Hadley Taylor Blog
At Hadley Taylor we like to keep our clients updated on the latest local property news and opinion.
9 January 2018
Why do we have so many empty houses in the UK?
Every week we are bombarded by politicians, the broadcast media and the commentariat about the “housing crisis” and the need to build millions of new houses across our green and pleasant land.
On closer inspection we find that these calls come from parties with a vested interest in new housing development such as house builders, local authorities and MP’s representing areas where housing is thought to be needed.
Whilst I too believe that we need to build appropriately priced housing in appropriate urban locations I have for some time asked why we don’t utilise the empty properties we already have.
Recent research has established that there are 11,000 homes across the country that have been empty for 10 years or more. In a country where local authorities are spending billions of pounds on temporary accommodation this is quite a scandal but I fear this is just the tip of the iceberg. In fact 60,000 properties have been empty for two years or more and 216,000 properties have been empty for 6 months or more. Councils have powers to penalise owners of empty properties but they are failing in their duty to implement these penalties and without greater intervention these properties will continue to be under-utilised. What makes these statistics even worse is the fact that the majority of these homes are in fact owned by the public sector.
Hundreds of thousands of additional homes could be created if all the redundant office and industrial buildings were converted for residential use. Much of these are also owned by central government or local authorities and are ideally located in urban areas.
In addition to hundreds of thousands of empty homes and commercial properties there are vast tracts of land already earmarked for housing developments which remains unused. Much of this is also held by government departments or local authorities. House builders own hundreds of thousands of building plots which are developed not to meet demand but to meet certain profitability criteria.
Generally I am opposed to government intervention in the housing market but I do feel that, when it comes to unused property, a little carrot and stick would sort out the housing crisis within a few years.
2 January 2018
My 2018 Predictions for the property market
In 2018 high property taxes will continue to be the number one reason why people move house less frequently than at any time since the 1970’s. The Government isn’t going to change course on stamp duty any time soon so we will just have to get used to the new normal and accept that there will be a shortage of homes for sale across the country.
Interest rates will continue their slow upward trajectory in 2018. This won’t be a problem for most of us but it could cause an issue for the overextended or for landlords with buy to let mortgages whose yield will be squeezed just a little bit more than they would like.
House prices will rise in Norfolk by about 3% in 2018 which is far less than in recent years. Prices will be restrained by low wage inflation and political uncertainty and at the same time prices will be underpinned by a shortage of stock and a rising population. Norfolk will fare much better than London and the South East where house price inflation will stall.
Uncertainty over the Brexit outcome will keep some buyers and sellers firmly on the fence in 2018. In my opinion they should all get off the fence and take control of their asset decisions rather than let events dictate their future. This is because the outcome of the Brexit deal will have far less impact on our personal finances than the chattering classes in the media would have us believe.
Estate agents will continue to change their business models in 2018. Some sellers will continue to use ubiquitous corporate agents or online only agents in the belief that good outcomes can be secured for the lowest fee. Canny sellers will seek out seasoned property professionals who, for a few hundred pounds more, can deliver real expertise and a much more advantageous financial outcome.
5 December 2017
How to buy a house in 28 days
Wouldn’t it be nice to agree to buy a house and 28 days later actually exchange contracts? Sounds a bit far-fetched I know but it is entirely possible and was the norm 30 years ago.
These days most residential property transactions take between 6 and 8 weeks to get to exchange but many take 3 or 4 months or even longer. Leasehold properties generally take slightly longer to transact than freehold properties. It is fair to say that transactions took less time to get to exchange of contracts just ten years ago than they do today in an age when technological advances in the way documents and communications are managed should shorten the time for each deal. So how can one buy a property in 28 days?
The first thing is to choose an estate agent who understands the buying process. Property professionals with a good reputation, years of experience, local knowledge and good connections will always trump a call centre or an online journal when it comes to tracking the progress of your sale. As a general rule, if the agent is a member of the Norwich and District Association of Estate Agents, the firm will be vetted, accredited and scrutinised by their peers so this is a good place to start.
Next you need to choose the right solicitor. Again, a walking, talking solicitor who’s been recommended to you by someone you trust will always do a better job than cheapandcheerful.com. Online services can be cheap but are rarely ever cheerful. Make sure your solicitor is local as you will generally have to visit their offices at least once during the purchase process and it helps if they have good local knowledge of the area you are buying or selling in.
Once you have agreed a purchase you need to get to work. There will be a number of tasks to attend to straight away such as ID protocols, payment of funds on account to cover searches, commissioning a survey, mortgage application and filling in property information forms. Nothing will happen on your sale or purchase until these tasks are taken care of, so don’t delay. Do them all at once and not one after the other. Never find yourself saying “it’s in the hands of my solicitor”. Solicitors need to be instructed what to do – not the other way around. Good solicitors like this approach believe me. Most sales take longer than they should not because the solicitor is too slow but because buyers and sellers take too long responding to all the tasks required of them.
So if you want to buy in 28 days, guess what, you can.
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.