Tag: uk property

Categories
Commercial Advice Residential Advice

What is a Building Reinstatement Cost Assessment (BRCA)?

what is a BRCA

If you own property, no matter what size or for what purpose, you need to ensure you’re insured to the right level should anything happen. This is where we come in. A BRCA refers to a Building Reinstatement Cost Assessment (BRCA), often known just as a Reinstatement Cost Assessment.

Giving your insurers a rebuild figure for your property is not as simple as it may initially sound. If you’re underinsured, you could face a significant shortfall in funds to cover costs in the event of a claim, and if you’re over insured you’ll likely be spending a lot more than needed on insurance premiums. The former is becoming more prevalent in the current market, which has seen significant rises in materials and labour costs, leaving many proper owners at risk.

In fact, recent research has found that 80% of UK properties are under-insured – to put that in context, that’s around 587,000 high net worth homes and commercial property with a total value of £340 billion standing without adequate buildings insurance.

The first thing your insurer will do when you make a claim is check the building is insured for the correct amount. In the event your property is underinsured, many insurance policies will typically revert to what is often referred to as an “averaging” clause.

This generally means the final payout of any claim will be reduced by the degree to which the property was underinsured.

So, if a building would cost £300,000 to rebuild, but is insured for only £150,000 then the insurer consider the property to be 50% underinsured.  This means if you made a claim of £150,000, the insurer would only pay £75,000, 50% of the sum insured.

The activation of averaging clauses is common and many people get caught out. We’ve worked with a number of clients who have received reduced cash settlements. This can be negotiated, however, this method of mitigation is limited in comparison to either having a one-off assessment or request a desktop review to see if there is potential a building is underinsured.

What’s Involved? //

When we conduct a BRCA, we undertake an inspection of your property or properties, and issue you a report with rebuild costs for all of the elements taken into consideration. For example, should a property burn down, we’re not just talking bricks and roof tiles, it’s important to take into consideration costs for clearance of the site, new plans to be drawn up, professional fees, construction and materials costs.

When talking about reinstatement, costs are given to repair, reconstruct or renew assets to an equal, but not better, condition (note: we’re afraid a BRCA won’t estimate the costs to add a swimming pool or a few outbuildings, but will focus on reinstating a like for like property).

Our assessments include visiting site to conduct an inspection and measurements, and issue you with a report you can understand and get the most from. We report on an extensive range of properties of all shapes, sizes and uses, so you can be assured we’ve seen it before and know how to assess the reinstatement value of your property accurately.

Recommendations and Further Advice //

The RICS recommends existing BRCAs are reviewed regularly, generally every 3 years or upon reinsuring, to reflect fluctuations in materials and construction costs, or undertaken at completion or immediately prior to completion of the sale. An existing assessment should also be looked at again and re-issued if changes are made to the building such as extensions or extensive refurbishment.

This will enable us to make sure all your materials and buildings are fully covered under your insurance policy. You don’t want to spend tens of thousands on an extension or refurbishment, only for the reinstatement value to reflect the original building, so keeping on top of and conducting BRCAs every few years are something to factor in to your budget and maintenance plans.

The Fourth Wall Standard

All our surveyors are members of the Royal Institute of Chartered Surveyors (RICS). With our diverse range of services and experience across the residential, commercial and heritage sectors, including: building design, project management and project monitoring, we’re uniquely placed to ensure your building is adequately assessed and insured to the correct amount.

Get in touch ➡️ our online form is here or contact us via reimagine@fourthwallbc.com / 0161 706 1131 / 0114 400 0254.
Categories
Beginners Guide Residential Advice Tips

The House Buying Process

house buying process

After weeks spent scrolling Rightmove and Saturdays spent on house viewings, you’ve finally found a property you LOVE so it’s time to get that offer accepted and move forward with your purchase.

If this is your first home or it’s just been a while since you last sold, we’ve put together a guide to the process of buying a new home to make things a little clearer for you and take some stress away.

  • Search for your new home

Before you begin searching, make sure you’ve saved enough for your deposit, have checked how big a mortgage you can borrow from the bank, and are sure you’ll be able to afford the repayments.

Speaking to a mortgage advisor can really help you understand how much you can borrow, and aid you arranging an agreement in principle from a suitable bank so you understand what price range you can view and how much you can offer.

  • Make your offer and have the house taken off the market

Give as much detail as possible when making your offer. The estate agent will want to know you can definitely afford the offer you’re making, and other factors may be of interest to the seller such as if you’re a first time buyer or if you’re in a chain.

Some agents will do it automatically but others may not so make sure to ask to have the house taken off the market as a condition of your offer. If not, you could end up ‘gazumped’, where another buyer offers more money than you and the seller backs out of your deal.

  • Instruct a conveyancer (solicitor)

Once your offer has been accepted it’s time to instruct a conveyancer and really get the purchase moving. A purchase is typically advised to take 8 weeks but there may be holdups along the way that can make the process longer by a fair few months. We’d advise keeping in regular contact with your solicitor to make sure you know what’s happening and when.

  • Apply for your mortgage

You should already have your mortgage in principle but it’s now time to apply for the real thing. If you’re using a mortgage advisor, they’ll prepare you and ask for the relevant documentation, but if not, ask the bank you’re applying with what you’ll need such as bank statements, pay slips (or accounts if you’re self-employed), identification and proof of deposit.

The bank will very likely carry out a valuation survey at this point, but remember this is not a building survey and will not highlight issues beyond high level observations which might affect the value. The valuation surveyor here is working on behalf of the bank so to get a thorough overview of the property from someone impartial, make sure to instruct a Chartered Building Surveyor.

  • Instruct a building surveyor

Make sure this one is on your list early on. It’s so important to really understand the property you’re buying, this is probably the biggest purchase you’ll ever make. Instruct a Chartered Building Surveyor accredited by the Royal Institution of Chartered Surveyors (RICS) to conduct a homebuyers report or a full building survey. We have a full guide to which survey is best for you here but do get in touch with any questions.

A Chartered Surveyor will be working for you and only you to ensure you fully understand the property you’re buying and any issues it may have. They’ll spend time at the property conducting a visual inspection of all internal and external areas so they can explain any issues and advise on remedial works. We want to support you as much as we can, so we’ll always offer follow up calls to talk any questions through and advise on your next steps.

Our report may also raise additional queries for your solicitor, or may help them when setting out their enquiries for the seller, so it could be beneficial to instruct your surveyor when you’ve instructed your solicitor. Unlike other reports, Fourth Wall’s bespoke building survey reports include an Executive Summary that can be sent straight to your solicitor so they can see the key findings quickly and raise any necessary enquiries.

  • Discuss the findings of your survey and searches with your solicitor and make necessary enquiries to the seller

Your surveyor may suggest some further enquiries for your solicitor to make, such as boundary walls, historical party wall disputes and planning permission. Our bespoke building survey comes with an executive summary that can be sent straight to your solicitor so they can see issues, remedial works and necessary enquiries quickly and clearly.

  • Hire a removal company

It’s time to get packing! With your survey and searches done, start prepping for exchange and completion by contacting some removals companies. The property market is extremely busy so don’t leave this until the last minute!

  • Pay your deposit, exchange contracts and arrange completion

Once you’ve exchanged, you’re legally bound to the purchase so make sure you’re happy with the enquiries and your understanding of the property before you say yes at this point. This is also a good time to look at buildings insurance as you’ll now have responsibility for the property.

  • Complete on your property, pay your solicitor and stamp duty if necessary, and collect your keys

When you exchange contracts all parties will agree a completion day. This is the most exciting part as you count down the days to the move into your brand new home. The less exciting bit is seeing all that money leave your account, but it’s all worth it!

  • Give yourself time to settle in, and then instruct a surveyor or architect if you’re looking to make changes to your new home

You’ve moved in and started unpacking, but now your mind is racing with all the exciting updates you can make to your new home. Give yourself some time to settle in your home and understand what you’d like from the space, and then get in touch so we can help you design your dream home!

Categories
Our thoughts //

Response to Spring budget

There’s definitely some positive news for the property industry in today’s budget, but we believe more could be done to help people get their foot on the property ladder.

The stamp duty holiday on properties up to £500,000 will be extended until the end of June and a holiday on properties up to £250,000 will continue until the end of September, before the usual holiday on properties up to £125,000 resumes in October. If you’re currently in the house buying or selling process, this will hopefully relieve the bottleneck currently experienced as solicitors and agents rushed to get sales done before the end of March. It will also continue to stimulate the housing market, that has been lucky enough to continue operating throughout restrictions.

First time buyers will be helped on the ladder by a new mortgage guarantee enabling them to access 95% mortgages. This is very welcomed, however, demand for homes in the UK continues to outstrip supply and we believe this to be a key issue impacting prices of property, with record prices being seen across the country.

Government should take greater steps to ensure everyone can afford a home, such as:

  • Incentivise SME developers to convert existing stock, such as retail, into affordable residential homes
  • Invest in skills and training to meet current labour shortages in the construction industry
  • Ensure additional funding and resources is made available to Local Authority planning departments so applications can be dealt with quickly and new affordable homes can be built
Categories
Tips

10 Tips for House Viewings

10 tips for house viewing

Have you been spending time scrolling on Rightmove and finally have some viewings booked in? It’s so easy to just glance around a house and like what you see without really looking, so we’ve put together a few tips on what you should do on viewing day…

1. Ask Questions

This may seem simple but so many people don’t actually do it. Make sure you’re asking plenty of questions of the seller and estate agent. Think of what you really want to know to save you a headache in the long run, such as how old the boiler is and when it was last serviced? Are there any rights of way or shared access arrangements with the neighbours? Have the sellers had any work done on the property recently? Have there been any issues with vermin?

2. Get in the roof void or loft

If there’s a ladder there, get in the loft! Have a good look at the beams to check for damp or rot, look for signs of leaks or vermin, and check the roof covering is in a good state of repair from inside. Any staining or wet timbers are a clear sign you need to have things looked at more closely. There’s a lot of hidden clues in the roof void so if you can, make sure you check it out.

3. Look at exterior areas

Don’t just head straight in, step back and take a good look at the property from the outside. Check for any obvious defects that could be costly in the future. Your surveyor will look at these in more detail but it’s always good to be aware of potential issues.

Is the brickwork above the bay window sagging? This might indicate overloading of the window lintel which could lead to the lintel needing to be reinforced or replaced.

Are any roof tiles missing? Many people don’t look at the roof, and we’ve seen a fair few where we’ve had to recommend repair or full replacement, so make sure you’ve had a good look.

Are the boundary walls or fence panels in a good state of repair? So many people don’t look after these to keep them in good condition, so have a look to see if there’s a job you’ll be needing to do there.

4. Check for damp

Keep an eye out for signs of damp in key areas such as corner junctions, ceiling joints and external walls. There could be flaky paint, peeling plaster, water marks or even an obvious smell.

If a room has recently been re-painted, keep in mind that it could be a sign of covering something up.

5. Test water and electric

Turn the taps on and even ask if the vendor or estate agent can turn the shower on to check the flow. Knowing that key services like water are working as they should is essential, and is often overlooked on viewing day. Whilst you’re at it, switch lights on to check the electrics are in order and go have a look at the fuse box to see if it’s a modern consumer unit or not.

6. Keep an eye out for recently decorated areas

Sellers will usually be trying to make the house look as beautiful and inviting as possible to get some good offers, and they may even re-decorate to make the property seem fresh and modern. However, keep in mind which areas have been redecorated and if this could be hiding any issues such as damp or cracking.

7. Keep an eye out for cracking

Hairlines cracks are common as some natural movement occurs in houses, but there are some key areas to look out for cracks. Check by windows and doors, and joins in walls such as where new extensions join to the original building. If there are big cracks or a lot of them, keep in mind that there could be a bigger issue your surveyor will need to check.

8. Check the rooms work for you

Rooms may be staged beautifully but always think if it would work for you. Are the rooms big enough? Is there enough storage space? Are there enough plug sockets and where are they located?

It sounds obvious, but don’t be fooled by staging and really try to imagine yourself living there and bringing in your existing furniture and belongings.

9. Check which way the house faces

We all love some sun, and where the sun rises and sets is important to know if the rooms will work for you. When does the garden get the sun? Which room has the light in the morning and which in the evening? Try to view the house more than once, at a different time of day to see where the light falls.

10. Test windows and doors

Are all the windows and doors working and do they all still have keys? Is the double glazing still in order or is condensation visible between window panes? Do windows and doors have a safety mark? It’s easy to overlook on viewing day but windows and doors are pricey to replace, and if they’ve been kept in good order it could be a sign that the rest of the house has too.

These are just some key pointers that many people miss on viewing day, but to be sure of the condition and structural integrity of your property, always get a Chartered Building Surveyor to conduct a survey – it could save you a lot of time, money and hassle in the long run. Get in touch with us here.

Categories
Our thoughts //

What will happen to stamp duty?

As the Government’s Budget on the 3rd March nears, it’s looking unlikely the stamp duty holiday will be extended for a significant period of time, but after a year of uncertainty for the UK, it’s difficult to predict what will happen in the next few months. Government had said they would not be extending the holiday, but are now considering an extension of 3 months until June, to allow those currently purchasing to complete on their sale. However, if they change their mind it wouldn’t be the first U-turn we’ve seen in recent months…

The implications of not extending the stamp duty holiday are concerning for a lot of people, not least those currently caught in the bottleneck of house sales who would be unlikely to complete before the end of March deadline, with an estimated 70,000 sales agreed in 2020 not expected to make it through before this date. If the holiday did end and these purchases hadn’t gone through in time, there may well be some sales falling through. It also seems a number of people are holding out on sales and purchases through the uncertainty, waiting to see what happens, and they will likely have an impact on the housing market later this year as they decide whether or not to move forward with their purchases.

House prices look to be starting to fall in some areas and, if predictions come true, when stamp duty ends they’ll likely fall more rapidly. This reduction in price is to be expected as the market stabilises following several months of artificial stimulus from the stamp duty holiday causing record highs in property prices across the country. We’ve said previously, however, that the boom in 2020 looks to have been heavily driven by second and multiple home owners and the higher end of the market, where property continues to be seen as a good long-term investment project and whose jobs are less likely to have been hit by lockdown restrictions and redundancies. 

The accessibility of mortgage products has caused some issues for buyers in the past year but, whilst lenders are likely to remain cautious, we would anticipate some loosening of lending criteria as the implications of furlough ending and the vaccine roll out become more apparent and some certainty returns to the housing market with the risk to lenders becoming increasingly more stable and transparent.

The potential of negative interest rates in the coming months may also stimulate the housing market, with traditional savings accounts of little value, banks are encouraging lending through mortgage products, and those with surplus capital seeing property as a solid investment.

Demand continues to outstrip supply due to a long term skills and material shortage in the construction industry, compounded further by Brexit and fluctuations in demand created by changing living patterns during the pandemic, so whilst we face more uncertainty ahead, investors, buyers and those working in the property industry can take some comfort in the historic performance of the housing market and there are indeed scenarios to feel cautiously optimistic about.

Stamp duty explained

Stamp duty rates with the holiday until 31st March 2021

Add 3% if this is not your sole property.

Up to £500,0000%
The next £425,000 (the portion from £500,001 to £925,000)5%
The next £575,000 (the portion from £925,001 to £1.5 million)10%
The remaining amount (the portion above £1.5 million)12%

Stamp duty rates from 1st April (potentially 1st July) 2021

Add 3% if this is not your sole property

If you’re a first time buyer, you pay no stamp duty up to £300,000.

Up to £125,0000%
The next £125,000 (the portion from £125,001 to £250,000)2%
The next £675,000 (the portion from £250,001 to £925,000)5%
The next £575,000 (the portion from £925,001 to £1.5 million)10%
The remaining amount (the portion above £1.5 million)12%

So, for example…

If you buy a house for £625,000 in March 2021 you will pay £6,250 in stamp duty, calculated as follows:

0% on the first £500,000 = £0

5% on the remaining £125,000 = £6,250

If you buy a house for £625,000 in April (potentially July) 2021 you will pay £21,250 in stamp duty, calculated as follows:

0% on the first £125,000 = £0

2% on the next £125,000 = £2,500

5% on the remaining £375,000 = £18,750