Hadley Taylor Blog
At Hadley Taylor we like to keep our clients updated on the latest local property news and opinion.
11 December 2018
My predictions for the property market in 2019
Brexit looms large over the property market in 2019 as it does over much of our lives. Who could have foreseen in 2016 that we would witness such levels of utter incompetence on the part of the political classes and Whitehall Mandarins as we have seen in recent months. Uncertainty over the outcome of the Brexit negotiations has certainly caused some buyers and sellers to hold back and the longer this farce continues, the more damage will be done. We can only hope that there is a resolution in the spring and the country can move forward.
The governor of the Bank of England has predicted a 30% fall in property prices should we leave the EU without a deal. However, I don’t agree with Mark Carney’s dire forecast firstly because he is firmly in the project fear camp and secondly because Parliament has no intention of allowing a no deal Brexit. It is fair to say, however, that we have come to the end of the latest cycle in house prices and house price inflation will be flat for a year or two. Whilst our population grows at such a fantastic rate and whilst the vast majority of people in the UK have a job it is very hard to see how property prices can fall very much at all.
Interest rates will rise in 2019 but only by minute and gradual increments. Mortgage lending will continue to be strong but this is all about households refinancing and not at all about households moving on.
In recent years we have become a nation of improvers rather than a nation of movers. When I started my business in 2004 people moved house on average every 7 years whereas today we move house on average every 17 years. This remarkable change in behaviour is due in part to the high levels of property tax levied on each purchase, making it more cost effective to stay put and extend homes rather than move on up the property ladder. This trend is likely to continue in 2019.
Buy to let as an investment model will continue to fall away as the preferred get rich quick scheme for the middle classes. Changes in stamp duty and mortgage interest relief have increasingly taken the gloss off buy to let and 2019 will see this trend continue. We will see more, smaller landlords bailing out of this sector in 2019 whilst bigger players and those holding properties within limited companies may continue to make it work.
The good news for the property market locally in 2019 is that Norwich remains an extremely popular destination for buyers seeking career progression or a change in lifestyle. So if you have a property to sell there is no reason why you shouldn’t achieve a great outcome in the New Year.
11 September 2018
Has Help to Buy had its day?
The government is considering whether to extend or end its Help to Buy scheme. This initiative was supposed to help first time buyers get on to the housing ladder by providing tax payer funded deposits that would eventually be paid back at a low rate of interest.
Like most government interventions in the housing market, Help to Buy meant well but was always flawed for a number of reasons.
Help to Buy merely serves to increase demand and this in turn increases property prices. If we are to help young people get on or move up the housing ladder we need to moderate house price inflation, not stoke it. Help to buy has clearly helped to increased house prices.
In practice, Help to Buy has also enabled some rather wealthy people, who never really needed assistance from the state in the first place, buy very expensive houses in London which can’t really be described as starter homes. There are of course thousands of deserving buyers who were clearly in need of assistance who have also benefitted from the scheme.
Agents like me were always rather mystified why the scheme was targeted solely on new homes. Why did buyers have to buy a new home in order to get assistance from the tax payer? The answer to this question lies in the fact that house builders form an incredibly powerful business lobby in the UK with many directors of corporate house builders also sitting on the benches in the House of Commons and the House of Lords. As a consequence by far the biggest benefactors of Help to Buy have been the multi-millionaire chief executives of our nation’s biggest house builders.
UK governments have a very poor record of success when it comes to disrupting the UK housing market. History shows us that whenever governments intervene in this particular free market there are always unintended consequences. It would be best if politicians stayed well away from the property market but if they are going to intervene then in future measures should be properly targeted and thought through, preferably with proper consultation with professional bodies such as the Royal Institution of Chartered Surveyors and the National Association of Estate Agents.
I for one hope that Help to Buy bites the dust sooner rather than later.
14 August 2018
Should we build on the green belt to solve the housing crisis?
Liz Truss is the latest in a long line of politicians to suggest that building houses on the green belt is necessary to solve the housing crisis. The Member of Parliament for South West Norfolk thinks that building thousands of new homes in the countryside is the answer to all our housing problems. Firstly, I don’t agree that there is a housing crisis and I certainly don’t agree that building houses in the countryside is a good idea.
House builders, of course, love building houses in the countryside because it’s easier than building them in towns and cities on brown field sites and so they make more profit. Profit being the primary and probably the sole driver for any house builder, they would build houses on green fields all day long if they got the chance. House builders form a very powerful business lobby, however, and this is why ministers continually suggest concreting over the green belt.
The reason it’s such folly to build homes in the countryside comes down to our need to protect the environment. We are told that unless we get a grip on CO2 emissions during the next 20 to 30 years we are going to have to deal with the consequences of an over-heated planet, parts of which are going to become increasingly uninhabitable in the future. Therefore, any new homes must be built in towns and cities in close proximity to jobs, schools and other amenities. Most new homes today are built in out of town locations with at least two cars parked outside each house. Here in Norfolk the vast majority of residents in new houses converge in their cars on the nearest town or to Norwich on a daily basis. This is clearly not desirable from a traffic congestion point of view and it certainly conflicts totally with the Government’s supposed commitment to the Paris accord on climate change.
There are other practical issues such as lack of public services, school places, broadband access, electricity generation capacity, mains gas supply and water resources, to name but a few, that make big out of town housing developments totally unsustainable.
So why do we need houses in the countryside? We don’t. We do need some homes in urban areas and these should be small, efficient and affordable units. The sole reason we need more houses in the first place is because successive governments think it’s a good idea to increase our population. It’s time this government got a grip on the true nature of our housing requirements and stopped caving in to vested interest groups.
10 August 2018
Bank of England raises interest rates
The Bank of England has raised its base rate by 0.25% to 0.75%. This is as high as the base rate has been for 10 years and although interest rates are still incredibly low some younger borrowers might be more concerned about what effect this change in policy will have on their debt repayments.
There seems to be very little evidence that interest rates needed to rise at all so perhaps the real reason why Mark Carney has raised rates at this time is so he can cut them again to cushion the effect of the UK leaving the EU next year. Carney is relentlessly pessimistic about the UK economy and about our chances of thriving outside of the EU so he will want to hedge his bets and this perhaps explains his latest move. Carney has been wrong all along about how robust the UK economy has been since June 23rd 2016 but like most fans of globalisation he is not likely to change his view in a hurry.
As for the property market, I don’t think the rate rise will have much impact because money is still relatively cheap and most borrowers are on fixed rate deals so they won’t feel the pain for some time yet.
15 May 2018
What happens if my agent goes into liquidation?
There do seem to have been a spate of Norfolk estate agents going into liquidation in recent months. The reason for this is nearly always because these firms haven’t been charging enough for their services. Some consumers really do believe that they can get the best possible service for the lowest possible price and in the grown up world this is rarely the case.
If you are selling through an agent that goes bust you might find that your property is transferred to another agent who has purchased the good will value of the business. This may be a perfectly workable arrangement as long as you want your business being dealt with by the company in question. If a sale has already been agreed on your property when the firm goes bust then this shouldn’t be too much of a problem either because at this point your transaction is in the hands of your solicitor. You may end up paying your fee to the receiver or to a different firm of estate agents who have purchased the good will of the failed venture but this shouldn’t change whether you have to pay the fee or how much the fee should be.
My best advice is to pick a long established firm in the first place and not a firm that is here today and gone tomorrow
24 April 2018
Why should I choose a NDAEA agent?
Consumers have a clear choice when selling what is in most cases, their most valuable asset. Sellers can choose an estate agent who is qualified, licensed, regulated and affiliated or they can choose one that is none of these things.
Some estate agents are members of the National Association of Estate Agents and some are members of the Royal Institute of Chartered Surveyors. Both of these organisations are regarded as the two professional bodies in the industry and both have redress schemes in place. Agents who are not affiliated to either of these organisations should be avoided at all costs.
Some of us are qualified to do what we do so ask before you commit. Agents who do not hold a relevant qualification should also be avoided at all costs.
Only a few of us are actually licensed to practice by the National Association of Estate Agents. Licensed estate agents should be first pick.
The bottom line is that you are more likely to find an agent who is qualified, licensed, regulated and affiliated within the Norwich and District Association of Estate Agents than if you look anywhere else. Our member firms also meet regularly for training events and to share best practice. We have a code of conduct and strict criteria for new members. Ask an NDAEA firm to tell you more about what we do and I’m sure they will be delighted to help you.
20 March 2018
Why there are so many second homes in Norfolk
The National Housing Federation has recently released research that reveals that there is now more second home ownership in Norfolk than ever before. In fact there are now more than 13000 second homes in Norfolk making it one of the biggest hotspots for second home ownership in the country.
It’s no surprise that the number of second homes in Norfolk is at an all-time high. The North Norfolk coast and the Norfolk Broads remain two of the UK’s best loved holiday destinations.
There are two main reasons for the rush to second home ownership in Norfolk other than it just being a great place to chill out.
Firstly it has become increasingly expensive for families to take a vacation abroad. This is partly due to rising taxes on flights and partly due to a weaker exchange rate. As a consequence, more and more families are holidaying in the UK. There are more foreign visitors to the UK who also want to come to Norfolk for their holidays and enjoy better value for money than they might have had prior to a weaker pound.
The other reason why people have been investing in second homes is that there are significant tax advantages in letting furnished holiday accommodation over shorthold tenancies. In recent years the Treasury has made buy to let less profitable and so furnished holiday lets has become the preferred vehicle for many property investors.
8 March 2018
Why Philip Hammond should give the economy and the property market a boost in his spring statement?
Next Tuesday Philip Hammond will deliver his spring budget statement. No doubt he will keep it bland and not risk upsetting the apple cart with any meaningful announcements. With tax receipts exceeding expectations in January he is ahead of schedule in his efforts to pay down the deficit so we won’t be too surprised if there are no surprises. There is, however, a great opportunity to not only re-invigorate the housing market but also re-invigorate the broader economy into the bargain.
I refer, of course, to stamp duty. This pernicious tax on aspiration is the number one reason why people are no longer moving up the housing ladder or, for that matter, moving down the housing ladder. As a consequence of this change in behaviour we find that the vast majority of properties that come to the market are as a consequence of death, long term care, genuine relocation or divorce. Very few people move house these days because they want something bigger or something smaller.
Abolishing stamp duty or even a meaningful reform of property taxes would stimulate more activity in the housing market and this would not only get people moving again, it would also stimulate the broader economy. An increase in transactions would result in HM Treasury being flooded with VAT receipts from all of the associated costs of moving, such as estate agency fees, removal costs, solicitor’s fees, broker’s fees and surveyor’s fees. There would also be a huge increase in VAT receipts from purchases of new kitchens, bathrooms, carpets and associated building alterations and extensions.
So come on Mr Hammond! Look at the big picture and kick stamp duty into touch for good.