Hadley Taylor Blog
At Hadley Taylor we like to keep our clients updated on the latest local property news and opinion.
The things Estate Agents Say
If you’ve ever heard an estate agent say “I’ll only put your offer forward if you come into our office to see our mortgage adviser” or “I’ll make sure your offer is accepted as long as you use our legal service” then you have been in the presence of at best an incompetent or at worst a crook. This is because the agent doing the talking either doesn’t know his business or he knows it but chooses to flout the law. You see it’s not just an agent’s moral responsibility to put all offers before his client; it is also his legal obligation to do so.
Estate agents who run in house legal and mortgage services do so in order to make more profit although they will tell you they do it to provide a more comprehensive service. What they are doing is running the risk of introducing a conflict of interest into their business and although some agents successfully manage to walk the fine line between providing additional services and falling foul of the law some don’t. If an agent puts their sales people on commission to sell all these services across the board they could have a recipe for corruption.
So if you ever hear this sort of thing going on please report it to the Estate Agency Ombudsman who will be very pleased you called. You see not every estate agent wants to be the butt of dinner party jokes or tarred with the same brush as these types. Some of us run businesses following strict codes of conduct where conflicts of interest have been deliberately removed from our day to day activities. If buyers and sellers want advice as to which professionals to use for legal and financial services we tell them who to speak to but this is where the relationship ends. Selling houses is our business and we tend to do it quite well.
How affordable is housing in the
Call me simple but I don’t buy this line about lack of affordability in the
Well let’s just look at the facts. Firstly house prices in
Interest rates are lower than they’ve ever been – sounds even more affordable.
Now let’s look at the average
So let’s look at the plight of first time buyers – a one bedroom flat in a decent part of
The issue here is not affordability at all. The issue is that first time buyers have changed the game. They don’t want to buy one bedroom flats which is what people of my generation did 25 years ago, instead they want a 3 bedroom house and that is why the BBC talk about there being a lack of affordability in the UK housing market.
The evidence of this trend is all too easy to spot from where I’m sitting. I sell 3 bedroom houses to first time buyers and I sell 1 and 2 bedroom flats to landlords who then let them out to young people who live in them until they can afford to buy their 3 bedroom house.
Now don’t get me wrong, first time buyers and indeed any type of buyer are entitled to buy whatever they want but what they shouldn’t do is complain about how unaffordable property is because in truth they haven’t had it so good for years.
Why go to auction?
Auctions have become very fashionable of late, especially in
It is well known in property circles that if you want to bag a bargain you go to auction. So why would sellers want to sell their property at a discount? What is even more of a mystery is why local authorities choose to sell their surplus property stock at auction. Why should the tax payer fund discounts to property speculators?
Auctions you see attract only a small section of the property buying public. If you go to auction you need to have cash or a mortgage offer and you need to have spent some money beforehand satisfying yourself that the house isn’t falling down and you need to have lots of courage. These prerequisites exclude most buyers and as any good salesman will tell you, if you want to achieve the best price for any product you market it to the widest audience not the narrowest.
So yes, auctions have their place but the quantity and frequency of auctions locally tells me that they occur not because they are an effective means of achieving the optimum price for the client but rather that they offer great profile to the agent concerned.
What a year!
As we enter the quiet end of an eventful year it is time to reflect on the last 11 months and despite many agents describing market conditions as very difficult, with two firms closing their doors for good last week, I am delighted to report that we have seen a 35% increase in transactions on 2009. In fact we end the year with more buyers than sellers. This year has also been our best year ever selling properties around the half million pound mark which is a market sector where we are very clearly the leader.
The New Year will bring a welcome batch of new instructions and I believe more activity in the market. Buyer confidence will improve as the economy continues to grow and as many in the public sector realise that a spending review doesn’t necessarily mean redundancy.
Investment buyers will continue to see property as a much better revenue stream than savings accounts which will produce disappointing returns for some time to come. First time buyers with good deposits and proof of earnings will find borrowing easier as the year unfolds and we will continue to see a steady stream of professionals moving to the area to work at the
New Year – Same Market
The New Year has started very much as the old year ended in our office with more buyers than sellers. Stock levels are low but there are always serious buyers around for those few owners who decide to take the plunge and I’m sure as the weather improves we will see a few more for sale boards in our area.
The latest economic indicators have not been very encouraging with inflation rising and economic growth slipping back. The upshot of these rather depressing figures will mean a further delay in any increase in interest rates and little chance of wage inflation and consequently of house price inflation for the foreseeable future.
So is it a good time to make a move in the property market? Well if you’re buying the answer is definitely yes because house prices and mortgage rates haven’t been as low as this for years and if you’re selling the answer is also yes because delaying a sale for two or three years won’t necessarily mean you’ll get a better price. In other words prices in the better residential areas of
Signs of house price inflation
I have commented recently about the lack of good quality housing stock coming onto the market of late and the impact this has on buyers wishing to move into the area. But what about the impact this lack of supply has on prices?
Well what we are seeing is rising prices during February according to the Nationwide. It stands to reason that if you limit the supply to any market the price will go up and that is exactly what will happen to
This is not the case for all sellers however. What we are also seeing is a two speed market starting to emerge. Let’s forget for a moment about
The sub prime market comprises smaller properties in less desirable areas or cities, the owner is more likely to be a distressed seller, these properties are in plentiful supply and therefore prices are under pressure. These properties are generally sold by volume agents and increasingly you will find them at auctions which have become the preferred last chance saloon for many sellers.
So what we need are sellers. So don’t be shy. We can introduce you to lots of buyers.
Spring is in the air
At last we have seen some activity in the
Many buyers and sellers are still a little reluctant to test the water. People are waiting but they’re not quite sure what they’re waiting for and I’m not sure either.
If buyers are waiting for prices to fall, I don’t think they will. With twice as many new households being formed as there are new homes built it stands to reason that supply and demand will remain the biggest driver in the
If sellers are waiting for prices to rise I don’t think they will in a hurry either. This is because the economy will grow very slowly for the next couple of years and wage inflation will be modest at best with workers in both the private and public sectors seeing wage increases only as productivity rises.
So what we have is a very stable market. In fact the sort of market that buyers and sellers should feel confident about dipping their toe into.
How do Estate Agents work in other countries?
I’ve just got back from my annual holiday and many of you may also have been away over the Easter break or will be planning your holiday for later in the year.
When I’m on holiday abroad I can’t resist the temptation to check out the property prices in whichever country I’m in at the time. I guess it’s an obsession that goes with the territory when one is an estate agent. What I find is that property abroad is increasingly expensive compared to the
What is also quite interesting is to see how estate agents in other countries work and to learn what they charge their clients. In fact I’m often quite envious at the rather eye watering commission rates estate agents enjoy in other countries. For example it will cost about twice as much to sell a house in the
Here in the
So if you’re back from your Easter holiday and considering putting your house on the market you can expect great value for money from your local property professional and expect him or her to work within a strict code of conduct rather like the one we have within the
How should I select my Estate Agent?
One question I am often asked by would be sellers is how should I decide which estate agent to use? Now I’m bound to say that sellers should choose me but if one is to be more objective let’s look at some more sensible selection criteria.
There are many good estate agents in
For example, sellers should never use estate agents who knock on your door asking if they can sell your house. This is a particularly nauseating practice that preys on the elderly, the infirm or the inexperienced. If it happens to you report it to the NAEA or the Ombudsman but most importantly don’t use that particular agent.
Never use an agent that asks for an up front fee. Good estate agents with the required expertise and local knowledge to sell your house at an advantageous price will charge you once they’ve done the job and not before. Volume agents who charge an up front fee rely on banking the income from hundreds of houses they don’t actually sell.
Don’t use an agent who values your house at a higher price that anyone else unless they can prove to your satisfaction how they will achieve the price quoted.
Don’t use an unlicensed agent. Most agents are members of the National Association of Estate Agents but not all of these meet the required criteria to be a licensed agent. Ask the agent if they are licensed when they call to do their market appraisal.
Beware of agents that want you to commit to a sole agency agreement for more than a few weeks. This is because if the agent is not successful at selling your house you need to be able to employ a different agent as easily as possible. Believe it or not some agent’s contracts tie you in for 13, 16 or even 22 weeks but you’ll only discover this when you read the small print in their contract.
Don’t use agents who also sell mortgages or conveyancing. These agents have unwittingly introduced a conflict of interest into their business for the sake of making more profit. These agents may be more focused on earning commissions from mortgage and conveyancing work than the job in hand which is to sell your house. Ethical estate agents have only one objective and that is to get you the best price for your most valuable asset.
Beware of estate agents who suggest selling your home at auction. Very few properties are suited to an auction sale. The vast majority of properties sold at auction are sold for less than their true value.
Most important of all do be assured that estate agents in this country are more ethical, more regulated and offer better value for money than realtors in virtually any other country on the planet.
Will property out perform inflation?
Price Waterhouse Coopers have recently confirmed a view that I have held for some time, which is that property price inflation over the next few years will be modest at best. Their view is that property prices will struggle to keep pace with inflation. This will change the way many people view their property purchases from now on. For those of us simply wishing to buy a house to live in, nothing changes, but for those who see their home as an investment vehicle that will always increase in value and which can be borrowed against whenever the need arises, I’m afraid the game is up.
However, before we write off property as an investment vehicle completely let’s consider how other investments will do over the next ten years or so. Are we to assume that savings rates will out perform inflation? On current form I think not. Are we to hope that stocks and shares will out perform inflation? Maybe, but maybe not and only the bravest investors will be around to find out.
So compared with the alternatives perhaps good quality housing stock in good residential areas doesn’t seem like such a bad bet as some might think.
Could property become a realistic alternative for investors?
Many people who rely on income from savings will be wondering what to do next with rates on deposit accounts struggling to get above 2%. Low savings rates are symptomatic of the state of the economy and are here to stay for the foreseeable future so could property prove to be a viable alternative?
Residential property investments haven’t looked very attractive in recent years due to falling property values but perhaps it’s time to look again now that we have more stable prices and very low rates of return for savers. Let’s ignore capital growth and look solely at yield. Residential investment property in
Of course there are many more things to consider with this type of investment and many more pitfalls than if one were to put one’s feet up and wait for the building society statement to come through the letter box but as we enter unchartered water for investments we will all have to make our money work harder than ever before.
New Year – new website
The turn of the New Year has seen the re-design of our website hadleytaylor.com. There are many unique features on the site that set it apart from other estate agent’s websites. For example we have a local information section providing details of local trades, professions and services that are in some way linked to property. You’ll find details of anything from solicitors to painters and decorators and plumbers to structural engineers. Also in this section you will be able to access details of state, faith and independent schools for all age groups in and around NR4, NR2 and NR1.
The other unique addition to our site is our blog. Many buyers and sellers come to Hadley Taylor not just because we tend to market properties in some of the most desirable streets in Norwich but also because we offer experience, advice and opinion. Our blog is one way in which we want to communicate with buyers and sellers, many of whom ask us to sell their home many years after buying from us in the first place.
How will increase in CGT affect the property market?
There is much speculation that the Government will increase capital gains tax at the budget as part of its attempts to reduce the budget deficit. Much of this speculation is I believe media driven and although I think we are going to see an increase, I don’t think it will be nearly as scary as some are predicting. I believe this for two reasons. Firstly, I don’t think our new chancellor is in the habit of political suicide and second, the wealth creators have to go on doing just that, creating wealth, and too much of an uplift on CGT would be counter productive in the long run.
So what effect will an increase have on the property market? Will landlords rush to sell? The answer to this will depend on the level of increase. If we have a modest increase I don’t predict a rush to dispose of investment properties. Professional landlords with large portfolios who are in it for the long haul tend to buy and not sell so I don’t think an increase in CGT will impact much on this group. Many amateur landlords who jumped on the band wagon during the past decade in search of an easy buck have already come unstuck and are no longer in the game. Accidental landlords, of whom many have been created during the past three years, will feel under most pressure to exit the market.
So I am expecting a welcome increase in instructions of small flats and houses in the city during the next few months but not the sort of surge in disposals that would lead to instability in the market and a drop in property values.
Why pay an estate agent to sell your house?
Why pay an estate agent to sell your house? Why not do it yourself? Why indeed, but let’s look at this in more detail.
Of course sellers want to keep the costs of sale to minimum but they also want to achieve the best price for their most valuable asset. These are often incompatible objectives. Anyone can sell a house but it takes experience, skill, tenacity, local knowledge and patience as well as the right routes to market to achieve the optimum price for a property. If the seller is equipped with all of these, then my advice is to go ahead and sell it yourself and save the fee.
In reality sellers tend not to be trained in the art of negotiation, they may not be on hand to take viewings at the drop of a hat whenever potential purchasers want to view. They may not wish to sit by a phone all day in case there is an enquiry and they may not want to pay several hundred pounds for an advertisement in the EDP property supplement. They will not have access to tried and tested property portals such as rightmove.co.uk and they certainly won’t have a list of people actively looking for a house in their area and in the required price bracket as will a good local independent estate agent.
Private sellers will have to take their own photographs, prepare their own sales particulars and measure up their own house, not to mention guess what price they should be asking and take a punt on which solicitor they should use. Private sellers will also have to vet purchasers for affordability and proceedability and keep the sale on track once the purchaser gets cold feet after reading the survey report. These are all rather onerous tasks that people pay their estate agent to do for them.
Tesco have made noises recently about providing sellers with a web based solution to sell their house for as little as £199 as if buying a house was like buying a packet of peas. Google have similar plans although at least they don’t sell peas as well. Private seller’s websites have been about for many years and the Tesco and Google models are no different to those that have come and gone before. None of these private seller’s sites or internet only estate agents has gained any degree of market share in any part of the
You can pay as little as £2500 to an independent estate agent for selling the average house in the
The big issue is a shortage of stock
Ask any estate agent from Lands End to John O’groats how the market is and he’ll probably tell you that he doesn’t have enough property to sell. At Hadley we have taken on several new instructions during the last two weeks so things are certainly warming up, but why is it that sellers are reluctant to put their houses on the market for sale?
One lady called into my office the other day and told me she was reluctant to put her house up for sale because she literally couldn’t afford the cost of the home information pack. This is an indicator as to how severe the recession has been for some working people. I was able to tell the lady that we could make arrangements for her to pay for her HIP upon completion and I’m sure most agents can do the same. Our HIP cost £299 plus vat and although this is cheaper than most agents’ pack I can see how this additional cost imposed by the government has kept some sellers out of the market.
There are many potential sellers who also want to buy but they find themselves unable to borrow what they need to move up the ladder to a bigger property. This may be because their circumstances have worsened during the recession or because their lender isn’t prepared to lend at the same terms as they would have done before the financial crisis. Either way many people who want to move up simply can’t just yet.
Some sellers are not putting their houses up for sale because they can’t find a house to move to and so we have a chicken and egg situation developing. My advice to sellers is always to get a buyer first because if your dream home comes on the market someone who can proceed will buy it while you’re still filling in your home information pack questionnaire.
Some sellers believe that if they delay selling for another few months they will get a better price. Now although I don’t believe prices will fall again, I don’t think they are going to go up in a hurry either due to the length of time it will take for the economy to return to sustainable growth and full employment. In short, your home may be worth a little more in 12 months time but not a lot more. The media might like to talk up price increases but remember they using national figures and these are hugely distorted by the price rises we’ve seen in London and the south east where all the bankers and footballers live.
The worst winter for 30 years hasn’t exactly put people in the mood for buying or selling either. Whatever happened to that Mediterranean climate we were told to expect by the climate change lobby?
So don’t be shy, spring is at last in the air and the market is hungry for properly priced properties of all types in good residential areas. If your house is the only one in your street with a for sale board in the garden you might do rather well.
How will the result of the general election affect the property market?
At Hadley Taylor we are preparing our business for an increase in transactions in 2010. We expect to do 40% more transactions this year than last. Last year we did 80% more than the previous year. This sounds impressive but I have to add here that 2008 couldn’t have been any worse if we’d been writing a horror movie script. This predicted increase in activity is due to the fact that many buyers and sellers have put their plans on the back burner during the last couple of years but many of these folk will see 2010 as the year to move on. The obvious blot on the landscape this year is the general election in May.
Election year is always a time of uncertainty for the housing market. Estate agents tend to want to see the back of elections as soon as possible because they lead to uncertainty in the minds of buyers and sellers alike.
So let’s look at some of the possible outcomes and their effect on the housing market.
Labour could still win it of course, due to the legion of voters who make up the client state. Under a fourth term of Labour we could see the housing market become an area the government targets to raise more tax in its efforts to pay down the deficit. We could see increases in stamp duty and the introduction of capital gains tax on your primary residence. Estate agents may face more legislation of their businesses under Labour as we have seen in recent years and this will inevitably push up the cost of sale.
The worse case scenario however is for a hung parliament. A hung parliament would result in a weak government with little power in the House of Commons to push through the sort of measures required to reduce the deficit at the necessary rate. The consequence of this could be a downgrading of the credit rating of UK plc or even sovereign default. A hung parliament, although unlikely, is a possibility and would be very bad news for the economy and the housing market resulting in a double dip.
If the Conservatives win we could see a more settled second half of the year for property but the sobering numbers that will come out of the treasury once victory has been secured will keep the lid on growth in the economy, wages and consequently in house price inflation for some considerable time as the age of inevitable austerity begins. David Cameron has pledged to scrap home information packs if the Tories win power. The controversial packs have already cost sellers about £700m during a time when the housing market could have done with a break so this will be good news to some. The Energy Performance Certificates which I have to say are probably the most useful part of the packs will probably stay under the Tories however and this can’t be a bad thing. The much heralded increase in the inheritance tax threshold will be welcome news for all those elderly people hoping to leave their property to the next generation.
Whatever the outcome of the election, I think we are in for the most fascinating few months we’ve had in this country for about 30 years.
HIP’s finally bite the dust
The demise of home information packs has been welcomed by the National Association of Estate Agents, The Law Society and the Royal Institute of Chartered Surveyors. So one might ask why these professional bodies weren’t asked their opinion before the HIP’s debacle and the answer is that they were asked, but their contributions to the consultation were largely ignored.
The new coalition government has, however, decided to continue with energy performance certificates for residential properties sold in the
Although most estate agents will have a great deal of sympathy with the thousands of people who qualified themselves to prepare these packs it doesn’t change the fact that these people were providing a service that increased the cost of sale at a point in the cycle when the market was at it’s most stressed. Many of these people will, I hope, continue to find gainful employment producing energy performance certificates instead.
Since the suspending of HIP’s we have seen a welcome return to the market of the speculative seller which has increased the number of properties on our books.