The Alex Goldstein Property Show (Part 13)
In this special one-year anniversary edition of the Alex Goldstein Property show, Alex discusses the next potential scandal in the property world concerning new build homes and leaseholds. He also talks wills, trusts and probate with legal expert Andrew Parascando of Powell Eddison Solicitors, and home insurance with Ian Darnbrook of A1 Insurance Services. In the property hospital this month is a question about staging your home for sale, and Alex shares his top tips on kerbside appeal.
The Alex Goldstein Property Show (Part 13)
Full transcript below:
Alex: Welcome again to the Alex Goldstein Property Show, this very special one-year anniversary edition. We strive to solve your property queries and to put you in the fast lane when it comes to the UK property market. Amazing tips plus industry expert insight, that is what we’re all about. Now if you need that property hit, connect with the Alex Goldstein social media account to get the very best property advice whenever you need it. Now in this months show we are getting the inside track from Andrew Parascondolo from Powell Eddison Solicitors on wills, trusts and probate and demystifying all of that. We also get to grips with insurance industry getting experienced insight from Ian Darnbrook from A1 insurance. Loads to fit in so we’re straight on with it.
Is there another possible scandal brewing in the property world? We are still feeling the effects of the banking and mortgage crisis from 2008, when banks were accused of mis-selling mortgages to people who couldn’t afford them and what do you know the bottom fell out of the property market. As a result, the pendulum has actually swung the other way now with banks being ultra-cautious about mortgage lending, making you jump through hoops just to prove that you can actually afford the mortgage you’re applying for. Now as it happens another scandal is now brewing in the property sector. Some big developers like Taylor Wimpey, Red Row and Bellway are all being accused of mis-selling new-build homes. Buyers have bought these homes as leaseholds with the promise of being able to buy the freehold after two years. Usually at the end of a lease, ownership of the property reverts back to the freeholder, however most people apply to extend the lease many years before it runs out. Until recently most houses were sold as freehold properties, however some of these developers have started selling the new build properties as leasehold then selling the freehold on to investors. Buyers are complaining that they were misled about the opportunity to buy the freehold after two years as unbeknown to them the free hold was sold on to private investors before the two years were up. The homeowners claim that the investors who now own their freeholds are only interested in making profits as they’ve now been subjected to ground rent hikes, additional charges, clauses and restrictions and as they don’t own the freehold their homes are then much more difficult to sell on and they feel trapped by the situation. Now let’s be absolutely clear, on the face of it the developers haven’t actually done anything illegal by selling the freehold on, however the homeowners claimed that their behaviour has been unethical, especially, and here is the key, as many of the buyers used conveyancing solicitors recommended by the developers, who they say failed to draw their attention to the potential for the freehold to be sold on early. This story is bound to get bigger so watch this space. The lesson here is if you’re thinking of buying any property is to make sure you find a very good, independent conveyancing solicitor who will highlight all the pros and cons so that you can make an informed decision and not fall prey to clauses that might come back to bite you later.
It’s great to have Andrew Parascondolo from Powell Eddison Solicitors in Harrogate in the studio with me. Andrew thanks so much for coming in, today we’re just sort of talking through wills, trusts and probate and I think it’s often a misunderstood area of the law and again just to guide people through. The big hot topic at the moment as I see it is why should people make a will? It’s very much out there and being talked about but I don’t think people have got a grasp as to why and what it entails.
Andrew: First of all, thank you Alex for inviting me to your show, very kind of you. Yes, I think it is a very hot topic. The statistics say that around 50% of the population don’t have a will. They still see it as a almost a myth that people think that wills are only supposed to be dealt with by the rich. Certainly not, we do regularly advise clients to make a will, they don’t have to cost lots of money, they can cost a few hundred pounds depending on the type of will. Essentially a will, what it does is it details what happens with your estate after you die. So, things like your money, your personal possessions, properties, what happens to them after you die. Essentially if you don’t leave a will, it’s the law and the laws of intestacy to decide how an estate is dealt with, who deals with it and how its distributed.
Alex: So, its effectively your estate could effectively just get past to the Government if you don’t have a will?
Andrew: Yeah, I mean essentially, it’s not as drastic as that. A lot of people think it is but under the rules of intestacy it goes down the bloodline. So, it would be things like siblings, sons, daughters, partners etc. Mainly wives not partners. The will allows you to decide how your estate is distributed, it’s not the laws of intestacy so as I say because they are literally a few hundred pounds to put together it’s really important for people to make wills and have them regularly updated. We generally say around five to six years to review your wills.
Alex: Yeah, I agree, and the other major buzzword out there is a LPA or a lasting power of attorney and again it’s a phrase thrown around and very much involved in the will sector. Just talk everyone through that, what it means, what it actually entails and why you should actually look at it fairly strongly nowadays?
Andrew: Yeah, I mean in my view I always look at it like this, a will is how to deal with your estate after you die and that deals with things like incorporating step children, you may want to exclude family members, you may want to appoint guardians for young children etc. deal with remarriage, divorce as well as estate planning. Lasting powers of attorney are essentially the way of administering your estate whilst you are alive so that if you are unable to make decisions about your property, your finances, your bills etc. not just because you’ve lost capacity, it may be that you’ve lost mobility and then the lasting power of attorney is a really good way of doing that. A lot of carers essentially have the buzzword of lasting powers of attorney, go and make one its really really important. Now the first thing that I say to a client when making a lasting power of attorney is why do you need it? That’s really why people come and get advice about lasting powers of attorney.
Alex: So, if for example I suddenly get knocked on the head and I’m in a coma or something and I didn’t have a LPA, or something set up in my will how would it then work? How could someone take charge of my financial affairs? Is there a process someone needs to go through? How does it work?
Andrew: Let’s look at it slightly differently. A will deals with your state after death and that only becomes valid when you die. In terms of a lasting power of attorney, that is whilst you are alive, that comes to an end upon your death and that is when the will takes over. So, if for example you were god forbid taken ill or run over by a car and had mobility problems and maybe capacity problems, if your spouse or a family member didn’t have a lasting power of attorney and needed access to your funds they would have problems doing that. It just depends, people have different estates, have different combinations of how they hold their money. They may be joint accounts, they may be single accounts and it’s just really talking to the client and not everyone will need a lasting power of attorney.
Alex: This is a fantastic point Andrew, the phrase LPA, lasting power of attorney, gets thrown around sort of fairly freely actually it’s not necessarily right for all and sundry. You need to speak and talk it through in detail because actually it may not be the right options. How does it work? You hear quite a lot in the news about wills being contested and other family members, I know you slightly joked and said well you know one member of the family has been left out of the will and it all gets into the news, obviously these tend to be very high-profile cases. With your experience and knowledge of the sector, do you find that this is a growing area and what’s the reason for it, has there been a change in the law, or why is that? Or is it just the media?
Andrew: Contested probate has increased in the last 24 months by 2000% and I do think that a lot of it is to with, there is a case that’s just been in the media which is Ilotts Mix and essentially that was a case where by a lady was estranged by her daughter for a period of 20 odd years, she then made a conscious decision to distribute her estate to charities, her daughter contested that and was awarded a amount of money by the judge, she was then not happy with that so appealed it, the appeal judge effectively increased the amount of money that she got and then the charities then appealed to the supreme court, now the supreme court has now ruled the appeal was not correct and has reduced the amount back to the original amount. So, in my view that case really is a case that sits on its own facts. It did attract a lot of attention, it did attract a lot of empathists for contested probates and contested wills, however in my view that is a victory for testimony freedom. At the end of the day people should be allowed to leave their estate how they feel fit as long as they have been properly advised. That’s the problem, we need to make sure that your listeners are properly informed that they need to just sit down with someone, it need not cost them lots of money to sit down and find out what their objectives and someone will weigh up the pros and cons.
Alex: A great insight there Andrew and obviously bolted on the back of this is probate, again a term widely thrown around. Just loosely, just talk everyone around what it is, why it exists and how to actually navigate through it all?
Andrew: I mean essentially probate is the administration of an estate after someone passes away. It is the formal application of the grant of probate if you leave a will. If you don’t leave a will it’s something that is called letters of administration and essentially it is a series of documents that allows you to proceed with the estate. The grant of probate once obtained allows bank account to be closed and the money to be collected, properties to be sold. The one thing that I do want listeners to be aware of, which has not been publicised very much is that the probate fees are just about to increase. I think that will have an impact on how people deal with their estate. There will be estates whereby people try to reduce the risk of this increased tariff by making decisions such as trusts, they may decide to reduce their estate by the use of trusts. It will also put executives in difficult positions simply because they will need to fund this new tariff which in some cases will be really difficult.
Alex: I’ve got to say some amazing insight and some great sort of tips for everyone. If anyone did want to get in touch with yourself or your team at Powell’s to talk through wills or probate trust aspect to talk through their personal circumstances. What is the best way to get in touch?
Andrew: Well thank you for that, it’s my pleasure. If people want to come down and speak with us we offer a free consultation period, it doesn’t cost anything, it’s free of charge, where people sit down with us and we then talk through their objectives. Another thing I would say is we’re no longer on 14 Albert Street, we’ve moved, we’re now at Raglan House on Raglan Street and we are having our official office opening on the 29 March at 5 o’clock, so we invite all of our clients to come and see us, those that can to maybe sit with us and maybe have a drink, a glass of wine or some champagne or some orange juice and to meet the team and the rest of the new team that’s come on board. The telephone number is as it always was so its Harrogate 01423 564551 and the website address or email address is email@example.com and you can visit our website at www.powell-eddison.co.uk
Alex: Andrew, can’t thank you enough, fantastic information there and thanks for coming on.
Andrew: Thank you for inviting me.
Alex: The property hospital is all about me answering your property concerns and demystifying the process. This week I’m answering a question from Lisa who’s got this to say.
Lisa: Hi Alex, I’m putting my house on the market soon and I want to make it look as attractive as possible to buyers. I’ve read that doing things such as having a fresh pot of coffee on the go, baking bread in the oven and the table all set for dinner help, but are they a bit cliched?
Alex: Lisa, thank you and yes, you’re absolutely right all those ideas are a bit dated nowadays and today it’s more about clean lines and less clutter the better. So clear away anything from the room that shouldn’t be there making sure all the surfaces are tidy and dust free. Dirty homes and unpleasant smells will deter your buyers. Clear any used pots from the kitchen and ensure any pet areas are thoroughly cleaned. Empty all your bins of course, have freshly laundered towels in a sparkling bathroom. I do actually know some clients have even bought brand new fluffy towels which they keep solely for house viewings. Also think about your furniture, what are you going to be taking with you. If you’re not going to be taking it, get rid of it and create more space in your home. Then think about lighting, warm ambient lighting will set the room of to its best so ensure key areas are well lit with lamps, downlighters or pendant lighting. The key is to put yourself in the position of the buyer and think about what would put you off and what you would like to see when you look around someone else’s home. I hope this is some help and best of luck with the house sale.
Voiceover: The property hot seat.
Ian: Ian Darnbrook
Ian: A1 Insurance Services Ltd
Voiceover: Years experience?
Ian: 25 years in the business.
Alex: It’s a pleasure to welcome in Ian Darnbrook in the studio today and just to really try to get to grips with dare I say, the insurance industry. Now Ian just talk us through exactly what does an insurance broker do. You hear the term getting thrown around, but I don’t know whether anyone really understands it?
Ian: Right, an insurance broker, we go out there to find the right policy to suit your needs. We deal with over 100 different insurers, so we go to each insurer to find the best policy for you.
Alex: And how do you actually get paid? Am I paying you up front as a search type service? How does it work?
Ian: The premium we quote to you includes a commission we get from the insurance company so the price we quote you is what you pay.
Alex: Sounds an obvious question but for what sort of things do you actually insure at the end of the day?
Ian: We insure most things your house, your cars, collections of cars, businesses, letting properties.
Alex: I dare say it’s the age-old question, why don’t I go on one of those fancy websites money meerkat as they say and go and get a quote, what are the pros and cons of going down that route?
Ian: You can do that, they can be cheaper, you’ve got to watch out for policy conditions and assumptions that they make when you’re doing quotes. If you get it wrong that’s your problem. We check the policy cover to make sure you’re getting the right cover, if you’re doing it yourself you may miss something, that could be higher excesses, we’ve had occasions where they’ve excluded flood cover and we’ve had people who have insured vehicles and have had no theft cover because they haven’t had the right security on the vehicle.
Alex: I guess in those situations the insurer completely backs out and says that’s not my problem and you personally have to settle it?
Alex: And from a insurance quotation point of view, with your experience what are the pitfalls a lot of people can inadvertently fall into and then I suppose live to regret it?
Ian: Probably the main one on household insurance is not insuring the property for rebuild cost. A lot of people will go for the sale value which is incorrect, it should be based on the cost to rebuild, on your contents, what it would cost to replace your contents.
Alex: And just talk everyone through this, rebuild value, what is it and how can you specifically define it because obviously you don’t get paying more than the rebuild or obviously less.
Ian: Normally if you have a survey done by a mortgage company they will give you a rebuild cost, or you can go to a surveyors and they will give you a rebuild cost. There are a lot of policies out there that are bedroom rated and they give you a certain sum insured. For example, AXA Extra they give you up to a million-pound sum insured so if you’ve got a three-bedroomed semi in Harrogate obviously a million pound is more than enough to rebuild that house.
Alex: Are you not then inadvertently overpaying of they’ve got a policy that values you up to a million, but your property is only worth 500 thousand?
Ian: No, I mean you’re not overpaying because its rated on the number of bedrooms, so you could have the same policy for a five-bedroomed house and because they’ve got five bedrooms they will pay a higher premium.
Alex: I’ve got you, and how does it work I suppose conversely on the car insurance side of things I suppose the age old thing especially when your children are growing up, they get in the car and driving licence, and people, don’t know, I suppose this old school mentality try to slightly fudge the issue and get the kids in under the parents car insurance but actually it’s their sons car and he’s actually driving it. How do you actually work through that sort of you ought to potentially?
Ian: You have to be very careful, insurance companies call that fronting basically buying the son or daughter a car insuring in the parent’s name, knowing the son or daughter is the main user. Most insurance that we deal with now, they’ll pick that up and know there’s a problem. Whilst young drivers are learning to drive premiums are not too bad, it’s when they’ve passed the test and they go to get the first car, you could be looking at premiums in excess of £3,000.
Alex: Gosh, and is there any way around that whereby if you put extra people on the policy, is there anything sensible you can do?
Ian: Sometimes if you put the parents on it reduces the cost a little bit. There is a lot of people out there doing telematics which is little black box in the car which does make a difference. Unfortunately, at the moment we have no insurers that can offer that it’s usually only available direct.
Alex: Got it, and what’s the most unusual items that you’ve insured? You’ve been round the block quite a lot, with all due respect and I bet there’s been some interesting items floated your way?
Ian: Yeah, we did insure a tank which was on a vintage policy. We’ve also got a client who’s got a collection of naval memorabilia which includes a letter signed by Lord Nelson.
Alex: And how do you actually value property, obviously go to a specialist?
Ian: Yeah, he got a specialist valuation company for that one. I think it was in the region of £25,000.
Alex: So, if anyone has got a tank on their driveway on indeed a letter from Lord Nelson or indeed a need for straight forward house and contents insurance what’s the best way to reach you guys?
Ian: Best way is to give us a call on 01937 581417 or you can email us which is, best email address is probably firstname.lastname@example.org
Alex: Fantastic Ian, a great insight and some really useful information. Thanks so much for coming on.
Ian: Thank you.
Alex: Don’t ever underestimate the impact of curb side appeal if you want to sell your home. One of the first things potential buyers will see when looking for a new home is that photograph of the front of your house, often in a list of properties that they are scanning on a website or a property app. You need to make your house look as attractive as possible at first glance and it could make the difference between them scrolling right past or stopping for a closer look. Also, many buyers do a drive buy of houses they are interested in before they go and book a viewing so it’s really important that the front of your house is presented at it’s best. So, first thing get rid of the cars, bins and anything else out on the driveway when the photographer comes to shoot the images so that the front of your house looks completely uncluttered. Clean all the windows and window sills at the front and paint all wooden doors with a fresh coat. Make sure the garden is weeded and tidied, hedges are pruned, and weeds pulled up. If you’ve got a doorbell make sure it works and if not either fix it or remove it. These are small things that if done can make a difference between people stopping or simply passing by.
That’s the Alex Goldstein Property Show and yet again some superb top tips and features. If you need expert information, videos and up to the minute property news then head over to the website alexgoldstein.co.uk Alternatively if you require personalised thoughts or 15-year experienced advice on buying or selling your property please get in touch directly. The next episode is out on the 1 May so make sure you tune in to that. Until next time.