Is it time for a ‘Happy New Home’?

Thursday December 26, 2019

The festive season is still in full swing for most of us, but, if last year is anything to go by, a Happy New Year may mean a happy new home. Data from property search giants Rightmove and Zoopla in 2018 revealed that Boxing Day was the busiest day of the year for online property searches, with two million people trawling through online listings.

Rightmove reported 40 million individual homes were viewed on Boxing Day last year, three times the number seen on a regular day, with Zoopla identifying searches peaking at 9pm.[1] Are you one of the millions using the festive break to search for your dream million plus home? If so, you might want to read our run down of the latest trends in homebuying.

Across Britain, the top search terms for property hunters are ‘garden’, ‘garage’ and ‘parking’[2]. If you’re buying a million-pound home outside of London, it would likely be a given that these elements would be included. However, in many parts of the capital, parking is a significant additional expense. The average cost of a parking space in London is £219,000 rising to over £400,000 in Westminster and Wandsworth and £500,000 in Lambeth, Islington and Camden.[3]

Our Associate Director Caroline Burke says that some of our high net worth mortgage clients have novel ways of getting around the issue. “In recent years I helped a client who owned a home worth £18m in Central London. Despite its value, it didn’t have any parking. When the adjoining £3.5m mews house came up for sale, they snapped it up in order to provide private access to the property, as well as the all-important car storage they desired.”

The research also revealed that ‘bungalow’ and detached’ rank highly in search terms, followed by ‘annex’, which is rather less straightforward in the mortgage world. Although there are some High Street lenders who are happy to mortgage a property with an annex, it depends on what it will be used for.

Caroline says, “It’s fascinating to see this term rank highly and I put it down to two reasons. Firstly, multi-family households are the fastest growing household type over the last two decades.[4] Although two families living under the same roof doesn’t always mean there’s a need for an annex, they are incredibly popular with our clients, especially overseas property buyers, who may need to accommodate family for long periods. Annexes are also a great option for nannies and other live-in staff.”

The other factor Caroline cites is ‘the Airbnb effect’ which has seen many looking to monetise their properties by letting out an annex for short periods. What are the implications for your mortgage if you’re planning to rent all or part of a property out on short term tenancies? Caroline says, “Whether you have an annex or not, if you’re planning to list a property on Airbnb, it’s highly unlikely you will find a mortgage solution on the high street. We work with a number of lenders who will mortgage against an Airbnb property or holiday let, but it’s a specialist area and needs advice from a team like ours.”

The desire to own the freehold of a property is a priority, judging by its position mid-table in the top ten list. Our Associate Director Daniel Gracie says, firstly, it’s important to know the difference between ‘freehold’ and ‘share of freehold’, “When you’re buying an apartment, you’ll likely wish to purchase one with a ‘share of freehold’. There can only be one freehold for the piece of land underneath the building, so ideally you will want a share of this along with the other owners, owned through a limited company. This gives you the right to choose how the property is managed.”

The popularity of the term ‘freehold’ indicates that people are cautious when it comes to leasehold properties, no doubt concerned by some media reports. However, they’re incredibly popular; around 24% of residential property transactions in England and Wales were leasehold in 2018, and 57% of all transactions in London were leasehold properties.[5]

Daniel says that lenders will generally want 50/55 years remaining on the lease at the end of the proposed mortgage term. However, short lease properties do come to market and are priced accordingly so – if you’re a cash buyer, property developer or you can find a lender to accommodate the circumstances – it can be a way of getting a foot on the ladder in an expensive area.

“Be aware,” says Daniel, “that the lease will need extending at some point, and the cost of this is usually tied to the value of the home. Also have a Solicitor go through the clauses of the lease carefully and be aware if there are any restrictive covenants imposed by the freeholder. Additionally, lenders will want to know details of service charges, ground rents, maintenance charges and future repair costs when calculating affordability.”

Finally, there’s a yearning for both the countryside and coast within UK property hunters, with the last three search terms in the top ten being ‘rural’, ‘acre’ and ‘sea view’. It’s likely any and all of these elements will increase the value of your home as they represent the elements which make a property worthy of falling in love with.

Our Founder and CEO Paul Welch says that’s the most satisfying part of the job, “Our team works on a variety of large transactions across the commercial and development finance space. However, we’re also here to secure people their dream homes. Whether it’s a pied à terre, holiday home abroad requiring an overseas mortgage, a second home in the UK or a first time buyer home for younger generations, we have the skills and network to make our clients’ dreams a reality by securing them the best possible terms on their financing. When we achieve that, there’s nothing more satisfying.”

Happy property searching, Happy New Year and let’s hope that – if you’re dreaming of a new abode – then our team can help you celebrate a happy new home in 2020!






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