Hundreds of homeowners have their say on cost of buying a home in Guernsey.
More money would be spent with local businesses if the States of Guernsey were to waive the cost of registering a bond, according to a survey into local home buying habits.
The survey was launched last month by the Founder and CEO of largemortgageloans.com – Paul Welch. It examined the cost of document duty payable to the States of Guernsey on registration of a bond and – given the chance – where home buyers might otherwise have spent the money.
More cash would lead to property improvements
More than half (54%) of homeowners said that, if they had not had to pay bond fees, they would have used the money to help towards the cost of buying their house. Outside of the cost of the home itself, proud homeowners were overwhelmingly in favour of spending the money on property improvements.
40% of those surveyed said they would have spent the money employing a local tradesperson to carry out internal home improvements. More than a third (36%) would have renewed or replaced fixtures and fittings such as a kitchen or bathroom and the same number (36%) would have spent the money on DIY home improvements. 28% would have made their home more economical to run, for instance through replacing the heating system or installing new windows and 27% would have bought items for inside their homes such as furniture.
Internal improvements were seen as the priority, but a fifth (21%) said they would spend the money on employing a tradesperson to carry out external improvements such as decorating or garden landscaping. One in ten (11%) would have spent the money on outside equipment such as garden furniture.
Homeowners in Guernsey keen to invest in their properties
Just 11% of homeowners said that, if they were free of bond registration fees, they would save the money and only 4% would have splurged the money on something else entirely such as a holiday, clothes or luxury items.
CEO and Founder of largemortgageloans.com Paul Welch says; “Guernsey is an island of proud homeowners and it comes as no surprise to me that – if people were freed of the burden of bond fees – they would spend their hard-earned cash on improving their properties. This would lead to at least two direct, positive outcomes. Firstly, housing stock would be of a better quality and secondly, islanders would be putting more money into the economy through employing tradespeople and buying goods and services to improve their homes.”
Cost of bond fees adds up over a lifetime
Bond registration fees are payable every you move your mortgage, including moving house, remortgaging or changing mortgage provider, meaning they can significantly add up. One in three (34%) homeowners said they have paid bond fees once in their lifetime, a quarter (24%) twice, 17% three times, and 17% of islanders have paid bond fees four times or more.
As for the cost of bond fees, when asked if they knew how much they had paid, it was an even split between homeowners. 50% knew how much they had paid in bond registration fees, and 50% did not.
Islanders want more flexibility in the mortgage market
The survey asked local homeowners, ‘If you could transfer your mortgage to another lender without having to pay bond fees, would you consider doing so?’ The response was overwhelmingly in favour, with 8 in 10 (82%) of homeowners saying they would consider moving their mortgage. Just 6% said no, and 10% didn’t know.
Welch says, “What’s absolutely clear from the results of this survey is that homeowners in Guernsey are keen to see change. They’re aware of these unnecessary fees, and would like to see more flexibility in transferring or changing their mortgages. At the moment, this isn’t possible, but there’s absolutely no reason why this can’t change.”
Welch continues, “I’m asking the States to waive these fees, at least for a test period. There’s £25 million sitting in an enterprise fund, aimed at investing in projects and companies with a Bailiwick focus. What is more Bailiwick focussed than giving homeowners more money in their pockets and local businesses a boost?”
Notes to Editors
Survey results gathered between 2nd May and 28th May 2018. 280 survey respondents, representing more than 1% of Guernsey households.1
Bond fees explained
Bonds are registered at the Greffe by any home buyer taking out a mortgage. The bond ensures that the bank or building society lending against the house has the ‘first charge’, meaning they can take control of the property if the mortgage repayments aren’t kept up.
Fees are payable upon registration of a bond and include Document Duty payable to the States of Guernsey, Court and Greffe fees and Advocate’s fees. Document Duty to register a bond costs 0.5% of the mortgaged value of a property. Taking the average local market Guernsey home priced at
£400,000 as an example, with a 10% deposit, a buyer would be borrowing £360,000. Registering a bond for that amount would incur Document Duty of £1,800.
Facts about home buying in Guernsey:
- Bonds are registered at the Greffe by any home buyer taking out a mortgage. The bond ensures that the bank or building society lending against the house has the ‘first charge’, meaning they can take control of the property if the mortgage repayments aren’t kept
- Document Duty to register a bond costs 0.5% of the mortgaged value of a
- Taking the average local market Guernsey home priced at £400,000 as an example, with a 10% deposit, a buyer would be borrowing £360,000. Registering a bond for that amount would incur Document Duty of £1,800.
- At the point of purchase, home buyers in Guernsey also pay Document Duty on the value of the property, payable to the States of Guernsey. Current Document Duty rates are as follows:
- 2% on the first £250,000 of the transaction value
- 25% on the portion of value between £250,001 and £400,000
- 5% on the portion of value between £400,001 and £750,000
- 75% on the portion of value between £750,001 and £1,000,000
- 4% on the portion of value exceeding £1,000,000
- Additionally, the home buyer needs to pay the costs to register the bond with the Greffe, Court costs and the legal fees of the bank with whom they have secured a
- Fees to register a bond are payable every time your mortgage changes, including every time you move house, remortgage or change mortgage
1 Guernsey Household Income Report February 2017 lists number of Guernsey households as 22,209.
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Founded by Paul Welch in 2006, largemortgageloans.com is a market leader in the UK mortgage industry and the UK’s first mortgage broker to specialise in arranging mortgages above £500,000. It is at the forefront of the industry as a result of providing innovative funding solutions, million plus mortgage advice and access to sources of capital not generally available.
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