Nearly half of homebuyers have attempted to haggle down the price of their property purchase since March.
A survey by online estate agent Strike found that since lockdown began, some 45 per cent of sellers questioned had buyers ask for a reduction in sale prices, most commonly ranging from a 5 per cent to 10 per cent drop.
But despite buyers appetite for a deal, the estate agent’s research suggested that not all sellers are willing to accept a lower offer. While a quarter would consider a reduction between 5 per cent to 10 per cent on asking price, around a third say they wouldn’t accept a lower bid at all.
This means that buyers hoping for money off will need their best negotiating skills, but also that sellers may end up forgoing a sale that could put them in a better position to move by refusing any discount at all.
Some 45 per cent of sellers have been asked for a reduced price by buyers in recent months
Sellers’ refusal to budge reflects the property market experiencing a mini-boom following the lifting of restrictions on moving home and the Chancellor’s recent cut to stamp duty.
Successfully chipping 5 to 10 per cent off a purchase price could save buyers tens of thousands of pounds. A successful reduction of 10 per cent on Nationwide’s average house price of £245,747 would result in a saving of £24,574, while a 5 per cent discount is £12,287.
Unsurprisingly, the area most likely for buyers to ask for a price reduction is London, where 70 per cent of sellers say they’ve been asked to lower their property prices.
The property market in the capital has lagged behind those elsewhere in the lockdown bump upwards in activity.
Meanwhile, buyers in Northern Ireland, the South West, the South East, the West Midlands and Yorkshire are less likely to ask for a cut price.
Of those buyers who would not accept a lower offer, just over half are confident that they can make a sale this year – and almost one in five say they have had more interest in their property than they expected.
Sam Mitchell, chief executive at Strike, said: ‘Now that restrictions have been lifted, property demand is booming.
‘While buyers are always going to try and get a good deal on a property, and who can really blame them for trying, demand is so high that sellers might not feel the need to lower prices in the current market.’
Around one third of sellers say they wouldn’t accept a lower offer on their property
What’s the best way to get a lower offer accepted?
Buying a house can be daunting, whether as a first-time buyer or an experienced mover, especially if you’re not sure of the best way to negotiate on the price.
The property market is bouyant at the moment and estate agents are likely to use this to try to increase the size of your bid.
Remember that your bid should be based on how you value the home and your own finances, not how much interest there is in the property. Ultimately, it’s up to you to decide if a home for sale is at a good price for you – and how much you are willing to pay to secure it.
Nonetheless, not all homes are selling – and many continue to have their asking prices reduced.
Sellers may be more reluctant to take a lower offer at the moment while there are so many house hunters out there, but they will also know that finding a good buyer is not easy.
There are some steps you can take to help your chances of getting a lower offer accepted.
They may not guarantee you will get a property at the bargain price you want, but can help to at least ensure the seller takes your offer seriously.
The first and perhaps most important step is to do your research. You could be missing out on savings if you fail to spot some obvious signs.
Selling your home? Getting the price right doubles your chances
Putting your home up for the right price on the first listing doubles your chances of finding a buyer, an extensive new study has found.
Analysis from Rightmove found that just one third of sellers who listed a property for sale but then had to reduce the asking price found a buyer.
However, two thirds of those who didn’t have to reduce their asking price found a buyer.
Rightmove’s Tim Bannister said: ‘If sellers are serious about selling, then starting with too high an asking price can cause unnecessary delays, and also make it a lot less likely they will actually find a buyer in the end.’
For example, before you put in your offer, it’s a good idea to check how long the house has been on the market – if it’s been up for sale for a while, it could suggest the property is overpriced.
Similarly, if the asking price has dropped since it has been on the market it could indicate the house is struggling to sell and the owner is keen to get moving.
Property listing sites Rightmove and Zoopla’s standard listings show you how long a property has been on the market and if it has been reduced, but not by how much.
You can download a Chrome internet browser add-on called Property Tracker that tracks prices on Rightmove and shows you reductions (and increases) in price.
Look at what else is on the market and what other buyers will be considering and check for listings sold subject to contract. See if you can get agents to tell you how much homes nearby or similar sold for.
Check Rightmove Sold Prices or Zoopla’s house price section for previously sold prices to get a feel of the market. Beware that all homes are different though and comparing like with like is hard.
Be nice to the estate agent
Estate agents act for the seller and buyers should never forget that. Their job is to get a property sold for the best price and some can be more crafty than others to get that price up.
That said, getting an estate agent on your side is one of the keys to getting a good offer accepted. Don’t just hide behind property portals and emails, speak to them on the phone, chat to them at viewings and buid a rapport.
Make it clear to them that you are a good prospect as a buyer. Have a mortgage decision in principle to hand that shows how much a lender would be willing to offer you and that you are ready to act fast on lining up finance. Get proof of your deposit and if you have a sale agreed on your current property, make sure they know that.
Don’t mess about making your offer with the agent. Lay it all out, offer to provide evidence to back up your finances and position and explain why you want the house. The more you can sell yourself to the seller, the better the chance of having an offer accepted.
You should also find out if the property is being marketed by more than one estate agency. If so, the agent you’re viewing through may encourage the seller to accept a lower offer, so as to secure the commission ahead of the other agent
Best mortgage rates and how to find them with This is Money’s help
This is Money has partnered with L&C Mortgages, a firm of independent mortgage brokers who specialise in finding the best mortgage rates and the right deal for you.
To check for the best mortgage deal and speak to an adviser, click here.
Or you can fill in your details online to find out the best mortgage rates for you.
How to negotiate
The next step is to plan out your negotiating tactics. Do you put in a high offer first in order to secure a deal fast, or start with a low offer and try to save some money at the risk of somebody else beating you to the property?
Remember you can always negotiate up, but you can’t negotiate down.
Don’t worry too much about upsetting sellers with a low offer, but test the waters with the estate agent first. They will probably say the seller won’t accept it, but you should be able to work out if it would prove so offensive that the seller would bar you from ever offering more (this is highly unlikely to happen).
If you do go for a lower bid, buying agent Henry Pryor says it helps your chances if you can prove to the buyer that you’re able to follow through on your offer.
He said: ‘You’d be amazed how many people go house-hunting without the ability to buy something.
Buying agent Henry Pryor gives his tips
‘If you’re expecting to make what might be seen to be a disappointing or possibly even a derisory offer it’s vital that you make up for it by at least looking like you could deliver on it.
‘Make sure you have a solicitor who will act for you. They will need to check your circumstances before agreeing to act on your behalf, something that can take time.
‘Get your deposit together so that you can show a screen grab of the money in a bank account.
‘Then, get confirmation that you can get a mortgage either with an “agreement in principle” or confirmation from your mortgage broker that you are good for the money. If you plan to have a building survey done, then find a surveyor who will do it.
‘The owner needs a reason they should consider accepting less than they had hoped for and the agent wants to be confident that if they agree a deal with you the deal is likely to go through.’
If you’re flexible on the completion date it may also boost your chances of having a lower offer accepted.
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How far ahead do you need to plan retirement? W
One in three older people leave retirement planning until two years before stopping work or don’t prepare at all, though experts believe you should start getting your finances in order in your 50s.
More than half of people who have recently retired would also warn the next generation to do more planning, to save harder now and to consider carefully how you access pension pots, according to new research.
Covid-19 and the economic downturn make it more important than ever to plan ahead, according to the Government’s free Money and Pensions Service which surveyed 2,000 people aged 50-70 about their pensions.
Looking ahead: More than half of people who have recently retired would warn the next generation to do more planning
MAPS suggests five key steps to get started early on, plus a final checklist of what to do in the last couple of years before retirement below.
This is Money has a guide to what to do at the 55, 65 and 75 age milestones to make your retirement comfortable here, and see below for how to sort out your pension if you fear it is falling short.
There are more than over 16million 50-70 year-olds in the UK and three quarters of them have some form of retirement savings outside of the state pension, according to official statistics.
But more than a third of over-50s leave retirement finance planning late or won’t plan at all, and only 7 per cent feel fully prepared, the MAPS research found.
When it asked about the Covid-19 pandemic, 36 per cent of 50 to 70-year-olds said their finances had been affected, and 18 per cent had decided to delay tapping their pensions.
What do retirees recommend younger generations do?
MAPS surveyed more than 700 people who are part or fully retired about what advice they would give people born between 1965 and 1980 about their finances.
1. Save more towards your retirement (60 per cent)
2. Start planning retirement finances earlier (56 per cent)
3. Take time to decide on how you will access your savings pots (45 per cent)
4. Find out more on how to make the most of your pensions (44 per cent)
5. Seek guidance on how to best organise your retirement finances (41 per cent)
Some 14 per cent are accessing their pensions sooner, mostly to bolster their own day-to-day finances but some to support family members and friends.
MAPS notes that 2020 will see some 940,000 people, the highest in nearly two decades, reach the age of 55.
This is when you can first access your pension savings without facing a punitive tax bill.
What early planning for retirement should you do?
MAPs suggests taking the following five steps to prepare your finances.
1. Track down your pension pots and check their value
With the average person having 11 jobs in their lifetime, it’s easy to lose track of any pensions you may have had in the past.
If you think you’ve lost a workplace pension, the first port of call should be your former employer, or you can contact the provider if you remember the name.
If you can’t find details of either, you can contact the government’s Pensions Tracing Service.
Once you’ve tracked down your pots, you can check your statements or ask your scheme or provider for an up to date valuation of how much you have saved.
2. Think about your living costs in retirement
Draw up a budget for your expected income and spending as early as possible to give yourself a greater sense of control over your situation.
The Money Advice Service has a free budget planner tool to help you plot this out.
3. Think about what age you’d like to retire and to access savings.
For some people, this may not necessarily be at the same time.
Some people may have already chosen a retirement age with their provider, but if your circumstances have changed and you plan to retire earlier or later, you may wish to reconsider how your savings are being managed to ensure your money is working hard for you.
It’s helpful to also check your retirement income using the Money Advice Service’s pension calculator if you’re going through any changes.
Carolyn Jones: Given over a third of over-50s have had finances affected by Covid-19 and we’re facing a recession, people should not delay or skip planning retirement finances
4. Consider if your spouse or family need to be factored into your plans.
If you wish to provide for family members with your pension savings, this could impact the choices available to you when it comes to accessing your money.
5. Make a free Pension Wise appointment.
Available to people aged 50 and over, specialists will explain the pros and cons of the options for accessing your pension savings, the tax implications, how to shop around to get the best deal, and how to avoid pension scams.
Telephone appointments are available on 0800 138 3944 and the website is here.
What should you do in the run-up to retirement?
MAPS recommends doing the following in the last two years before retirement.
1. Work out your likely retirement income
– Trace any lost pensions
– Find out how much you might get from your defined contribution pension – check your annual statement or ask your providers for a new one to see how much savings you have built up.
– Get a state pension statement here.
– Check what other savings and investments you could use towards your retirement
STEVE WEBB ANSWERS YOUR PENSION QUESTIONS
2. Draw up a budget to calculate your costs in retirement
– Look at where your income comes from and how you spend it
– Think about what changes you might need to make to live comfortably
3. Don’t take risks with the pension savings you’ve built up
– Avoid pension scammers by being suspicious of any unsolicited contact about your pension
– Check who you are dealing with and don’t be rushed into making any decisions
4. Decide when to start taking your pension
– Check with your pension scheme provider when you said you wanted to start taking your pension and if this is still what you want to do
– Think about how you want to take money from your pension, if it’s a defined contribution pension scheme. (Read a This is Money guide to your choices here.)
Carolyn Jones, head of pensions policy and strategy at Money and Pensions Service, says there is no set date for when people should start planning retirement though your 50s are a perfect time.
But she notes: ‘The earlier you do it the easier it will be to bridge any gaps, and the more likely you are to feel prepared and comfortable in retirement.’
Regarding the current coronavirus crisis, she adds: ‘Given over a third of over-50s have had their finances affected by Covid-19 and we’re now facing a recession, we’re urging people not to delay or skip planning their retirement finances – whether you’re thinking of retiring later or bringing it forward.
‘Your pension is likely to be one of the most valuable assets you hold so it’s really important to start planning early to make sure you make the best choices based on your circumstances.’
Jones goes on: People who have had an appointment with our Pension Wise specialists feel more confident, informed and prepared when it comes to how they will access their pension savings.
‘In 2019/20, more than half of appointment customers said that getting guidance either changed how they accessed their pension, or how they intend to do so.’
How to sort out your pension if you fear it’s falling short
If you are worried about your pension and whether you will have enough, read a full 10-step guide to sorting it out here.
To get started, investigate your existing pensions. Broadly speaking, you need to ask schemes the following:
– The current fund value
– The current transfer value – because there might be a penalty to move
– Whether the pension is in a final salary or defined contribution scheme
– If there are any guarantees – for instance, a guaranteed annuity rate – and if you would lose them if you moved the fund
– The pension projection at retirement age.
You can use a pension calculator to see if you have enough – find This is Money’s here.
You should add the forecast figures to what you anticipate getting in state pension, which is currently around £9,100 a year if you have a full National Insurance record.
Get a state pension forecast here.
If you are tempted to merge your old pensions, check out some tips on how to decide here.
If you have lost track of old pensions, the Government’s free tracing service is here.
Take care if you do an online search for the Pension Tracing Service as many companies using similar names will pop up in the results.
These will also offer to look for your pension, but try to charge or flog you other services, and could be fraudulent.
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Is it worth joining my firm’s salary sacrifice scheme at age 62?
My company is in the process of starting salary pension exchange.
I am 63 in December. Is it worth me joining as I have been told it could affect my state pension which I will get when I am 66. Also the works pension finishes at 65.
SCROLL DOWN TO FIND OUT HOW TO ASK STEVE YOUR PENSION QUESTION
Pension dilemma: Is it worth joining my firm’s salary sacrifice scheme at age 62? (Stock image)
Steve Webb replies: Growing numbers of workers are covered by an arrangement known as ‘salary exchange’ or ‘salary sacrifice’.
This relates to the way in which their works pension contributions are paid. In many cases this can be to their financial advantage, but you are wise to check for pitfalls.
To understand how salary exchange works, it is worth thinking about what normally happens when your employer pays you a wage.
National Insurance contributions are payable on your wages by both you and your employer.
Steve Webb: Find out how to ask the former Pensions Minister a question about your retirement savings in the box below
The rate for employees (provided they earn above £183 per week) is 12 per cent and for the rate for employers (provided the wage is more than £169 per week) is 13.8 per cent.
The NI rate falls to 2 per cent for higher earning employees on £962 or more a week, although the employer rate remains at 13.8 per cent,
This means that for every pound a lower or middle earner makes, more than 25p is going to the government in NI contributions.
Now consider what happens when your employer pays money directly into your pension.
You never get this money as wages so there is no employee NI contributions payable. And the employer doesn’t have to pay any employer NI contributions either.
The reason all of this matters is that when you make *employee* contributions into your pension, you do this out of wages on which both employer and employee NI contributions have already been paid.
If you could get that money into your pension without ever being paid it as a wage, you and your employer could save a lot of NI contributions, though it’s not so beneficial for higher earners.
The way that salary exchange works is that it is a deal between you and your employer. You agree to exchange (or ‘sacrifice’) part of your salary and they agree to put extra money into a pension on your behalf instead of you contributing yourself.
You save employee NICs because your salary is lower and your employer saves employer NI contributions for the same reason.
This saving can then be shared between both parties. As a result you could end up with more money going in to your pension at no extra cost.
Even though you are relatively close to retirement, there is no reason in principle why this sort of arrangement would not be attractive.
STEVE WEBB ANSWERS YOUR PENSION QUESTIONS
You would still reduce your NI contributions bill and/or get more money into your pension at no cost to yourself, though not by as much if you are a higher earner.
In the past, one reason why you might have thought twice about this arrangement would be because of potential knock-on effects on your state pension.
Prior to April 2016, part of the state pension was built up on an earnings-related basis. This meant anything which lowered your earnings would have lowered your state pension.
But since 2016 you build up state pension at a flat rate. So as long as salary exchange doesn’t take you below the floor for NI contributions (£120 per week) then you don’t need to worry about this.
There are a few other things to be aware of, but mostly relatively minor. These relate to anything where the amount you get relates to your level of pay and where you might get less if you accept reduced pay.
I’m assuming that you are in a modern ‘pot of money’ (defined contribution) pension arrangement rather than a salary-related (defined benefit) pension.
But if your company pension is salary-related you should ask if your works pension would be based on the original wage or the reduced wage level.
Similarly, before you sign up to salary exchange you should ask if any redundancy pay you might get if you were made redundant would be linked to your original salary or your reduced one?
Likewise, perhaps for your younger colleagues, they would want to check if maternity or paternity pay would be linked to the higher or lower pay figure.
Your younger colleagues should also think about whether a lower pay level might affect how much money a mortgage lender would be willing to lend them.
In most cases, however, provided that your employer is fairly sharing the benefits of salary exchange with you, then it is likely to be well worth considering, even for a couple of years.
Ask Steve Webb a pension question
Former Pensions Minister Steve Webb is This Is Money’s Agony Uncle.
He is ready to answer your questions, whether you are still saving, in the process of stopping work, or juggling your finances in retirement.
Steve left the Department of Work and Pensions after the May 2015 election. He is now a partner at actuary and consulting firm Lane Clark & Peacock.
If you would like to ask Steve a question about pensions, please email him at firstname.lastname@example.org.
Steve will do his best to reply to your message in a forthcoming column, but he won’t be able to answer everyone or correspond privately with readers. Nothing in his replies constitutes regulated financial advice. Published questions are sometimes edited for brevity or other reasons.
Please include a daytime contact number with your message – this will be kept confidential and not used for marketing purposes.
If Steve is unable to answer your question, you can also contact The Pensions Advisory Service, a Government-backed organisation which gives free help to the public. TPAS can be found here and its number is 0800 011 3797.
Steve receives many questions about state pension forecasts and COPE – the Contracted Out Pension Equivalent. If you are writing to Steve on this topic, he responds to a typical reader question here. It includes links to Steve’s several earlier columns about state pension forecasts and contracting out, which might be helpful.
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Recovery in UK tourism outpaced global average last month
Recovery in the UK’s tourism and recreation industry outpaced the global average last month, Lloyds Bank has found.
Activity in 13 of the 14 UK sectors tracked by Lloyds picked up faster than the international benchmark.
Boost: Activity in 13 of the 14 UK sectors tracked by Lloyds picked up faster than the international benchmark
But there are fears that the UK’s recovery could stall this month, amid fears of a second wave, the new ‘rule of six’ and the end of the Eat Out to Help Out scheme which boosted restaurants in August.
Jeavon Lolay, from Lloyds Bank Commercial Banking, said: ‘Other European countries have already experienced a slowdown as they navigate further outbreaks of Covid-19 and additional measures to stop the pandemic’s spread.’
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