The Property Jungle

The rules of renting

If you’ve ever owned a property, then you’ll know that it often costs more than you may initially have imagined... 

Unless you’re lucky enough to buy a property which is in walk-in condition, then chances are you’re going to have to spend some money on it.

Now, I’ve mentioned the surprising costs of buying on this blog previously, when I warned that you could need £30k more than you think to buy a house. But, once you’ve overspent the budget, what can you do to get yourself back in the black?

Turning debts into income

There’s no getting away from the fact you’ll likely have a mortgage - and for a long time, too - but owning a property doesn’t have to be about accruing debts. Odd as it may seem, this realisation came to me last Saturday night when watching X Factor.

In the six months I’ve owned my house I’ve racked up a £4k overdraft purely on renovations, and this has been really playing on my mind. So, in what was a bit of a spontaneous decision during the show, I had a look at Spareroom.co.uk and chucked together a little advert to rent out my spare room.

It felt a bit odd, as I wasn’t quite sure what I should tell prospective housemates about myself.  It was also a bit tricky working out what type of person I wanted to share with.  All I knew was that l didn’t want someone sitting on my couch every night watching TV with their other half, or someone who took over my home as their own, leaving me feeling like a spare part. 

But how do you communicate that to someone? And is it fair of me not to want someone to make my house their home too if they’re paying me rent? Probably not.

The response to my ad

I hadn’t any idea how long it would take to fill my spare room, but within two days I had three people coming round to view.  

The first girl was nice enough but I wasn’t convinced we were a great fit. If I’m honest, it could have been the fact she said her boyfriend lives around the corner and she hated his house as it was really dirty. This got me worried that he would be around a lot - no-one wants to feel like a stranger in their own home.

The second girl said the room was too small and was in and out within minutes. But just when I was starting to get doubts, the third girl - who it turns out, is a student - seemed really nice, despite the fact that I was really looking for a professional.  Even better, she had just moved to the city so wanted the room right away.

I’ve decided to give this girl a go and am totally surprised the process took only three days. But I’m also slightly nervous about sharing with a stranger- something I’ve never done before.

The next few weeks will reveal whether or not it turns out to be a good choice, but in the meantime, share your renting stories.

Have you had any house-share nightmares? Are there certain house rules you always lay down from the start? Post your comments below or email me at editor@confused.com.

House prices drop by thousands of pounds

Is the value of your house £6,000 less than last month? That’s the question.

Seems like a rather steep loss in house price value by anybody's standards, but that’s what its house price index says.

The Halifax House Price Index, if you’re not familiar, is a respected house price report published monthly, and its latest finding is causing quite a stir.

It revealed that house prices in England and Wales dropped by 3.6 per cent in September or by more than £5,800, bringing average house prices to around £162,096.

The price drop represents the largest monthly fall in the history of the Halifax report – which dates back to 1983.

Are we really set for another house price crash?

What’s gone wrong?

The Halifax attributes the large price falls to supply and demand. It says more properties have come onto the market in recent months, but this has not been matched by demand because home-buyers have been more reluctant to move. This is because of renewed uncertainty about the economy and jobs, and has in turn has put a downward pressure on prices.

But, believe it or not, it may not be as bad as it first appears. Looking at the quarterly figures, house prices in the third quarter of 2010 were lower than in the second quarter of 2010, but only by 0.9 per cent. And annually, prices are still 2.6 per cent higher than 2009.

Martin Ellis, the housing economist at the bank, also says it’s too early to panic, and stated: “It’s too early to conclude that September’s monthly 3.6 per cent fall is the beginning of a sustained period of declining house prices.”

So what can you take from this? Simply that house prices are unpredictable and, while this remains the case, keeping a watchful eye on the housing market is vital to making the best buying and selling decisions when you need to.

One neighbour gave me dog issues the other gave me rats

If you’ve been reading my property blog you may remember that I had an interesting first encounter with one of my neighbours when I first got the keys to my house.

To cut a long story short, my neighbour had been letting her dogs use my garden as their toilet for quite some time, it seemed. You can read more on that in my ‘meeting the neighbours’ blog.

Now though, I’ve had an equally interesting encounter with my other neighbour and this time it involves rats.

The neighbour

This is what happened. I came home the other day to find my neighbour crying outside her front door because there was a rat in her kitchen. It’s not the first time I’ve seen her crying in the street, so to be honest I was a little less caring than I could have been as I thought it was just another ‘drama.’

But as it happens, she had a giant rat running around her kitchen so her tears were probably just. My real sympathy didn’t kick in though till I came home to find the rat running around my garden. My neighbour had managed to get it out of her kitchen and into my garden.

Obviously, I was none too pleased with this and had a chat with her saying ‘we’ needed to do something about it. You may think it was no longer her problem as the rat was in my garden but let me explain more.

Basically, her garden is so overgrown that it is growing into my garden and I think this may be a bit of a breeding ground for rats. (She claims not to be able to afford to do anything about it nor have the ability to do anything about it, but that’s another story.)

On top of this, I’m not convinced her dwelling habits are the best either and this was slightly confirmed when she admitted she had been leaving her black rubbish bags out in her back garden and that this may have attracted the rats.

A bit of an odd conversation to have, but I had to subtly suggest that she leave them out for the bin men rather than let them pile up in her garden... crazy suggestion I know..

The rat

The rat was large and had a chunk taken out of it and was perhaps didn't have long to live anyway but me and my neighbour couldn't agree on how to deal with the problem. She didn't want to lay down rat poison in case it killed her cat and instead favoured the approach that if you ignore it, then it will go away. Concerned that my own cat could get ill from rat poision, this option was abandoned, but to be honest, I really wasn't sure what to do.

Not being able to use my garden for fear of running into a rat wasn't a great alternative but ignorance in this case proved to be bliss, as I haven't taken any steps to get rid of the rat but at the same time, I haven't seen it for a while either.

So, four months into my new house and I’ve had two rather unusual chats with both neighbours. And I could have another one, but that’s for another blog.

So what’s the lesson I’ve learnt here? Simply, that some neighbours can try your patience and that I’d rather not have any, or at least have some different ones.

Why you could need £30k more than you think to buy a house

 

Finally, after what may seem like years of waiting, good news appears to be on the horizon for first-time-buyers, with the conditions needed for buying a house improving vastly.

If we look at house prices back in August 2007, the average cost of a property was £199,612, but in august 2010, this fell to £167,953.

Add to this the fact that the Bank of England Base Rate has been at 0.5 per cent for 18 months now and you’ll get an improved picture of affordability for first-time-buyers.

The good news doesn’t stop there though, as HSBC has just launched a new 90 per cent loan-to-value mortgage for first-time-buyers with only a £99 fee.

So if all these conditions are enough to allow you to start searching for your first home and you have cash for the deposit, stamp duty (if it falls into that bracket) and conveyancing fees, take a minute to read this new wealth warning that’s flying about.

Apparently, home-buyers generally underestimate the finances needed for buying a home to the tune of £30,600.

One fifth of homebuyers pay more for their home than planned

Personal finance website, money.co.uk, claims that one fifth of homebuyers pay more for their homes than they planned to, with that budget gap averaging out at nearly £23,000 per buyer. 

On top of that, buyers also on average spend £8,000 on personalising their home in their first year, again unbudgeted for expenses.

To fund the gap, buyers are resorting to using personal loans and credit cards with a large number of people having to pay these off on top of the mortgage.

I myself am guilty of doing this – albeit not to the same extent but in some ways I think a bit of under budgeting is almost uncontrollable.

As a new property owner, the way I see it is like this. You potentially have two choices; take the chance and get on the property ladder when you can, or if you’re particularly risk averse – wait until you have a nice pot of cash to fund any possible additional expenses.

It’s only been 3.5 months since I bought my first house, and I’ve already spent about £5k plus, ‘personalising it’. But looking back do I wish I waited? No, I don’t. I’m glad I took the chance and jumped on the property ladder while I could or I would still be renting now and for who knows how long.

 

 

 

 

Is homecare insurance really worth it?

When I moved into my house I thought I better do the sensible thing and take out homecare insurance. This is basically a package that offers protection against things like your boiler breaking down, or your central heating packing up.

You choose to cover just your boiler or you can opt to add in cover for the central heating system, electrics, plumbing and drains, gas appliances and kitchen appliances. So basically, if repairs are needed then you are covered for it. But now I have major reservations after being tied into the contract with British Gas.

British Gas Regrets

Basically, after you sign up, British Gas send round an engineer who inspects your boiler etc to make sure things are in running order from the time you start the policy. They do this to make sure you don’t have say, a broken boiler and take out a home care policy and claim the repairs from them. All makes sense. But from the start of the inspection, it was like a sales pitch. Maybe I got a jobs-worth, or maybe all engineers are told to make out that your boiler and central system are about to fall apart -who knows. I wasn’t quite prepared for this approach though.

And I certainly wasn’t prepared for him to say I needed a new boiler because it was old. Forget the fact the boiler and central heating system is actually in working order, the engineer didn’t seem to care and was hell bent on scaring me into thinking I was going to have to fork out thousands of pounds for a new system.

I asked him to justify the age of my boiler and he just pulled an age out of the air- no facts to back it up – and then added that to my homecare file. The worst is yet to come though as he then said because my boiler was around 13 years old, if something did go wrong, British Gas could not confirm it would be able to fix it as they may not be able to obtain the parts. Ok...so what am I paying for?

Add then add to this the fact that I was told I should really get a power flush- something that he said could cost around £800 - and if I didn’t - depending on what went wrong with my heating, I may not be covered for that either because I had ignored its recommendation.

Confusing Customers

To be honest, it all got very confusing and then he ended up telling me that if there was a problem with parts of my boiler or central heating – that it could turn out to be covered but it all depended on what caused the problem in the first place! So basically until there was a problem, he couldn’t confirm whether my cover would pay-put or not.

Almost in tears in the kitchen at the thought of one day or any day soon having to pay thousands of pounds – he then told me I’d passed the inspection.... who’d have thought that the way he was gon - but of course, all the stuff he had said before still stood and I had to decide there and then whether or not to continue with the contract.

None too happy about being forced into a decision he said there was no down time and again managed to confused me with what was and what wouldn’t be covered if A or B or C or D happened! I still have no clue, but after recently completing a lot of the house renovations, I’m coming back at this one with vengeance and I'm not going to pay for something that is potentially useless.

Personally, I’m not too happy with my British Gas experience - in this case, it wasn't a good example of treating customers fairly.

Had similar experiences? Share them here.

Are you being prevented from shopping around for mortgages?

As we move into the fourth year of the credit crunch, are we any closer to a healthy mortgage market? Confused.com editor, Sharon Flaherty finds out.

If you think back to before Northern Rock collapsed in the summer of 2007, there were mortgages galore being offered in loan-to-values of 100 per cent or higher. Mortgage rates were also pretty low and putting down a deposit on a property was certainly not mandatory.

But now, a reasonable amount of time after the financial crisis; is the mortgage market recovering at all?

I’d like to say yes but that’s not necessarily true because there are whispers that borrowers are being rejected for mortgages in record numbers. There is also talk in the market, that one lender is rejecting 90 per cent of the applications it receives for 90 per cent LTV mortgages.

Worryingly, there is also further chatter in the market that one lender is rejecting 90 per cent of the applications it receives for 90 per cent LTV mortgages and the rejections can be traced back to minor discretions such as missing a credit card payment.

What are the banks playing at?

According to financial adviser, Ray Boulger, borrowers are now finding it difficult to know where to turn for a mortgage and those that rely on best buy tables are finding that they don't qualify for them. Worse still, some high street lenders are being accused of trying to prevent shopping around by leaving a hard footprint on customers credit profiles, even when a customer just asks for a Decision in Principle rather than making a full mortgage application.

According to Boulger, this "blatantly contravenes FSA rules, with only a few footprints needed to crucify a credit score."

If you stop a minute to think, this is a big deal. If you get rejected for a mortgage then you are obviously going to want to try and get another elsewhere. But if banks are using this tactic then that’s a big obstacle for any borrower to overcome and is against the FSA rules of Treating Customers Fairly, amongst others.

Now the banks are going to admit to doing this, but we want to know if they are and are calling for anyone who may have had this experience to get in touch with us here at Confused.com so we can put this to rights.

If you feel your bank has tried to prevent you from shopping around or if you know or have evidence that your credit profile was severely damaged as a result of being rejected for a mortgage, then please get in touch.

E-mail your stories to editor@confused.com and let us stamp this out.

 

A rental scam to watch out for

Most of us have rented accommodation from time to time, and some of us for longer periods than we would have liked, but there is a new scam on the go, which you should be aware of, as Sharon Flaherty, editor of Confused.com explains.

Unsuspecting potential tenants, particularly ones from overseas, are being duped by adverts on the Gumtree website, according to the National Landlord's Association (NLA).

Don't fall for this scam

This latest scam, relates to the advertisement of rental accommodation in the UK. In case you’re not aware, most of the Gumtree website allows people to advertise for free, so say you or me could advertise a room to rent, but it seems someone has taken this a step too far..

After e-mail exchanges, potential tenants are being asked to send money to the ‘landlord’ but then rather predictably, when the tenants attempt to make contact with the ‘landlord’ or, indeed, collect keys to the property, the ‘landlord’ is uncontactable and the potential tenant is left out of pocket.

In fact, in this latest scam, the ‘landlord’ advertising on Gumtree claims to be a member of the NLA uses the NLA logo and has created fake stationary copying that produced by the bona fide, service.

Director of operations, at the National Landlords Association said: "Tenants, no matter where they are from, should not send payment to advertisers before they are certain that the advertiser is genuine.

"Overseas applicants needing to secure accommodation before they arrive in the UK would be well advised to first seek the help of the employer or university they are coming to. They will be knowledgeable of standard practices in the UK and often have lists of accredited landlords and local letting agents."

Take advice on landlords where you can

So, what is the moral of the story? Don’t send money unless you know it’s genuine and do proper checks on prospective landlords, for example by checking whether they are a member of the National Landlords Association.

In the meantime, if you have fell victim to this scam, or any such similar scams, warn other readers here by posting your comments below and informing the NLA on info@landlords.org.uk.

The big mortgage debate

 
You may be sick and tired of hearing about the ‘bad banks’, the lack of mortgage lending, unstable property prices and the state of the economy in general, and who would blame you. But Sharon Flaherty, the editor of Confused.com has something you may need to know.

It’s those same things have been dictating the headlines for far too long now, but as nice as it would be to switch off from it, there has, in the last few days, been an announcement about potential changes to mortgages, and it’s likely to affect you.

The Financial Services Authority (FSA) – the regulator which oversees the financial services industry – has been looking in detail at the mortgage market since 2005 before the credit crisis believe it or not, and is now consulting on sweeping changes to mortgages as we know them. Why? Because it feels too many mortgages are given to people who can’t actually afford them.

How the numbers stack up

During 2005-2008, the FSA researched 9,000 mortgaged households to calculate how much money borrowers had left once mortgage payments and living costs were deducted from income. Yes, it was a small research sample size, but the findings are worth paying attention to.

It found that a huge 46 per cent of these households had either no money left at all or had a shortfall in their finances after paying the mortgage. So, in a nutshell, the FSA feels a lot of households were putting themselves under financial strain to meet mortgage payments and now it plans to make sure when people take out mortgages, they can really afford them.

Mortgage changes the FSA plans to make

The FSA has proposed that lenders verify all incomes before a mortgage application is approved. It also wants to ban products such as self-certified and fast-track mortgages. So what’s the effect of this? Essentially, it could men borrowers have to wait longer while their mortgage applications are checked, and the self-employed may find it more difficult to get a mortgage.

In this mortgage consultation, the FSA has also proposed changes to interest only mortgages because it believes many have been taken out by consumers without them considering how the capital will be repaid. So, to make sure consumers can afford them, it is proposing lenders assess affordability on a capital and interest basis, even where the mortgage is being taken out on an interest-only basis.

This is not yet the end of the FSA’s consultation into the mortgage market and it will make its final decision on mortgage proposals by the end of the year, at which point, the mortgage landscape will likely be changed fundamentally from pre-credit crunch days.

A step too far?

But are the mortgage changes necessary? Obviously some mortgage holders struggle to make ends meet, and it is these people the FSA is trying to protect. On the flip side of the coin though, people use mortgages as a tool for bettering themselves; to help them get on the property ladder so they own their own home, and for some, to make a profit.

So is this mortgage market intervention a bad thing? Will consumers suffer as a result? And will house prices fail to climb as high as they have historically because there will be less demand for properties as more people are locked out of the property market? Perhaps more stable property prices are a good thing?

Tell us what you think here.

Prepare for turmoil in the property market

If you’ve just bought a property, the last thing you want to hear is that your purchase is already losing value. But that’s something you should prepare yourself for, particularly as the uncertain economic climate continues.

Perhaps news of falling house prices is much worse if you’ve bought a property to make quick money. But even if you haven’t, it’s painful to learn all the same.

So, why am I talking about falling house prices? Because recent indicators suggest there has been an increase in the supply of properties coming onto the market for sale.

The abolishment of Hips has gone some way to encouraging buyers to put their house up for sale and test the water but, as of yet, there’s no evidence that the number of buyers coming onto the market matches the supply, and this is what has me worried.

My property market prediction

Three years ago, when I began saving for my deposit to buy my first house – yes it took that long just to save a 10 per cent deposit! – I predicted that  2010 would be the best time to buy, as I believed prices would be at their lowest.

Back then, as the credit crisis was just kicking in, I could never have known how big the recession was to be and that it would leave us with a huge Budget deficit and a coalition government. Was my prediction wrong? House prices did fall significantly across the UK, but it seems they may still have a little way to go yet.

What the experts say

If you listen to some well-known property economists, then the suggestions are that house prices will fall back again in the second half of this year, and perhaps decline more next year.

To top it all off, the latest Bank of England survey on credit conditions – which looks at the amount lenders are willing to lend us - indicates that lenders will also scale back lending in the next three months.

So, what does this mean for home-owners and would-be buyers? It means keep your finger on the pulse with what’s happening with mortgages, and keep track of house prices in the area you want to buy/sell so you can make as informed a choice as possible.

Having difficulty selling a property because of falling values? Getting the price you’re asking for? Tell us your thoughts on the property market in your area.

First property purchase means very empty pockets

Confused.com’s editor explains why not having cash reserves when you buy your first house is less than ideal..

One of the conversations I had with my mum last month before I moved into my first house went something like this.

Mum: "This is going to be harder than you think, you know. (Mum talking about how much money I would need to shell out on the new house.)

Me: "Nah, it’s fine, I know what I’m doing. I’ve worked out all the money." (Which I thought I had.)

Time to eat my words though as I’ve just checked my bank balance and I’m more than £800 overdrawn.

Underestimating the estimates and woodchip wallpaper...

Why? Well, maybe I’ve not been reining in my expenses enough to match my outgoings, but the work I’ve been getting done on the house certainly hasn’t helped.

When I bought the house, the plan was to have a week to get the decorating done. So I arranged the move-in date for a week earlier than when I was due to move out of my flat.

At first, I wanted to just get the yellow-stained walls painted white all over the house to give it a freshen up and then think about more seriously about decorating plans once I’d settled in. I’d even found someone to do it for a good price, so all seemed hunky dory.

But, the decorating plans haven’t quite gone according to plan, as instead of painting over that dreaded woodchip wallpaper that’s all around my house, I thought it would instead be a good idea to strip it off. Big mistake.

I’m not sure if you’ve ever had dealings with woodchip wallpaper, but there’s no other way to describe it than a menace. Hard to get off and when you do get it off; you’d better be prepared for what’s likely to happen next.

I guess it stands to reason that if you’re using woodchip wallpaper, then you’re probably hiding bad walls, but as a novice and first-time-buyer, I didn’t really have this knowledge.

So, when it finally came off the walls, so did a lot of the plaster. The result? Me being unable to unpack my stuff for 4 weeks until I could get the two rooms – my bedroom and the main lounge area –re-plastered and painted.

Empty pockets

The unexpected wall chaos means a) I’ve spent more money than I had budgeted for which b) means I can’t do other things that I had planned for the house – like painting the rest of the house – or buying a couch, or a bed...

So what’s my lesson learned? Houses are more expensive than you think they’re going to be, especially when it’s your first and you really are starting from scratch.

So as boring as it sounds, it is worth having a little bit of extra money to dip into, to pay for house decoration, basic furnishings and a little reserve in case there’s anything unexpected that goes wrong with the house.

Note to self for next time.

　

Rising damp = Raised stress levels

Ever been told your house or property has damp? It’s a pretty common problem, so it’s highly likely that, if you’ve lived in a property of age, you may have rising damp, just like me.

I bought my house fully knowing that it had damp, but actually I was unaware of how much or how bad it was, and to be frank, a few surveys later, I’m still unsure. Here’s why.

The initial midrange £550 survey I had carried out before I bought the house found: “high levels of damp in the hallway.”

This worried me a bit at first, but after getting a quote from an independent damp-proofer for £575 to treat the damp, I decided it wasn’t a deal-breaker.

Now that I’m in the house though, and have stripped wallpaper off some of the walls, I’ve found more damp myself. Now, I’m no expert, but I can tell when a wall feels damp, and a wall in my living room certainly does.

In fact, I’ve enlisted a couple more damp experts who have since told me that I have damp in my kitchen, and in two places in my living room, none of which were picked up in the initial homebuyer’s survey I paid £550 for...and of course, all of which are ramping up the cost of fixing the problem.

Trust the experts?

I’m a bit surprised to say the least, especially by the mixed messages I’m getting from every damp “expert” I approach.  So who do I believe?

With each “expert” using a different damp tester and no strict guidelines or regulation over the industry, it’s making it difficult to know who to trust or believe, especially when the quotes vary by a few hundred pounds.

For now, I’m ignoring the damp problem until I’ve at least dealt with one other issue. And that’s the fact that this “additional damp” wasn’t picked up in the homebuyer’s survey I paid for, before I committed to buying the house. After all, what’s the point of having them if they don’t pick up on such problems?

Taking matters into my own hands

Curious as to what leg I have to stand on when it comes to disputing the survey’s findings, I’m going to take the issue a step further and challenge the surveyors report, and will let you know the outcome.

Does any of this sound familiar? Have you had surveys let you down? Or experienced similar problems? Tell us here.