How the decades long desire to be close to others vanished overnight.
For the last 30 years, as the population aged, the quest for an isolated home devoid of shops and transport, became less and less. The urge to buy in cities and towns was overwhelming. No need for a car or even a garden where elderly residents could rely on public transport and a park. Not anymore.
The last two months has shaken the priorities of us all. How we live and where we live. Most will not have the spare funds to buy a second home as a rural retreat, and if we did, there may be local resentment to contend with. Many potential sellers had put off the idea of moving “out to the country” for several years but the last ten weeks has been an unprecedented time and an apparent tipping point. Estate agents report widely that Londoners are heading for the exit in order to find a new life and that all important “home office.”
What does this mean for those living in London who wish to remain and those who decide to take the plunge and move out? The London market has been in decline since 2014 and you can expect that trend to continue as supply increases. Greater choice for buyers while prices drop marginally in the short term. Good time to buy while the gap between London and the rest of the country continues to close. However, don’t expect that unmodernised house to be a bargain. They rarely are and will sell quickly regardless of market conditions.
For those moving out, there is a sharper learning curve. First, there is little point looking until you have sold (exchanged) where London property may no longer fly off the shelf. There are various inter-related factors affecting the country market which are rarely thought of when buying in London. Seasonal variations, topography, new transport routes and housing developments nearby are a few examples. Welcome to “NIMBYism”. One aspect, when buying in the country, which does not attract the attention it deserves is the plot. The plot size and shape can be just as important as the house itself and many Londoners fail to grasp this crucial distinction. Unless you control (aka own) the land immediately around your property you are likely to end up at countless parish council meetings complaining of what your neighbours wish to do on their land. If you have the opportunity to buy extra land to insulate yourself from hidden eyesores and ugly development, do so. The pressure to build on green fields will not go away so best to be prepared for it.
Hanslips helps buyers get it right first time. Moving is expensive and no one wants to move twice having discovered, all too late, those hidden pitfalls.
Robert Crampton’s Times article today focuses on Major-General Paul Nanson’s book, Stand up Straight: 10 Life lessons from the Royal Military Academy Sandhurst. Nanson explains how a military routine can help us all reach our potential. While we may all laugh at hospital corners and shiny shoes, Nanson believes that the realisation of our full potential often begins with meticulous repetitive attention to detail to apparently inconsequential details, such as sock folding. With this in mind I doubt if General Nanson would approve of any residential property buyer walking into an estate agency without the means to buy, just in the same way we would not stand on parade without clean shoes and an ironed uniform.
What wise words might Nanson provide buyers in the UK property market? It is likely to be more a case of Preparation, Preparation, Preparation. Do your window shopping now, get up to speed with what is correctly priced and what is not, limit your geographical search, have the finance and solicitor in place (with proof in writing of both), so that should a desirable property appear you are able to agree favourable terms and exchange quickly. Despite the sluggish market, the best properties often sell quickly and do not even appear on the open market.
Hanslips is in an ideal position to help clients with this attention to detail and thereby improve a buyer’s chance of a successful purchase. I would hope that even General Nanson would approve.
Brexit appears to many like a bad smell that just won’t go away. You’ve opened the windows, checked your shoes, but it’s still there. But while the malaise continues, so will buying opportunities.
This September and October could prove the ideal time to pick a bargain. Don’t be deceived, however, as Hanslips has been involved in two sealed bids in the last two weeks. Where reasonably priced property does appear, expect interest and competition.
Hanslips is perfectly positioned to provide expert advice to clients not only in agreeing favourable terms on a property bargain but also how to compete to best advantage when up against other interested parties.
Let’s try to ignore Mark Carney’s latest comments and wind the clock back to mid-August when Boris Johnson had his letter on the Housing Crisis printed in the Times. His main gripe appears to be with developers. He names Persimmon Homes as a principal culprit in “not building homes to an acceptable standard and generally refusing to repair basic faults.” He points to affordability and poor supply as the basic reasons to the Housing Crisis and cites a number of solutions which includes freeing up brownfield sites, reform of stamp duty, scrapping affordable housing quotas, and freeing up land being hogged by developers who are “treating their buyers like serfs”. His main bugbear are the developers.
Boris’s first criticism of developers, in not building homes satisfactorily, is fundamentally flawed. Developers are sellers like any other seller and so buyers have the same “rights” against a developer as they have against anyone else selling a home. Buyers are normally advised to carry out a full structural survey on a home they hope to buy while their solicitor checks that the paperwork is in order. If the property is still in the process of being built, then it is quite common for buyers to “retain” a sum of money prior to completion. If the developer fails to complete the work satisfactorily then this “retention”, which can be tens of thousands of pounds, can be withheld by the buyer. The surveyor and/or solicitor are also likely to include within the contract a “defects liability period” where the developer is contractually obliged to put right any faults within a given period of time, in most cases well after a buyer has moved in. All in all, therefore, there already are measures in place to protect the buyer. His second criticism of developers is that they are “blatantly landbanking to keep prices high”. Developers are entitled to work within the law as they see fit. If the Government is not happy with how developers appear to twist the rules in their favour, as they claim, then it is up to the legislators like Boris to change the law.
It wasn’t that long ago, four years in fact, that the Governor of the Bank of England, Mark Carney declared that interest rates, and the prospect of them going up, would depend on the UK unemployment level dropping below 7%.
Last week the Office for National Statistics stated that unemployment now stood at 4.3%, its lowest level since the 1971.
So what can we conclude? Possibly the Governor did not know what he was talking about or he was using the wrong criteria in determining what will happen to interest rates. Either way, his latest comments at the IMF in Washington, which focused on Brexit and inflationary pressures on rates, are successfully leading to more uncertainty in the UK property market. This is creating buying opportunities, but don’t expect every property to be as flexible on price as a diesel car.
According to Danny Alexander MP, interviewed by the BBC news yesterday, the answer is no. Not for the Liberal Democrats at any rate.
The Conservative element of the Coalition have made a pre-emptive strike in the hope that “look, we’ve hit the rich once, why do it again?” Danny Alexander, however, when asked if these latest changes to stamp duty now meant that the mansion tax would be shelved was emphatic. He said that the latest stamp duty changes were a separate subject and that Lib Dem policy remained to add two or three council tax bands. Notice the omission of the phrase “Mansion tax”…the Lib Dems merely wish to press the “refresh button” on council tax. Expect Labour to follow suit with a similar re-branding exercise.
So, a one off penalty increase if you buy, not (yet) an annual tax increase if you own a property over £2m. Nevertheless, the latest changes to stamp duty will hit the top end of the market hard. If you add into this mix the increase in tax on “non doms” and Kensington and Chelsea’s drive to forbid “mega basement extensions”, one can see that the head winds are piling up into the perfect storm. All this without even an increase in interest rates!
What is frustrating is that the penalties keep increasing for those that move. Those that sit tight and do nothing including the elderly “grannies” that Mylene Grass referred to in her interview with Ed Miliband, seem to be ok, for now. What the politicians have failed to notice that it is precisely when homeowners move that the wider economy benefits. People are more inclined to upgrade kitchens, bathrooms, change carpets and curtains when they start afresh.
The property market used to be a well oiled machine in the mid to late 1990s. Now the oil has dried up and we are in danger of a total seizure. Fewer and fewer people with expensive homes will sell, which would, on its own, normally hold prices up. But other factors are beginning to play their hand and so prices over £2m will continue to be under pressure. But don’t think for a moment that homeowners sub £2m will be immune.
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