Hadley Taylor Blog
At Hadley Taylor we like to keep our clients updated on the latest local property news and opinion.
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.
14 February 2018
The cat’s out of the bag when it comes to online only estate agents
Stockbrokers Jeffries have released some research into a leading online only estate agent that confirms what proper estate agents have been saying for some time.
Jeffries estimate that online only estate agents sell as little as 50% of their listings compared to traditional estate agents who tend to sell about 80% of their properties. This is only of any importance because traditional estate agents only ask you to pay them if they achieve a sale, whereas online only estate agents will take your money whether they sell your house or not.
The online model has been with us for as long as the internet so this low-cost estate agency business model is nothing new. What is new is the amount of money being spent on nationwide television advertising. As a consequence, the Advertising Standards Authority have taken more interest in the leading players in this sector of the market. In fact the big players who advertise regularly are very well acquainted with the ASA who have wrapped them over the knuckles repeatedly for misleading consumers, firstly into thinking that they won’t pay for the service on offer, and secondly for overstating the savings consumers can make by using online only services over the traditional model.
The BBC’s Watchdog programme has also featured several online agents pointing out that their Local Property Agents are in fact commission only salesmen and not full-time employees of the agent at all. What’s more Watchdog criticised online only agents for training their Local Property Agents to exaggerate the number of listings they have in each area and the proportion of these properties that they actually sell.
As there is rarely any smoke without fire, I think it’s fair to say that Jeffries, the ASA and the BBC can’t all be wrong about online only estate agents. There is something very fishy about asking a call centre in Milton Keynes or Solihull to sell your house when you could use an established local business who might charge you a few hundred pounds more to sell your house but is more likely to sell your property and achieve a better price.
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.