2016 - the year 'the market decides'

2016 - the year 'the market decides'

So, welcome to a new year. To my mind, 2016 begins (as all new years should) with a large dollop of positivity about what the next 12 months will bring and a fired-up commitment to make it the very best year for your own business.

However, and here’s the rub, market forces will go a long way to determining how the next 12 months will unfold. Sometimes, you simply have to roll with the punches and react to what is happening, cutting your cloth accordingly and any other clichés you might care to mention.

In the housing and mortgage market, 2016 in particular looks set to be a year when ‘the market decides’ and, because of this, there is perhaps unsurprisingly a degree of trepidation about what comes next. This is certainly true in the mortgage market where a series of planned changes will have an impact on the ability of your clients to secure mortgage finance. I realise that this is true of any other year, but there are potentially some sizeable obstacles to overcome.

Take for instance, from a regulatory point of view, the introduction of the European Mortgage Credit Directive (MCD) in March, which is going to change the playing field in a number of areas. Firstly, lenders and advisers have to plan and prepare to implement the Directive and this takes time, money, effort and resource. One would hope it won’t impact on the ability of lenders to issue loans but it may well do.

Plus, of course it will usher in full FCA regulation of second-charge mortgages for the first time, and this again will have an impact particularly, I suspect, in terms of remortgaging, raising finance on existing properties, etc and whether that should be via a straight remortgage or via a second charge, unsecured loan, or further advance. Brokers in particular, who may well never have offered secured charge mortgages before will need to make a decision about how they consider them – something they’ve not had to do in the past. Those in the second-charge market appear to be cock-a-hoop about these changes because they effectively put them on a level-playing field with firsts for the (if you’ll pardon the pun) first time.


March of course is going to be a big month for the market. Between Christmas and New Year the Government issued its consultation on those who may not be required to pay the extra 3% stamp duty charge for a purchase of an additional property, not a main residence. At present, without seeing the final rules, it does look like landlords who have less than 15 properties currently (either personally or in a limited company), or are going to purchase less than 15 properties in one go, will need to pay the extra costs post-1st April.

It’s perhaps why you might have seen a surge in buyer interest from landlords ever since the start of December as landlords seek to beat the stamp duty increase deadline. There are of course many reasons why the deadline will simply be a bridge too far for certain purchasers – notably the length of any given property chain, but also the fact that some conveyancers may not be able to complete the transaction in time, or those needing finance to purchase may hit the buffers in terms of the timescale required from their chosen lender.

It’s incredibly important therefore that agents work closely with their landlord clients on this, because we may be just a week or two away from a point where a pre-31st March completion is not possible. This may impact on the decision of the purchaser to go through with buying a property, which may well have a knock-on impact on other chains and other clients and could cause some serious issues if that potential buyer does decided not to pay the extra stamp duty and pulls out. Agents will undoubtedly have to work closely with the client, conveyancer, adviser, possibly lender, in order to get the arrangements as spot on as they can. It could be a very uncertain period for all concerned.

So, while we look at the year ahead with optimism, there are some early bumps in the road which you may currently be unaware of which could have a major effect on what you do this year. The first battle is being forewarned and forearmed, the next will be how you react to those challenges and hopefully from this you will be able to formulate a plan of action that means you end the year in the winners’ enclosure.

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brandonlee10
brandonlee10 24 Jul 2017

The financial ramifications of the triggering of Article 50, the starting gun for Britain's departure from the EU, are far from clear. Buyers will be most cautious in London, given that buying a home in...

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IrisJ.
IrisJ. 19 Jul 2017

Great advice, but may I also add that when buying an already built home, make sure you do all of the proper inspections. Most importantly pest inspection because people tend to get surprised when they

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IrisJ.
IrisJ. 17 Jul 2017

The third point is, in my opinion, the most important one. People have become too inconsiderate and careless when it comes to rented properties. If a landlord wants to protect their property, regular visits...

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cornishalan
cornishalan 10 Jul 2017

Added to the cost of purchasing these village properties are the above average maintenance costs. Particularly where the property is a listed building or requires specialist building skills such as thatching...

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Jo Mullett
Jo Mullett 07 Jul 2017

Here in Swansea, known as the Japanese knotweed capital of the UK, it never fails to amazes me that people have no idea of the potential problems this invasive non-native plant can cause when buying or...

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NathanG
NathanG 05 Jul 2017

McDonalds, for example, have been purchasing their real estate on prime locations for years. If something happens to the company they'll have invaluable assets that will be able to save them. We might

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Jonah
Jonah 04 Jul 2017

Graham: surprised to see you cite the "extra tax liability" as capping out at ?560. It doesn't - the extra tax is exponential, as it is levied on the income (i.e the inflating level of rental income you...

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Dianne Griffen
Dianne Griffen 29 Jun 2017

Be very wary of anyone bringing you deals that they have ?found? and want to ?sell on to you? or ?joint venture? with you on ? you need a proper legal contract for this, involve a RICs surveyor to confirm...

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jason hadzikostas
jason hadzikostas 28 Jun 2017

The most important thing is a budget. Students have to manage their spendings in food, house maintenance, books and many other things. According to me, student Studios are the perfect option for them as...

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SecomTech
SecomTech 22 Jun 2017

AT Last...This was discussed years ago and there was a move towards landlords registering their bad tenants on a database..(can't remember where) It seems a logical step though our leaders will probably...

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Bertrand
Bertrand 02 Jun 2017

How about the Welsh Govt introducing a scheme to protect landlords against "rogue" tenants who are then taken to court for criminal damage to the properties they trash. Pretty unlikely I suspect and politically...

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AmberMorris
AmberMorris 25 May 2017

"Please don't pick a novelty tune-playing doorbell. They're not 'fun'. They're stupid." Laughed a lot to this. It's actually true, though.

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