4 Jul 2016
Author: Stephen Breen
The housing market is rife with uncertainty following the referendum with almost one-in-three house sales falling through between April and June. Although nobody can be sure of the future, there are ways you can take advantage of the market as it is:
Discounts of 30 or 40 percent have been reported in areas where there is a bigger supply of new builds than demand requires. However, the fact that the buyers are usually investors buying multiple properties is a factor, and it isn’t the average across the country. For individual buyer, discounts of 5 to 10 per cent are more achievable, with discounts in the 5 to 7 per cent range being entirely realistic.
For buyers with foreign currency, the discounts are amplified by the low value of the pound. Countrywide Estate Agency has revealed that buyers who are purchasing in euros, dollars, yen, yuan or roubles will save around £100,000 on a £1 million property.
Experts don’t think huge discounts are achievable, generally – and particularly in London. London sellers don’t need to accommodate your request for a discount when there are overseas buyers willing to pay the full price, thanks to the favourable exchange rates which have already bagged them a bargain.
Experts think that sellers are more likely to accept an offer than previously, but only where offers are realistic – and silly offers will still be rejected.
Give yourself the best chance of sale
If your property is on the market, experts suggest that you should try to keep a number of buyers interested in the sale. Have all the necessary paperwork ready including any planning permissions and building consents, so prospective buyers don’t lose interest over any potential complications. Keep the property on the market until the mortgage evaluation has been completed.
Be ready to buy
Faced with a number of offers from prospective buyers, a seller won’t always pick the highest price and instead might be attracted to the one that offers them the quickest sale. This is particularly true if keeping the property on the market is needlessly costing them money.
If you have a short chain and you have your finance sorted, your offer will be more attractive than other prospective buyers who could take months to complete. The ability to be flexible on completion can also be attractive to a seller who is in a chain themselves.
If you do your research before going in with an offer, it is more likely to be accepted.
Talk to the vendor and agents to find out how long the property has been on the market and why the seller is disposing of it. If for example they are relocating because of work, they may be anxious to complete the sale more quickly.
If the property has only just come on the market, an offer is unlikely to be accepted – unless the seller is really looking for a fast sale. Any previous price reductions or failed sales suggest the seller would be more open to a discount.
Selling and buying
If you are both selling and buying, the current mood of discounting in the market could be an opportunity to profit. If your current house is on the market for £100,000 and you plan to purchase for £200,000, a discount of 10% on both your sale and purchase will net you a £10,000 saving.
Look for value
With sales falling through, there are fewer properties on the market and it is more important than ever before to look for value. Don’t assume that a discount means the property was priced fairly to begin with. Look at what other properties in the area have gone for historically, both in the years before the referendum and over the last few weeks.
Don’t rule out buy-to-let
The Government’s changes to stamp duty and mortgage tax relief have made buy-to-let less of an attractive prospect. However, if you’re considering buying multiple properties as a buy-to-let opportunity, you could land a very good deal in the current climate. The biggest discounts that have been reported are on new builds in areas where there is an oversupply, and where a number of properties have been purchased together.
The Help to Buy scheme is due to end this year and new loan to value regulations could make it more difficult for first time buyers to get a foot on the housing ladder. Buyers are also cautious and many are holding off buying because of the uncertainty. Experts believe renting will be more popular, presenting an opportunity for would-be landlords.
The drop in the base rate forecasted will also further hit savers, making buy-to-let again look like a more viable investment opportunity.
Ride it out
Some experts suggest that if you want to sell but can wait, it’s a good idea to hold fire. Summer is historically quiet for the housing market anyway, and by Autumn we may have a better understanding of the future of our country following the Brexit vote.
However, if you’re trading up, waiting does mean you miss out on the possibility of benefiting from a larger discount on your purchase than your sale.