer will usually handle the return and payment on your behalf, but you can also do it yourself. Just be careful, as late payment can result in penalties and interest. It’s like getting a parking ticket on top of paying for the parking meter 😂

To make your life easier, there’s an SDLT calculator provided by HMRC to help you figure out the exact amount of SDLT you’ll have to pay.

Key Points:

  • Stamp Duty Land Tax (SDLT) is a tax that needs to be paid when buying a property or land in England or Northern Ireland that costs more than £250,000.
  • The amount of SDLT you pay depends on the purchase date, property price, and whether you’re a first-time buyer eligible for relief.
  • The current SDLT rates are 0% for the first £250,000, 5% for the next £675,000, 10% for the next £575,000, and 12% for anything above £1.5 million.
  • First-time buyers can get relief on Stamp Duty Land Tax. The rates are 0% up to £425,000, and 5% for the next £200,000.
  • If you already own a property, you’ll have to add an extra 3% to the SDLT rates.
  • You need to send an SDLT return to HMRC and pay the tax within 14 days of completion.
  • Late payment can result in penalties and interest.
  • There’s an SDLT calculator provided by HMRC to help you figure out the exact amount of SDLT you’ll have to pay.

Conclusion

That’s the basic rundown of SDLT for buying a residential property in England and Northern Ireland. Make sure you understand the thresholds, exemptions, and how much you’ll need to pay before you make your property purchase. Otherwise you could have a nasty shock when you receive the bill!

Please note that like the wind all this is subject to change so my advice is to check the HMRC website or consult professionals such as us in Crediton to get the latest information on SDLT rates and thresholds.

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How to Attract Birds to your Garden

One of the beautiful things about Devon is the abundance of wildlife, including the songbirds that we have in our gardens. Schemes like #NoMowMay have helped in recent years to give our native birds a chance to thrive on the insects that untouched grass and meadowland supplies.

But it’s not just the birds, as part of Plantlife’s annual No Mow May campaign, research found that simple changes in mowing can result in enough nectar for ten times more bees and other pollinators. In fact, their study discovered over 200 species were found flowering on lawns in 2021 including rarities such as meadow saxifrage, knotted clover and eyebright. Don’t forget to log your own findings on their website.

Attracting birds to your garden is a delightful experience. You learn a lot and experience many new things about birds’ habitats and your environment.

In February this year more than 1,900 farmers and land managers took part in the 2022 GWCT (Game & Wildlife Conservation Trust) Big Farmland Bird Count. Over 420,000 individual birds were counted in the survey. An impressive 26 red-listed species were recorded, with seven among the 25 most frequently seen species. Of these, starlings, lapwings, fieldfares, and linnets were the four most abundant red-listed species to be spotted, with over 125,000 counted, which equates to 29% of all species recorded.

More than 63% saw robins, carrion crows and pheasants. The five most abundant birds seen were woodpigeons, starlings, lapwings, fieldfares and rooks, with a total of 204,398 spotted in total, which equates to 48% of all the birds counted.

So if you want to be someone that makes a difference, you need to attract the birds into your garden in the first place. Here are few tips to help get you started.

Grow native plants

A bird-friendly landscape offers different layers of plants for different birds to use. From tall trees to ground cover – you need a little of everything. You also need to grow different types of plants for different birds. When choosing plants, consider the season during which each plant is most valuable. Early flowering shrubs provide nectar during the spring, while trees and bushes give fruits in the late summer and fall. Therefore, think broad and grow that engage different birds round the year in your garden.

Make a little pond 

If you have the space then this will attract water-loving birds. Birds drink clean and fresh water from the pond especially on hot days. At the same time, they have a safe and accessible place to take a bath. If you have a small space, then they also love a bird bath – just ensure you keep it clean and refreshed.

Provide food

Supplementary feeding can ensure that your garden supports many different birds.

According to the RSPB during the summer months, birds require high protein foods, especially while they are moulting. These food include black sunflower seeds, pinhead oatmeal, soaked sultanas, raisins and currants, mild grated cheese, mealworms, waxworms, mixes for insectivorous birds, good seed mixtures without loose peanuts. Avoid using peanuts, fat and bread at this time, since these can be harmful if adult birds feed them to their nestlings.       

Temporary food shortage can occur at almost any time of the year, and if this happens during the breeding season, extra food on your bird table can make a big difference to the survival of young. Birds time their breeding period to exploit the availability of natural foods: earthworms in the case of blackbirds and song thrushes, and caterpillars in the case of tits and chaffinches. It is now known that if the weather turns cold or wet during spring or summer, severe shortage of insect food can occur, and if the weather is exceptionally dry, earthworms will be unavailable to ground feeding birds because of the hard soil. In order to help with this, buggy nibbles and mealworms can be provided during these times to prevent starvation.

You can find more information on feeding the birds in this great guide from the RSPB.

Avoid Pesticides

Attracting birds to your garden also gives a huge responsibility to safeguard them. Many bird populations are endangered due to harmful pesticides. Avoid using anything that can prove dangerous for birds as they can mistakenly consume it – this includes slug pellets and leaving salted slugs where birds might pick them up and feed them to their young.

Stop your cat (and dog) from catching birds!

55 million birds are killed by cats each year! Cats are natural hunters and sadly they will hunt and kill wildlife for fun. Responsible cat owners can try to curb their natural instinct using a few simple tactics.

The RSPB have a number of suggestions and these include putting a bell on your cat’s collar. Feeders should be placed about 2m from dense vegetation, preventing surprise attacks from cats but giving birds easy access to cover. Place nest boxes where cats cannot get close, as they might prevent parent birds from getting to the box.

Help track birds

At this time of year you can assist the experts by logging the birds you see in your garden. For example, Swifts pair for life and meet up at the same nest site in the UK each spring – usually in gaps under roof tiles and in the eaves of buildings. But as more and more old buildings are demolished or renovated, many swifts are returning to discover their nest site is gone.

By telling the RSPB where you see nesting swifts you’ll help to build a picture of where swift nest sites need to be protected and where it would be best to provide new nest sites.

With fun accessible schemes such as Give Nature a Home and the Big Garden Birdwatch, the RSPB will continue to transform gardens across the country into mini nature reserves. Building a movement and weaving the UK’s landscape into a tapestry of connected wild spaces. You can be a part of it too – and don’t forget to share your sightings with us, we’d love to know if this blog has helped you transform the birdlife in your garden.

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Five useful resources to help landlords in Devon during lockdown

Question mark neon sign

In this two-minute read, we share five resources which landlords may find helpful during the extended lockdown period.

It’s a bewildering time for most people.

At Helmores we’re working hard to ensure our landlords and tenants across Devon are as well informed as possible.

Following the initial shock since lockdown was announced last month, the situation has calmed down, but we’re still monitoring it daily.

We’ve sourced five websites and articles you might find helpful during lockdown.

Government Advice

The Government has created several documents explaining its position and offering guidance.

The main page is: COVID-19 and renting: guidance for landlords, tenants and local authorities and is linked below. It features several downloadable documents.

https://www.gov.uk/government/publications/covid-19-and-renting-guidance-for-landlords-tenants-and-local-authorities

Gas Safe Register

The Gas Safe Register is the official Gas registration organisation for the UK. By law, all gas engineers need to be on its register. Last week it released an update on Government advice around the Coronavirus and the responsibilities of landlords and gas safety.

https://www.gassaferegister.co.uk/help-and-advice/covid-19-advice-and-guidance/landlords/

This is Money Article

There’s been lots of coverage in the media around landlords and rental properties since the outbreak started. One of the more useful articles we read was from the This is Money website.

It covers a range of topics including how to apply for a buy to let mortgage holiday. The link to it is below.

https://www.thisismoney.co.uk/money/buytolet/article-8175645/How-landlords-manage-tenants-coronavirus-lockdown.html

Residential Landlords Association

This campaigning organisation for residential landlords features a website with regularly updated news and other information.

https://www.rla.org.uk/

Speak with Us

Often, it’s easier to get answers to your questions by speaking with people in the know. We’re spending much of our time right now answering questions like those you may have and helping landlords and tenants during this challenging period.

So, if you want to have a chat about any concerns you have or need guidance, please give us a call on 01363 777999 or email [email protected]

We’re here to help get you through this and come out the other side safely.

Stay safe, stay at home, protect the NHS, and save lives.