House Buying Guide

The new coalition government have promptly scrapped the Home Information Packs (Hips) which have been required to be produced by home sellers since 2007. The packs will no longer be suspended for anyone selling a property from 21 May, but the government will need to pass legislation to get rid of them completely. The only item remaining is the energy performance certificate, which ranks the energy efficiency of a house.

Whilst the news is good news for many home sellers, it will not be welcomed by those in the HIPs industry, many of whom are self employed. People like estate agents though, working in the property sales industry have generally welcomed the move. Estate agents claim the packs stunted the recovery of the housing market, because they made it more difficult for people to put their home on the market.

In his budget announcement today, the chancellor Alistair Darling has declared that from tomorrow, 25^th March 2010, there will be no stamp duty to pay for first-time buyers who are purchasing a property worth less than £250,000. This is planned to continue for two years.

In order to be classed as a first time buyer, you must not have previously owned a property anywhere in the world. If it is a joint purchase, then this must be true for all the buyers. The completion date must be after midnight on 25^th March 2010 (and before 25^th March 2012).

Whilst this may be good news for those at the bottom end of the market, those at the top end of the market are being hit with the increase that will pay for the relief for first time buyers. The rate for properties worth more than £1m will increase from 4% to 5%, although this would not come in until April 2011. This will obviously have a much bigger impact in London and the South-East, than it will elsewhere.

The Bank of England has just announced that its interest rate will stay at 0.5% – bringing us to a full 12months of the lowest interest rate of all time.

Since the UK economy is still in a fragile state, the move was widely expected. Any increase in the rate could have been a hammer blow to the UK’s recovery.

Although the Bank of England rate is still at 0.5%, mortgage rates are still significantly higher than this – the average standard variable rate is at 4.7%. and the average two-year fixed-rate mortgage is now at 3.9%.

Recent data from Halifax suggests that house prices dropped by 1.5% in February – likely to be due to the drop in demand following the recent return of the lowest stamp duty band to £125,000 from the £175,000 figure it had temporarily been increased to.

Hannah-Mercedes Skenfield, mortgage expert at moneysupermarket.com said: “Undoubtedly the biggest winners from the fall in interest rates have been those consumers who have been sat on standard variable rates (SVRs). Traditionally lenders’ SVRs have usually been higher than the deal that was ending so consumers would have to remortgage as a result. Now we have a situation where many consumers are sitting on extremely low rates and have no incentive to move. We have started to see SVRs starting to increase again, and rates for remortgaging starting to fall so for some consumers, now is the time to consider looking for an alternative deal.

“The losers have been those consumers who have little equity in their property or those who have been looking to get a foot on the housing ladder, particularly first time buyers. There have been some positive signs in the mortgage market over the last 12 months; we saw the number of available mortgage products fall below the 2000 mark in 2009 but we have seen a steady increase since with numbers in excess of 2,700 which shows that the recovery in the market is in place, although it is a way short the height of 2007 when there was over 30,000 products. In addition, those who are even able to access a deal with an LTV of 90 per cent will have found themselves paying a hefty premium for the privilege, often as much as 6.05 per cent.”