WILL VIRTUAL REALITY BE THE FUTURE OF PROPERTY SHOPPING?

While not a new concept, there has been rapid advancement in Virtual Reality (VR) and augmented reality technology, to the point where it could start to have an impact on consumers’ daily lives over the next few years. There is a wide array of applications that VR could have within a variety of sectors such as education, the office environment, medical facilities and of course estate agency.  Although it will still take some time for VR to become available to the majority of consumers, the advancement in the technology through hardware development and computing power has made the integration of VR into real estate business far more possible.

How does virtual reality differ from augmented reality? While augmented reality provides an additional layer of 3D content to the user’s actual surroundings, VR fully submerges the user into a simulated environment. By wearing a headset, the user is transported to another place offering them a 360-degree view of their simulated surroundings.

Regarding estate agency application, it will allow potential applicants to take 360-degree virtual tours of properties for sale or let all over the country without having to travel. Buyers can virtually tour multiple properties in a matter of minutes without leaving the comfort of their own home. The process will reduce the stress of relocating to a new city or even a new country. It will also allow potential buyers to quickly narrow down the field to a few choice homes that they would like to take a second look at in person.

Virtual reality could be an excellent tool for developers. They will be able to give potential buyers a virtual tour of an architectural rendering of a property before it is built. Buyers will be able to view an off-plan property and get an idea of the space and how it works before one brick is laid.

While most people have heard of virtual reality, not everyone has had the privilege of actually experiencing it first-hand. Although the technology is there, it will still be a while before we see everyone shopping for their homes in VR. However, that said, there are already elements of VR that are easily accessible to the general public and already being used within the property sector, such as Google Street View, which allows the user to visit city and suburb streets that they have never actually set foot on. VR headsets are also becoming more commonplace in many households.

What can we expect from virtual reality in the future? According to technology commentators, developments are underway to introduce haptic or kinaesthetic communication to virtual reality. Using forces and sensations the technology will replicate the sense of touch and allow users to see their hands in the virtual world. The user will be able to open doors and cupboards, interacting with their virtual surroundings when viewing a property.  Further developments are also being made to introduce the other senses into the VR world such as smell and taste. The buyer will be able to smell the freshly brewed coffee or baking cookies during the virtual home tour. These introductions can be used to simulate the same emotional response in buyers as they would if used in home staging during a show day.

Even with the advancement in technology and possible application, it remains to be seen whether the virtual world will ever truly rival the actual experience of shopping for a home in person.

INTEREST RATES AMONG THE LOWEST IN HISTORY

While the interest rate increased from 0.25% to 0.5% in November last year, it still at one of its lowest values in history and is highly-favourable for potential homeowners who are trying to get their foot on the housing ladder. While the marginal change in the interest might have some consumers tightening their belts slightly, historically 0.5% is still one of the lowest interest rates the British home buyer has had to endure.

From 1971 until this year the interest rate in the UK has averaged 7.59%, reaching an all-time high of 17% in November 1979 and the record low of 0.25% in August 2016. In July 2007, the official bank interest rate was 5.75%, which means that from that date up until November last year, the bank’s base interest rate had dropped by 5.5%. Even with the 0.25% increase, homeowners who purchased their property with a mortgage within the last decade are paying less for their home now, than they did when they first bought it. Bearing in mind that banks will generally grant mortgages at an interest rate around 2% to 3% above the base rate, on a repayment mortgage of £200,000 over a period of 25 years at 7.75% (base rate of 5.75% plus 2%), the monthly repayment would have been £1,511 with a total repayment of £453,149. The same mortgage at an interest rate of 2.5% (base rate of 0.5% plus 2%) would cost £897 a month with a total repayment of £269,204.

While there are markets such as prime central London, where the majority of home sales are cash buyers, for the most part, prospective homeowners around the country are dependent on mortgages to purchase a property. A low-interest rate will help build consumer confidence and increase their chances of getting into the market. High-interest rates widen the gap for prospective homebuyers to meet the necessary criteria that mortgage lenders require for the applicant to obtain the finance. They also mean that applicants may have to opt for a lower mortgage amount, which could result in them having to choose a smaller home or perhaps one outside of their ideal location. Very often, high-interest rates push lower-income earners out of the market completely.

Another advantage of the current favourable interest rate is there may be some room in  consumer’s budgets to pay extra into their mortgage to reduce the term of the loan and pay the property off faster. This will, however, depend on the lender and their policies and fees with regard to overpayment. Most lenders will allow homeowners to overpay 10% per year if they are still in their introductory fixed, tracker or discount period. Usually, once this period has passed, you will be able to overpay as much as you want, but again this depends on the lender and their policies, so best to clarify beforehand.

At the moment the UK is among the top fifteen countries in the world with the lowest interest rates. While there are talks of the interest rate going up in the future, for the time being, UK citizens should make the most of the current circumstances and place themselves in the best possible position to get into the property market.

 

Value vs Marketability

The first distinction to make when listing a property is the difference between the actual value of the home and its current marketability.  There are numerous elements that determine a home’s value, just as there are aspects that impact a home’s marketability in the current economic environment and phase of the market.

While the value of a property is determined by looking at things such as its type, size, features and configuration, marketability is more about the readiness of the property to be sold. It relates to aspects such as the home’s condition and aesthetic appeal.

Value

The value of a property is largely determined by the supply and demand in the market, along with buyer’s personal preferences. For example, when demand for housing is greater than the supply of properties currently listed on the market, the perceived value increases. The opposite is also true, in that when there are more homes for sale than buyers – home values can stagnate. There is a definite link between property prices and demand – the value of a property is not established by the homeowner, but rather the prospective buyer. Essentially what this means is that value is largely determined by what buyers are prepared to pay in the current market.

It is important to note that while renovations or alterations will affect the price of the property to some degree, it does not always mean that the value of the property will increase. Why is this? If the home is renovated with the view of selling, it is important to be aware of the current trends in the market and what buyers are willing to pay more for. A new kitchen or bathroom upgrade will make the home more attractive to buyers, but will they be willing to pay an increased amount which is equivalent to the cost of the renovation?

Another consideration is over-capitalising. If the improvements to the home are beyond what the value of the area dictates, it will negatively impact the property’s saleability. Why would a buyer want to pay more, when they can get a similar home in the same area for less?

Marketability

Considering that the marketability of a home is largely determined by how ready it is to sell, preparing the home before it is listed will increase its marketability and ensure that it attracts a greater number of potential buyers. Essentially increased marketability can result in a higher price for the property. If a home is clean, neat and well-maintained, it will be far more appealing to prospective buyers. The marketability of the home increases by ensuring that it is in the best condition before it is placed on the market. Although adding a coat of paint and having the garden landscaped won’t necessarily increase the home’s value, it will increase its marketability and make it more appealing to a larger number of potential buyers – even though the actual features of the home have not changed.

Staging the property will also have an impact on its saleability. It is advisable to de-clutter and remove unnecessary items, but keep the home furnished. It can often be more difficult to sell an empty home because it can look bare and it will be potentially difficult for buyers to see themselves living there. An experienced estate agent will be able to provide valuable advice regarding staging the home and making it more appealing during viewings.

While there is a distinction between value and marketability, both aspects should be considered to ensure the maximise potential selling price is achieved.

Find out an estate agent that can help your home stand apart from the crowd in this competitive market.

Spring clean to help sell your home

As the temperatures rise and more buyers venture out to look for homes, the warmer months are the ideal time for would-be sellers to spring clean their home and prepare for listing on the market. There are a few things that homeowners can do to get their property ready for sale and ensure that it stands out from the competition.

Make the first impression count – It takes as little as eight seconds for a buyer to decide whether they like a property or not.  You only have one chance to make a first impression, so make sure it counts in the right way. If a buyer has to choose between two homes within the same price range and area, both offering similar features, then the distinguishing factor will be the look and buyer’s overall first impression of the property.

The first impression of a home is created by the potential buyers’ sensory perception of the property. It will be based on what they see, hear, smell and feel when they first enter the home. All of these elements contribute to and influence the overall feel of the home, which will generate an emotional response. If this experience is positive and results in a favourable impression, it is more likely that the buyer will feel compelled to make an offer.

Get an objective second opinion – Homeowners often have an emotional attachment to their home, which can make it difficult to have an objective view. Because of this, it’s advisable to call in a trusted second opinion about what improvements might need to be made to get the home ready for sale. You might be tempted to avoid input from others, however, an objective second pair of eyes can help you see your home from an outsider’s perspective. Seek out honest opinions that focus on both the home’s good points as well as the bad. If you are worried about possible conflict with friends or family, a trusted estate agent will give their honest and direct opinion about what should be done to make the home more marketable.

Spring cleaning is not just about cleaning – Once the areas of improvement are identified, it is time to put in the work and clean and make the necessary changes to the home. Apart from washing and scrubbing the home, spring cleaning also entails decluttering.

Attention should be paid to every detail in the home, ensuring that even the slightest cracked window pane is replaced. Buyers will be keeping their eyes open for things that are wrong with the home.  Remember that the home is competing with others on the market, so it is imperative that every effort is made to ensure the home is in its best condition.

Allow buyers to picture themselves living there – Make buyers feel as welcome as possible in the home. Potential buyers need the space to be able to view the home at their leisure and be able to visualise themselves living in there. Packing away personal items and photos will make buyers feel more at ease and will help them envisage themselves in the home. It is also best to decorate or paint the home in neutral, muted colours with only a few well-placed items to add interest and warmth. For example, a vase with some fresh flowers or potpourri in the bathroom will aesthetically enhance the home and make it smell good. Home decor magazines are a great resource for tips.

Do away with bad odours – Unpleasant odours will potentially drive buyers away so ensure that the home smells inviting. Traces of food, pets or smoking and other disagreeable odours can kill deals fast. Having the carpets professionally cleaned, for example, will help remove bad smells and will enhance the look of the home.

Ensuring the home is market ready will be a vital element in setting the property apart from others in the neighbourhood and will give you an advantage in today’s competitive real estate market.

Elements to look for in any neighbourhood

Packing up and relocating to another city, or for that matter, another country, is a major undertaking, so it is imperative to do the necessary research and weigh up all the options before making the final decision. Whether it is as big a decision as immigrating or moving across the country, there are essential aspects that should be assessed in every prospective neighbourhood to ensure that you will feel at home.

Transport

Location is of utmost importance in real estate and proximity to reliable public transport can have a positive impact on the appreciation of the home’s value over time. The majority of people spend a fair bit of their day commuting to and from work every day, so it is important to consider the distance from the neighbourhood to the office. Other considerations would include whether there is access to public transportation, service hours, route and stops.

Studies have shown that home values tend to rise faster in areas that are close to bus, train and underground stops. A tube station within 500 metres adds £42,000 to the price of a London house. If the walk to the station is just another 250 metres – the price drops by more than £10,000, and if the station is a mile away, the price premium disappears altogether.

Local businesses

Consider the retailers and businesses that you often frequent, such as the bank, pharmacy, and grocery store. Are these shops conveniently located within proximity to your prospective new home? While a gourmet deli and coffee shop is a great place to meet up with friends, being near to a grocery store that stocks your daily staples is far more practical. Ensure that the businesses are reputable and that their prices are reasonable. Much of the legwork can be minimised by reading online reviews.

Schools

For a family with children or a couple planning to have children in the future, the quality of the schools in the area is an essential element to consider. In fact, even if you don’t plan on having children it is an important consideration because it will have an impact on the home’s potential appreciation in value. Homes close to schools that are highly sought-after will sell for higher prices. According to government research, being near to a top-performing primary school in London can add £38,800 to the average house price. A study by the Department for Education (DfE) has found prices are 8% higher near the best-performing primary schools and 6.8% higher near the best secondary schools.

Amenities

While proximity to amenities is important because it will influence the home’s investment potential, there is another element that relates to the buyer’s personal needs and wants. Someone who rates culture very highly will want to be near to art galleries and theatres, whereas someone who enjoys the nightlife will want to be close to restaurants, pubs, or dance clubs. A sports enthusiast would want to know the distance to the stadiums and athletic arenas in the area. There is also the matter of free entertainment, such as parks, museums and libraries.

Economy

Not the country’s economy, but rather more specific factors that are influencing a certain area, such as a high crime rate. There will be telltale signs if an area is experiencing a financial decline, such as houses in need of attention, rundown parks, littered streets, and businesses closing down. Many people will want to move out of the area, so look for a prevalence of ‘for sale’ signs.

Using these guidelines will assist you to find the right neighbourhood that will meet all your needs, regardless of whether it is in the UK or abroad.

RE/MAX name used in online scam

 

RE/MAX has received reports of an international online rental scam using the RE/MAX name.

The scam begins with an apartment listing on a classifieds or apartment-listing website. After exchanging several emails with the apartment “owner,” the potential tenant receives wire-transfer instructions to transfer rental deposit funds to RE/MAX or a RE/MAX-branded company.

In one instance, the apartment owner used a false name and provided documents such as pictures of the apartment and his passport ID in an attempt to verify his credibility. However, those operating the scam could use other tactics to lend legitimacy to their operation.

If you are approached online by one of these scammers, please do not send money.

RE/MAX brokerages, offices or agents are not involved in these scams. As a general rule, never send money for an apartment you haven’t seen or to a person you haven’t met. If you believe you’ve been involved in a scam involving the RE/MAX name, please report the matter to abuse@remax.net. In addition, contact the apartment-listing website where you found the ad and report the issue.

If you ever have any questions about the legitimacy of a real estate transaction with a business or agent using the RE/MAX name, please call RE/MAX London at +44 (0) 20 3142 7288. You can also email abuse@remax.net to report any suspicious emails, offers or websites that feature the RE/MAX name, RE/MAX logo or RE/MAX Hot Air Balloon logo.

Unfortunately, the criminals behind scam and phishing schemes are skilled at recreating authentic-looking documents and websites. You may be contacted by a scammer posing as an agent on the phone or receive emails from a fraudulent email address. Once again, the best way to check if you have been approached by a scam operative is to contact RE/MAX London at the information listed below.

+44 (0) 20 3142 7288

abuse@remax.net

http://www.remax.co.uk/important–scam-notice

Unpacking Section 24 and how it will impact landlords

In the past, landlords were able to deduct the full cost of their mortgage interest payments on their rental properties before they had to pay tax – this is no longer the case. As of April last year, mortgage, overdraft and loan interest costs cannot be taken into consideration when calculating your taxable rental income.

This is due to the amendment know as Section 24 of the Finance Act (No.2), dubbed as ‘The Tenant Tax’. Changing the Generally Accepted Accounting Principles (GAAP), the amendment will change the way that profit is calculated on rental portfolios in the UK. It applies to all UK resident landlords with residential rental properties situated in any country worldwide, any non-UK resident landlords with residential rental properties in the UK, and any trusts or partnerships with a residential rental portfolio.

Who will be most affected?
Those who will feel the impact of the change the most will be landlords with high-loan-to-value portfolios, who currently have a rental yield of 4% or lower. Essentially what the amendment will do, is push certain landlords into a higher tax bracket despite the fact that their income has not changed or increased. If the landlord is already dealing with a marginal rental yield of below 4%, the result could be that the run into a negative cash flow situation and financial distress.

Landlords who have a buy-to-let mortgage in the 40% to 45% tax brackets will pay more tax, while those in the 20% bracket might pay additional tax if their gross income, which is their rental income inclusive of all other revenue streams is higher than £45,000.

It is important to bear in mind that landlords will be reporting an inflated profit on their tax returns, which could impact their eligibility for child benefit, tax credits and increase any student loan payments.

Gradual implementation
Thankfully the changes will be phased in over a period of four years from 6 April 2017, with the full brunt of the change only fully being felt on 6 April 2020, giving landlords some time to decide whether they wish to remain in the rental game or sell up. By 2020, all finance costs will only be restricted to a 20% tax relief.

What to do next?
Landlords who want to hold onto their rental properties will require cash flow. They will also need to ensure they have a decent buffer so they don’t run into financial difficulty that forces them to sell. Ideally, as the first point of call , speaking to a knowledgeable tax adviser who understands property will be their best bet for successfully navigating the Section 24 road ahead.

For more information regarding Section 24 or ways to reduce the financial impact, contact RE/MAX London at info@remax.co.uk

Could this be the most expensive property in Pimlico?

Possibly the most expensive property per square foot sold in Pimlico may not be what most people expect. Sold by RE/MAX Central in Westminster, the apartment which is located in the Pimlico grid, achieved a selling price of £285,000. That doesn’t sound like a lot at first, but it is when you consider that the property is just 8.8 m2, making it around £32,386 a square metre.

Previously owned by British actor Robert Waite, the apartment’s prime location was ideal for commuting to and from various studio and shooting locations around London’s city centre. Initially listed at £299,999, the property took approximately three months to sell because its size made it unmortgageable. “There were two challenges that we experienced when marketing the property, the first being that it could only be sold to a cash buyer because banks were not prepared to finance the deal. The second challenge was finding a buyer who wanted a property of this size,” says Roger Collings, Manager at RE/MAX Central.

The apartment is situated on the second floor of a period building, built in the 19th century by renowned builder, Thomas Cubitt. While it has just 95 sq ft under roof, it does have a roof terrace measuring approximately 13 m2.

Collings says that the property was bought by a couple who plan to use it as a Pied a Terre. “The price the apartment was sold at highlights the demand for property within prime central London. While the number of transactions has dampened, prime central London is still a sought-after address,” he concludes.

Financial preparation will improve applicant’s chances

For the majority of the population, purchasing a property will be the largest financial investment they will ever make, so it makes sense to give the decision the due diligence it deserves and prepare accordingly. Before applying for a mortgage, you will need to ensure that you have assessed your financial situation and answered a few pertinent questions before approaching your bank for property finance.

What is my credit score?

A favourable credit score and clean credit record is a valuable asset when applying for a mortgage. Applicants can obtain a free copy of their credit report from credit bureaus such as Experian or Equifax to assess their financial position.

Any missed, or slow payments will have a negative impact on your credit score. However, it is also important to be mindful of the less obvious credit infractions such as opening too many accounts, and numerous credit enquiries. All of these things will impair your records and could scare off lenders. Reducing the number credit cards you have and ensuring you are on the electoral roll will both aid in boosting your credit score.

What is my annual income?

As a potential home buyer, the maximum mortgage amount that you can qualify for will be based on your annual income, so be sure to include any bonuses or annual investment returns when making this calculation. Mortgage lenders will require proof of income to quantify the mortgage amount, so you will need a P60 form from your employer and possibly three months’ bank statements and payslips.

How much debt do I have?

Another major consideration that banks take into account when determining the mortgage amount they are willing to grant is the applicant’s amount of disposable income. To increase the disposable income you have available, get rid of or pay down debt as much as possible. Lenders will require you to provide them with all the debt you currently have to work out a debt-to-income ratio, which will be used as a tool to determine your level of affordability. Having a lower debt-to-income ratio will be highly beneficial as it will increase the chance of gaining approval for a higher mortgage amount.

What kind of deposit can I put down?

The more money you can put down as a deposit – the better. A larger deposit means that the bank has to finance a smaller percentage of the purchase price of the home, which mitigates their risk. Another advantage is that bank reserve their best rates for applicants with large deposits, resulting in lower monthly repayments.

What is my employment situation?

Most lenders won’t want to provide finance to someone who is in their probationary period, so if you are thinking of changing jobs, rather stay put until after the application. Also, lenders view an extended length of employment favourably, only providing finance to an applicant who has had stable employment for some time. If you have recently changed jobs, rather wait three to six months before applying for a mortgage.

Lenders also view self-employed people as a higher risk, especially if the business is in its developing stages. Applicants who are self-employed will usually be required to provide their  SA302 form relating to the last three years from HMRC, alternatively their full accounts for the last three years.

What can I afford?

Affording a home is more than just paying the monthly mortgage repayment, other costs need to be considered such as utilities, taxes, insurance and maintenance. Owning a home is a long-term investment that needs to financially sustainable for the term of the loan, so it is advisable to purchase a property that you can comfortably afford. Financial preparation is the key to homeownership readiness and will make the mortgage application process far smoother.

High street vs Online – What’s the difference?

Over the last few years, more and more online property sales models have made an appearance in the market sparking debate as to what is a better option – the online model or a high street agency?  While they are perceived to be two entirely different models, the fact is that all estate agency models have an online presence and advertise on property search portals such as Rightmove, Zoopla, etc.

Essentially, what this means is that being online is not what differentiates the two models, but rather it is the level of service that each model provides.

Rather than saying online or high-street, the differentiating term should be Upfront Fee model versus No Sale, No fee model.  The solely online model fills a gap in the market for owners who wish to sell their property themselves without the additional services that an estate agency provides. Once the property is listed on the respective site, the online agency has fulfilled their contractual obligation to their client regardless if the property sells or not. Clients will not pay commission, but they will pay a fee, irrespective of whether the home sells. In a no sale, no fee agency such as RE/MAX, if the home does not sell, they don’t make a penny.  In fact, they will be out of pocket because they would have spent money on marketing the property. They are incentivized to sell the home for the best possible price, within the shortest possible timeframe, which surely is advantageous to the seller.

There are several additional services that consumers get from RE/MAX that they won’t get from an upfront fee agency.

A full service from start to finish

Clients deal with one agent throughout the process. The property sales process can be complicated, so having an agent who can assist, will make the whole process far smoother.

Open houses

Buying and selling property is emotionally driven, it is not the same as picking a retail item from an online catalogue. Most people want to view a property and get a feel for it before they decide to buy it, an agent helps to facilitate that process.

Offline marketing

A No Sale, No Fee agent will have a network of contacts, experience, and market knowledge to successfully round out their marketing plan to ensure the property is exposed to the right target market.

Key pointers during the process

An agent can introduce trusted advisors to deal with the conveyancing and the financing of the property, provide advice on what to do should the surveyor find any issues with the property, make the move-in process smoother by introducing removal companies and providing valuable information about utility companies.

Negotiation

Good No Sale, No Fee agents are skilled, experienced negotiators, which is valuable when trying to reach a fair price for a property that is either being bought or sold.

All of these aspects enhance the client’s experience and make the process easier. Even in this digital age, a value-added service will remain an intricate part of the industry.