Second Homes Are Rare – So Make Yours Perfect

By September 10, 2019 No Comments

Most people wait years till they can raise enough money to get on the property ladder. However, once they have keys to their own house, they might not anticipate how difficult it could be to purchase their next home.

In fact, while there were 173,790 first-time buyers (FTBs) during the first half of 2019, there were only 160,540 homemovers, according to recent research by Lloyds Bank. This was predominantly due to the steep deposits required for a second property as well as high stamp duty costs.

That is why homeowners might be more inclined to improve the house they already own, whether by adding an extension to the property to make it bigger or by improving the quality of its features and fixtures, such as with sash windows in Oxfordshire, in order to make it future-proof.

Alternatively, some homeowners who recognise there is a lack of supply for second homes on the market might be considering putting theirs up for sale. As so few people are thinking of moving at the moment, those who do try to sell might find they have quite a large target audience interested in their property.

To find out more, read on.

 

– Difficulty climbing property ladder

Lloyds Bank’s findings showed the average amount of money paid by homemovers has increased by £79,627 over the last five years, rising by almost a third (32 per cent). This takes the typical price for a second-stepper to £329,648, which is out of reach for many Brits.

These expensive house prices means deposits tend to be more than £100,000, having risen by 22 per cent since 2014 when it was £86,398.

Unsurprisingly, those living in London have the worst deal, with ‘next’ houses typically costing £650,510, which is almost double the national average. In addition to this, the deposit required is £213,907 on average, representing a growth of 26 per cent over the last five years.

“The slow rate of homemovers is a reflection of growing deposits, higher stamp duty charges and potential interest rate rises,” Andrew Bickers, mortgages director at Lloyds Bank, stated.

 

– Rising cost of moving

Indeed, Lloyds Bank revealed the cost of moving has increased by four per cent in the last year alone, with the south-east having experienced the highest growth rate over the last five years of 43 per cent. This is followed by East Anglia (41 per cent), Greater London (37 per cent), and the north-west and East Midlands, which both witnessed an increase in moving costs of 36 per cent.

 

– Rising house prices

As well as the increasing cost of moving, house prices have also been on the rise recently. According to the latest House Price Index from HM Land Registry, UK property values grew by 1.2 per cent between May 2018 and May 2019.

This took the national average price of a home to £229,431, rising from £226,671 the year before. While this is only an increase of just under £3,000, it still adds to the overall moving cost for second-steppers, and could put them off climbing the property ladder even more.

 

– FTBs vs second-steppers

While first-time buyers who want to desperately get on the property ladder have no choice but to accept these price rises, those who already have their own homes are likely to be deterred from moving.

This could explain why FTBs are increasing, with Lloyds Bank’s statistics showing the number has risen by five per cent from the first half of 2018 to the same period in 2019.

In comparison, the number of homemovers only rose by one per cent (810) during this time. However, this still represents the first increase in the number of second-steppers in three years, showing there has been a positive movement in the property market regardless of steep costs.

 

– Take advantage of demand

With this in mind, homeowners looking to make some money might be interested in selling their property to these second-steppers. Indeed, though slightly more people are taking the leap in moving out of their first house or flat to purchase their forever home these days, they might find there is not a lot of choice available if homeowners are not willing to move themselves.

Lloyds Bank’s Mr Bickers stated: “The perfect ‘next’ homes are also becoming less available, such [as] those with an extra bedroom and outdoor space – which is all in the mix when it comes to the number of movers we are seeing.”

Though some people can expand their properties, this is not always the case for everyone. For instance, those living in flats, maisonettes or terraced houses will be unable to add extensions on, and therefore will only be able to gain more space where they live by finding another home.

Similarly, while some property owners could expand their property, they may not be able to change its location, add a driveway, build a garden or fit a garage in. These are typically things second-steppers want from a bigger house and they can be difficult to attain when staying in the first property they bought.

Therefore, homeowners who are themselves looking to move could attract a lot of interest in their home if they put it on the market, as there is currently an undersupply of good-quality second houses available to buy in Britain.

 

– Improve rather than move

While the number of homemovers has increased lately, there are still significantly fewer second-steppers than FTBs active in the property market.

Deterred by the expensive costs of stamp duty, solicitor’s fees, rising house prices, and deposit requirements, many homeowners are choosing instead to improve their asset rather than move.

Unless they need to relocate to be closer to schools, because they have a new job, or they want more outdoor space, lots of people are trying to create their perfect home in their current residence.

Figures from Yorkshire Building Society from earlier this year reflect this, showing a 12 per cent rise in the number of homeowners requesting additional borrowing in 2018 compared with the year before.

Moneynet.co.uk reported that homeowners are increasingly considering remortgaging instead of moving home, with the bank’s mortgage manager Janice Barber saying Brexit has caused the property market to be particularly unstable this year.

“It’s perhaps not surprising that we’re seeing homeowners borrow more on their mortgage or remortgage to raise funds for home improvements as people look to improve rather than move while Brexit is still uncertain and the housing market cools,” she stated.

Ms Barber added many homeowners are either taking out personal loans or credit cards, or remortgaing their property to renovate their house either because they are planning to stay in it longer than they anticipated or to add value to the home when they do come to sell it.

 

– What home improvements to make 

Homeowners who want to make their property more attractive to buyers or to turn their first home into their ‘forever home’ may want to consider several important renovations to improve their residence.

Aesthetic changes, such as re-painting and updating fixtures will certainly make the home look more appealing. However, improving the structure of the house is what will make it last longer.

For instance, one of the best things to do to add years to your home is to replace all the windows. This will boost the energy efficiency of the house, help keep the property warmer during winter, and reduce dampness, which can cause damage to other areas of the dwelling and put off homebuyers, either now or in the future.