Housing and Planning Bill
21st October 2015
The Housing and Planning Bill introduced to Parliament on October 13th aims to drive up the rate of housebuilding in England to an average of 200,000 new homes per year, from 133,000 per year over the past decade.
Changes to the planning rules are the bill’s main focus. Local planning authorities will have to produce plans for new homes by 2017 or the government will ensure plans are produced for them. Councils will also face a new duty to determine 50% of minor planning applications within statutory time limits.
The bill emphasises brownfield development and imposes a new duty for local authorities to keep brownfield registers of suitable land. It alters the compulsory purchase regime with a view to allowing local authorities to drive forward brownfield development.
We are a little worried at the bill’s implications for our rural heritage, despite the so called safeguards for the Green Belt that it highlights. Of course the bill meets a public need. Even the Council for the Protection of Rural England hesitates to criticise the aims of this legislation, preferring to cast doubt on the likelihood of those aims being achieved. ‘Housing Bill won’t help build homes’ is the latest headline on the CPRE website. We beg to differ. We think the bill will help to build homes, and will in the process, for all the emphasis on brownfield sites, result in an accelerated erosion of rural England, although not to the extent envisaged in Bill Bryson’s alarmist article in The Times on the 30th September, thanks to his and other people’s campaigning.
We expect some impact on prices from the Housing Bill, although mitigated if the economy remains buoyant. Prices at the top end of the market will continue to come under pressure, though prices below £1m should remain relatively strong. Increasing demand for properties in or close to attractive market towns will continue. Reducing costs of moving home would go a long way towards further reinvigorating the market.
Back to school?
4th September 2015
September sees the dispatch of children back to their studies at school or university. It is also a time for a meeting of minds. Sellers, frustrated that their (often over-valued) property failed to sell earlier in the year, can “press the refresh button” while buyers drift back from holiday, looking for that sensibly priced home.
Most motivated sellers will have set Christmas as their “get out by” date, which brings a sense of urgency to the Autumn market. At Hanslips, we can manage this to your advantage. We are quick to uncover the reasons behind a sale, able to advise accordingly on opening offers and by using our service we’ll place you at the head of the queue when competing with other perspective buyers.
Interest rates remain the key
17th June 2015
Time to raise interest rates? Not a welcome idea for many homeowners or those who have borrowed heavily, but for the good health of the property market, perhaps overdue. It will forestall a need to increase rates more sharply later. Transaction levels will increase as supply increases so while prices may be under initial pressure, the wider economy will benefit. People often only make significant alterations to a property when they move. It is this lack of fluidity, levels at their lowest since 1978 according to the RICS, that ultimately helps no one.
Press the refresh button on the Council Tax bandings
21st May 2015
If the newly established Conservative majority had any sense they would press the “refresh” button on the Council Tax bandings and press it quickly. While the Mansion tax may have, on the surface disappeared, political sentiment will have not. Such a measure will alleviate the long term threat of a more punitive tax and a potential fall in house prices. But do politicians think this far ahead?
Pecking order for buyers of residential property
Ray Boulger, a senior mortgage expert at John Charcol, said last month that estate agents are pressuring house buyers into using their in-house mortgage advisers rather than allowing them to seek independent advice. If buyers declined the in house advice, he said, they risked not seeing available properties. In fact potential house buyers are often not informed about properties, that match their criteria, for a number of reasons.
If you have ever had dealings with estate agents you may be familiar with the experience of telling them what you are looking for, only to find a few weeks later, your ideal home listed as “sold” in their shop window.
Estate agents are supposed to act in the best interests of their client, the seller, but may not entirely share those interests. They may be keener than the seller on getting a quick sale and avoiding non-sales in order to control costs and boost turnover.
A buyer’s ability to move quickly and what their plans are for the purchase, ie whether buying to resell, stay long term or let, may mean the difference between a successful purchase or never hearing from the agent in the first place. As a buyer you may feel somewhat indignant when asked by the selling agent why you want to buy. You may feel this is none of their business. But that is where you would be wrong.
Estate agents grade both their buyers and sellers and mixed in is the element of risk. How much time, effort and money an agent puts into both parties will depend upon a number of inter-related factors. It all ends up with you, as a buyer or seller, fitting into a pecking order.
This table outlines who is top of the pile, who is bottom, and why. Where do you fit in?
Position who? Why?
Developers with cash or cash buyers represented by a buying agent. Repeat business. Known source. Vetted buyer. Less risk of falling through.
Sellers who have exchanged contracts already but not yet completed. No mortgage required. Arguably more attractive than cash buyers who are renting because those renting can pull out and still be comfortable renting.
Cash buyers. Renting. No mortgage.
Cash buyers staying with friends. No mortgage. However comfortable it may be to rent, the buyer may feel uncomfortable being out of the market.
Own property under offer with same agent. Potential for 2 fees if the agent successfully finds a property for the seller to move to. But chain situation can often lead to a fall through.
No property to sell. Cash plus mortgage agreed in principle.(using estate agent’s in house mortgage advisor) Anyone borrowing finance is immediately pushed down the order.
No property to sell. Cash plus mortgage agreed in principle.(not using estate agent’s in house mortgage advisor) Those not using the in house mortgage advisor maybe pushed further down the order.
Property under offer with another agent. Only one fee for the agent to focus on here and chain situation means there is always a risk of a fall through.
Property on the market with the same agent but not under offer. Agents are always keen to secure two fees if at all possible, even if both fees are abstract.
Property on the market. Not under offer. Geographically inside agent’s selling zone. Potential to win/nab instruction from another agent.
Property on the market but outside target zone. Nearly bottom of the pile.
Property not even on the market, but it needs to be sold before any purchase can be made. No prospect of the agent selling the property. Congratulations. You are bottom of the pile.
Future plans Add to this pecking order the reason for the purchase and the order may change. Of most interest to the estate agent are those buyers who will sell the property within say two years, raising the prospects for a second fee. Of less interest are those who want to live in the property long term. NB Buy to let Buy to let investors who have a large portfolio and retain the same estate agent to manage their properties are likely to be higher up the pecking order. The management income often keeps estate agents in business if their sales department is struggling.
Other factors may come into play but the above is a standard classification. Appreciating where you fit in, and understanding the negotiating process can save thousands of pounds.
Auctions and statistics
Any glance at the recent auction results focusing on Central London will appear to paint a familiar picture. Auction rooms full to bursting regardless of the icy conditions outside, with buyers ready and willing to pay top dollar.
Allsop advertised on the 17th December that in its last sale, 80% of properties sold in excess of their reserve and of those, 6% exceeded their reserve by at least 100%. Auction houses, however, often set absurdly low guide prices which can distort the figures.
Take for example, 60 Felden Street, Fulham SW6, which went to auction with Savills on the 7th December 2010. This is a freehold terraced house, in a pretty tree lined street, set over two floors with a 25′ west facing garden, allowing a buyer to both modernise and extend. The last time a house sold in this street for less than £850,000 was over 4 years ago. Little wonder then that interest was whipped up when the guide price of £650,000 was published. By setting such a low guide price, the auction company not only ensures buyer activity but also establishes itself as a firm that delivers results.
So the next time you see guide prices and their sale prices it is worth remembering that the only figure worth remembering is what the property sold for.
When an estate agent is faced with the tricky problem of trying to sell a property that just won’t shift, it may have to dream up more ingenious ways of hoodwinking the public. Such agents are regulated by the Misdescriptions Act 1991, so how do they do it? Like a magician, a degree of imagination is called for.
No 16 Hesper Mews, is situated on the borders of fashionable South Kensington and less fashionable Earls Court. Newly modernised by the developer with all the latest state of the art gadgets you would expect from a superb finish of some 3,650 sqft priced at £4.95m. Launched in March/April 2010 it failed to find a buyer and was withdrawn from the market during August. Buyers had sniffed but none had offered. Re-launched in September and offered as “new” on various websites including Primelocation, both the appointed selling agents, Savills and Ashdown Marks were keen to breathe fresh life as they had exhausted their pool of existing buyers. It was also on for sale and for rent, which any informed buyer would have deduced, that this owner was getting desperate. To further enhance the new image, the old front elevation photograph was replaced by one of the interior. Keeping the price unaltered this was a gamble and perhaps a last throw of the dice for this developer who only had a small window before the Christmas slowdown. At last a rental offer materialised which put pressure on those viewing the house as a potential purchase. As is often the case this did induce an offer to buy and an exchange of contracts took place in two days.
The gamble paid off and credit should be given to the estate agents for their fresh approach. However, the next time you see a property advertised on Primelocation as “new”, not all may appear precisely as it seems.
12 tips when buying property
1) Your overriding aim is to present yourself as a “serious buyer” who is unlikely to let the seller down at the last minute. Be organised, realistic and clear about the property you are trying to buy.
2) Before you start looking make sure you have a solicitor and surveyor ready to act on your behalf.
3) If you require finance ensure you have a mortgage agreed in principle.
4) Do not rely on websites to keep you fully informed as to the latest properties coming onto the market. Estate agents are not obliged to post new properties on websites. They may not do so as they think it would create unnecessary work arranging viewings, when they believe they already have prime buyers for the properties in question. In these instances, some properties may never appear on the ‘open market.’
5) The majority of properties are still bought through an estate agent. When registering with an agency, ensure contact is made with one individual who will then feel responsible for keeping you informed, and try to be in regular face to face contact with that person. This will raise your profile; one survey in January 2011 found that less than 50% of prospective buyers kept in ‘repeated’ or ‘regular’ contact with an estate agent.
6) Make a note of who the manager is in the relevant office. This person often does the valuations and will likely have advance warning if suitable properties are due to come to the market. He or she should also be up to speed if your original contact is away on holiday or ill.
7) View a property at least two or three times if you feel it might be a possibility. View in the dark, in daylight hours and at weekends when traffic and wind direction will all vary.
8) Natural light and aspect are important so bear in mind the property may look different in winter, with a low sun and leaves off the trees.
9) Avoid wasted journeys. You may well wonder, having registered, why the estate agent still pleads with you to view a property that you are convinced is inappropriate. The estate agent, however, may need to convince their client that the asking price for a property is too high. They can often only justify recommending a reduction in price after a minimum number of viewings.
10) Ask the right questions. You must ascertain the motivation behind the sale before making any offers:
How long has the property been on the market and how long at this price? Have there been any offers? If the property has been on the market for several months and with more than one agent, there may be scope to negotiate the price down.
Why are they selling? If it is because of unreasonable neighbours then you need to know that. Could be a divorce situation, where it is also worth knowing that BOTH parties are happy to sell.
How long have they lived there? If only a few months, you may need to delve further.
Where are they moving to? If they have nowhere to move to they may be less willing to negotiate on price. If they have already completed on a related purchase, and are subject to a bridging loan, they should be keen to sell.
Try and differentiate between negative points you can put right with money and those you can’t. If the property needs a new kitchen and bathrooms, this can be rectified. But pylons, noisy neighbours, poor light, footpaths, and north-east facing gardens seldom can.
11) Your initial offer is likely to be rejected. If you make an offer at the asking price, try to insist on some favourable conditions such as deadlines and what you wish to include, (eg the curtains or AGA) A low offer should soften expectations and may help to ascertain the seller’s bottom line. Under the Property Misdescriptions Act 1991, any offer you make must be submitted to the owner by the selling agent.
12) Under offer (sale agreed subject to contract) does not equal sold and unless you insist on the property being withdrawn, the estate agent may continue marketing it. Until you have exchanged contracts you can still be gazumped by another buyer so you must keep the period between the property going under offer and the exchange of contracts as tight as possible. Agree with the estate agent in writing as to when you and your solicitor hope to exchange, what is included/excluded in the sale and for what period the property is to be withdrawn from the market. Make sure your solicitor has received a ‘full package of papers’ including the registered title deeds before rushing in to do the survey. It demonstrates a degree of commitment that the vendor is a serious seller and is less likely to let you down.
- Top thoughts
- What you buy is far more important than when you buy
- “Off market” is about to get bigger.
- What next for the unpredictable property market?
- Trend Reversal
- New Year, get organised
- Brexit and buying opportunities
- Boris and the Housing Crisis.
- Carney. The boy that cried wolf.
- Housing and Planning Bill
- Back to school?
- Interest rates remain the key
- Press the refresh button on the Council Tax bandings
- Pecking order for buyers of residential property
- 12 tips when buying property
- Auctions and statistics
- "New" homes
- Thoughts archive