Hadley Taylor Blog
At Hadley Taylor we like to keep our clients updated on the latest local property news and opinion.
16 November 2017
Why has Hammond got it wrong on stamp duty?
The government seems to think that the main issue facing the property market is gazumping. If the powers that be actually asked people working in the property sector what our priorities were they would discover that gazumping is very low down on our list of gripes. The budget next week offers the government an ideal opportunity to reinvigorate the property market but only if the right measures are taken.
Stamp duty is by far the number one reason why there are far fewer transactions today than at any time since the 1970’s. At the moment the government simply wants too much of a slice of each purchase and this is why there are fewer first time buyers, downsizers and people aspiring to move on to a bigger property. Whilst it’s understandable that the Chancellor of the Exchequer would want to continue the stamp duty cash grab, it really is very short sighted. If stamp duty was reduced or even abolished there would be far more activity in the property sector and the government would have a field day collecting billions in extra VAT on solicitor’s fees, estate agent’s fees, surveyor’s fees, removals, carpets, furniture and the rest.
We also have a skills shortage in this country. In truth, we have the right skills in the right quantity but these skills are not always where we want them to be. This is because skilled people don’t always want to move to where the work is due to the high taxes associated with moving house. We would have a much more dynamic jobs market if we reformed stamp duty and this would result in greater productivity.
So please wise up Mr Hammond and look at the big picture. Stamp duty has become a tax on aspiration and it has to go.
6 November 2017
Should I sell my house at auction?
The vast majority of property in the UK is sold by private treaty. Private treaty allows a seller the opportunity to fully test a property on the market and it also allows the buyer to do due diligence before exchange of contracts. Less than 5% of property is sold at auction in the UK and there are some very good reasons for this.
In the past we have sold several houses at auction but I have very rarely seen any property sold at auction that wouldn’t achieve a better price if sold by private treaty and that’s why I very rarely advise auction as the best way forward for my clients.
There are some instances where selling at auction is the most suitable way to proceed. For example some institutions and charities are required to demonstrate complete transparency when disposing of unwanted property assets and the easiest way to achieve this is to sell at auction. Some distressed sellers require a quick and definite sale and going to auction is often the quickest and most assured way of achieving a sale albeit at a discounted price.
However, every auction sale has its fair share of properties that don’t make the reserve price. Generally speaking about 70% of auction properties sell on the day but that leaves 30% of auction sellers who have already parted with a fee who are left without a buyer.
Selling at auction is usually a more expensive way of selling than selling by private treaty through an estate agent so this is another factor to take into consideration.
My advice is to go to auction if you’re buying, because you might bag a bargain, but to stay away if you’re selling.
2 November 2017
Bank of England raises interest rates
The Bank of England raised interest rates today for the first time in 10 years from 0.25% to 0.5%. For many savers this will be good news, although for some borrowers it might not be what they were hoping for.
Interest rates have been at ultra-low levels for several years since the financial crisis of 2008. Many younger borrowers will not have any experience of normal interest rates which, as us older folk will remember, should be more like 5% as long term norm.
Most mortgage borrowers are on fixed interest rate deals so they won’t feel any pain until they come to the end of their fixed term arrangement. Those on tracker deals or standard variable rates will see their repayments rise which, at a time of low wage inflation, might cause some discomfort in family budgets.
This hike in borrowing costs is likely to be part of a trend rather than a one off, although further increases are likely to be modest and very gradual.
Looking on the bright side, this latest move does signify that our persistently resilient economy has come off life support and perhaps the Bank’s post Brexit kamikaze cut in rates last year was unnecessary after all.
10 October 2017
Is the property pendulum swinging in favour of hard pressed Millennials?
The age group most active in the property market is the over 65’s. Most of this generation can be classed as Baby Boomers. This is the generation sitting on most of the UK’s property wealth. Most of them have paid off their mortgage and many of them now use their home as a giant equity release cash machine to fund their retirement. They have benefitted from several property booms since the 1960’s and their good fortune is unlikely to be repeated. They also enjoyed free university education, tax relief on their mortgage payments and final salary pension schemes, all of which have been consigned to history. Many Baby Boomers have gone one stage further, entering the property market as landlords in the buy to let market and have done very nicely there too.
By contrast the group least likely to be active in the property market are the 18 to 35 year olds. Transactions within this age group have declined by 21% during the last 12 months alone. This is due to spiralling property prices, high levels of student debt, more stringent mortgage rules, weak wage inflation and high property taxes.
There is some hope on the horizon for the Millennials though. During the next 12 months average UK property prices are unlikely to increase by more than 2%. In other words wages should soon increase faster than property prices for the first time in many years and this will give younger people a chance to get on the housing ladder or move up the ladder as the case may be.
We will also start to see some Baby Boomer buy to let investors selling off their rental properties in light of weaker capital growth, the prospect of higher interest rates, tax changes on mortgage relief and increased regulation of the rental sector.
For the older generation the news of weaker property price inflation will come as something of a shock because they have headed into retirement high on the crack cocaine of rising house prices and owe most of their wealth to successive property booms. Could it be that the pendulum is at last swinging in favour of the young?
7 September 2017
Do wind farms affect house prices?
Whether you love them or loath them wind farms are here to stay for the time being but what impact do they have on house prices?
There is a whole debate as to whether wind turbines are an efficient way of generating electricity and another can of worms to be opened as to whether they are as environmentally friendly as we are led to believe. What I want to focus on is whether their presence will down value your biggest financial asset.
The London School of Economics thinks they do down value your home by up to 12% if you live within 2km of a wind turbine. Here are some reasons why this might be the case.
First there are certain health concerns about living near a wind turbine. There is a phenomenon known as “shadow flicker” which causes certain health problems if you live too near a turbine. Thankfully there are regulations about how near to residential properties a turbine can be located and mitigating measures can be taken to prevent the problem if it arises so this is not a big deal.
Noise pollution is a slightly bigger concern but again there are regulations around the proximity of turbines to residential areas. There have been, however, a number of court cases won against turbine operators on the basis of noise pollution.
The visual impact of land based and offshore wind farms is one of the biggest drags on property prices. Nobody wants to see a wind turbine from their home or for that matter from their holiday let and there is little doubt that values have fallen in areas where there are lots of turbines. Many sea views have been transformed into semi-industrial marine landscapes.
The biggest problem though is cable corridors and sub stations because for every wind farm there is an enormous amount of infrastructure required to turn the energy into electricity on the grid. Each cable corridor can be up to 50km long and 200m wide and can use up to 100 acres of land. Sub stations are by far the worst blot on the landscape as they can be seen for several miles particularly on the flat lands of Norfolk. Flooding is now a threat in rural areas where millions of tons of concrete used in the construction of sub-stations has caused run off issues.
So before you buy your next home, check first for wind turbines and for any future plans for wind farms in the area.
15 August 2017
Why are online only estate agents so expensive?
The unique selling point of an online only estate agent is that they are cheaper than a full service high street agent. But is that really the case?
The market leading online only estate agent would have us believe that they don’t charge anything at all. Behind the subterfuge of their TV advertising campaign it is clear of course that they do charge you a fee if not a commission. Thankfully the Advertising Standards Authority is on to this dishonest use of wording and the agent in question has been wrapped over the knuckles. The fee they do charge is £849 plus VAT outside of London and more if you are selling inside London. However, this only gets you their basic entry level service. If you want accompanied viewings, floor plans, photographs and the rest you will have to pay them a lot more. In fact it’s a bit like flying on Ryanair and having to pay extra to be seated next to your 12 year old child.
The key thing here is what do you actually get for your money because the agent in question will bank your fee regardless of whether they sell your house or not and regardless of how much they sell your house for, whereas a traditional agent will only expect to be paid if they sell your house and will do their best to get you the very best price for your house because they are incentivised to do so. The question is how much expertise can you buy for £849? Anyone who has worked in business or in a professional capacity will know straight away that the answer to that question is not a lot of expertise can be bought for £849.
In fact how much expertise is there to be found in an entire building full of call centre workers on little more than minimum wage? Certainly a lot less than a handful of members of the Norwich and District Association of Estate Agents.
The main reason why online estate agents prove to be very expensive when compared to going down the traditional route is that if they undersell your biggest asset by even 1% you will have lost a lot of money and would have achieved a much better financial outcome using a proper estate agent in the first place.
If in doubt, ask a proper estate agent to visit you in your home and ask them what service they provide and how it compares with that provided by an online only agent.
18 July 2017
How to find your dream home in a shrinking market
Anyone searching for their next home will have discovered that family houses are in very short supply. This is a nationwide problem and not just a local phenomenon. For example, there are only 35 detached family houses available for sale in NR4 and a mere 10 detached family houses available for sale in NR2. In previous years we would have seen at least double this number of houses on the market for sale.
With this shortage of housing stock unlikely to change in a hurry what can buyers do to improve their chances of finding their dream house?
First buyers need to be in a proceedable position. If buyers have a property to sell or haven’t even put their house on the market then they will go to the back of the queue for any property that is remotely desirable. Buyers need to have done their homework so that they know what they want, where their search area is going to be and how much they are likely to have to pay. This involves a fair degree of objectivity because we all think our house is nicer and more valuable when compared to other properties.
The next thing to do is to speak to all the agents who sell houses in your search area that are similar to the sort of house you are looking for. This doesn’t mean just emailing them and hoping for the best. It means phoning them or visiting them and talking to someone who seems to know what you are looking for and where to find it. According to a recent Which survey, less than half of buyers found the home they ended up with on the internet. This means that most of the rest found their dream home by talking to their local property expert.
If you want to buy a desirable property in a favoured location such as the Golden Triangle, Cringleford or the North Norfolk Coast then be prepared to pay a premium for it. Good residential areas hold their value so you will always see a good return on your investment even if you think the price is a bit steep to start with. Last but not least, be decisive. Buyers who dither and pontificate nearly always fail to get what they want. Buyers who endlessly trawl through sold price archives and do all the maths about each potential property’s true value nearly always end up still living with the in-laws a year down the line.
Most importantly, always talk to an expert and not to a call centre in Milton Keynes.
June 8th 2017
Don’t you just love elections?
The property market relies on confidence and stability more than any other sector. Elections and referendums cause instability and hesitation and that is why estate agents like to see the back of them. There is no doubt that buyers, and particularly sellers, have been holding back during the past few weeks and this is not helpful if we want a dynamic property market which stimulates economic growth and supports a fluid jobs market. Our political classes have, in recent years, been determined to line up as many elections and referendums as they possible could. What with the Scottish independence referendum, the 2015 general election, the EU referendum, the local elections and now this year’s general election I think we are all rather punch drunk and in need of a rest from constant debating, campaigning and voting.
This year’s general election wouldn’t be so bad if it really was a “snap” election but 9 weeks of campaigning is hardly snap in my book. What the property market needs now is a sustained period of stability so that buyers and sellers can plan their next move with confidence well into the future without the fear that the government of the day will upset the apple cart. All we need now is for some little upstart north of the border deciding she wants another independence referendum because she didn’t like the result of the first one or worse still another EU referendum. With the SNP losing ground in Scotland a second independence referendum, thankfully, seems less likely.
Waking this morning we will all discover what our next government is going to look like and regardless of who we voted for, I’m sure we all hoped we could all breathe an enormous sigh of relief and get on with business as usual. However, the political classes and the electorate have decided that instability is the new norm so consumers and businesses will just have to get used to the new climate of uncertainty and make their own plans regardless. All the political parties have promised to build more houses. This is nonsense of course because governments don’t build houses at all. Houses are built by developers and housing associations and these organisations will only build houses if they believe that the government of the day is capable of delivering the right economic environment to make those developments pay. Thankfully Norwich remains a highly desirable place for professionals from all over the UK to move to for work opportunities and a better quality of life. So if you have something to sell we certainly have a buyer for it.