News & Views Blog

Nicholas Leeming, major client director of propertyfinder.com, commented on the CML buy-to-let figures and the escalating demand for private rented homes:

'The vast majority of the rental sector is booming at the moment, driven by tenant demand. The number of people searching for rented homes on our site has increased 36% since last August when the credit crunch began. Mortgage costs are high and confidence in the housing market is low – in the short term, a lot of potential first-time buyers are choosing to remain in rented accommodation, at least until the picture of the market is a little clearer.

In the long term, the role of buy-to-let in the UK housing market is likely to get bigger rather than smaller. We estimate that around 3.1 million of today’s over 30s who had expected to retire in their own homes will actually live out their golden years in rented accommodation due to affordability constraints. Most of these people will find homes in the private rented sector.’

Posted by Ben Henzell at 08:16 PM | Permalink | Comments (2)

Nicholas Leeming, major client director of propertyfinder.com:

Where HIPs are concerned, the only thing the government has been consistent on is indecision. The main impact on the market has been from dithering over implementation, rather than the actual legislation. Now that HIPs are compulsory for almost all properties, they are just an expensive, unavoidable inconvenience – much like death and taxes.

Where were they introduced?

The legislation was initially intended to speed up the process of buying and selling a home by making vital information on a property available to buyers upfront. This would prevent people pulling out of purchases further down the line. But after several U-turns, the government burdened the market with a diluted HIP that does not provide the information a buyer needs. Without a structural survey, a buyer and their mortgage lender don’t have the information to guarantee they can proceed with buying the property.

Agent Response

Agents tell me HIPs have done nothing to speed up transactions for this reason – there’s nothing in them of use. Buyers aren’t even looking at them and don’t ask to see them. Solicitors often refuse to rely on the information they contain.

EPCs

Supporters (mostly those with a vested interest) make a lot of positive noise about EPCs. But buying a home is an emotive process and the energy efficiency of the property will not influence the decision of the vast majority of buyers. HIPs have become about complying with an EU directive on reducing carbon emissions, not about helping buyers and sellers of property.

New Build Properties

Which is precisely why this pointless legislation is being extended to recent new build properties. New properties are built to the latest building regulatory standards. A HIP won’t tell buyers anything new but with guaranteed high standards of energy efficiency, dragging them under the legislative net will undoubtedly boost the government’s energy efficiency statistics. So the government can furnish their green credentials at the expense of others. The only other outcome of extending the reach of HIPs will be to create work to placate the HIP providers who suffered from the earlier indecision and are now struggling in a slower housing market.

Posted by Ben Henzell at 10:19 AM | Permalink | Comments (3)

The London property market is more resilient than most other parts of the country. Despite hype about the reliance of London on financial services, the city has a strong and diverse labour market which shows little sign of faltering.

Nicholas Leeming, major client director of propertyfinder.com comments:

Although prices of million and multi-million pound homes may be more vulnerable to weaker City bonuses, prices of normal family homes will ultimately be supported by the strong jobs market, continued migration to the capital and the shortage of housing.

Worryingly, there are reports emerging that a growing number of people are thinking of selling their home and moving into rented accommodation until property prices fall.

It’s a dangerous game to say the least. Speculating on the property market with your own home is definitely not for the faint-hearted. The average London property has to fall over 7% in value before you even break even once you take into account all the costs of selling, moving and then buying again; stamp duty is the biggest cost.

For people in more expensive homes, the market has to fall further still – over 8%. So you need the market to drop a very long way before this starts to look like an attractive prospect. And you have to consider how much the hassle and upheaval is worth to you.

The London rental market is certainly very busy at the moment. Tenant demand is strong and rents are rising rapidly. There is a lot of competition from tenants for the nicest homes, so those selling up to move into a rented home will have to fight for the best property. Good rented accommodation for a family in a decent school catchment area is like gold dust.

Posted by Ben Henzell at 09:26 AM | Permalink | Comments (1)

Deciding on what and how to bid for a property is one of the most challenging parts of the house buying process. There is no set formula and this is a straightforward commercial negotiation, made all the more difficult because the individuals involved may have widely differing standards and business experience.

Property expert Nick Lemming gives his advice..

Vendor Research

• Before even thinking of submitting and offer you need to do as much research as possible into the background of why the property is on the market and how long has it been for sale.
• A vendor with a deadline is more likely to negotiate than one who does not have to move. Similarly a property which has been on the market for some months may sell well below its guide price.
• Remember also that the vendor is human... he or she will probably be more prepared to negotiate if you take the trouble to be courteous and show them respect. Discuss why they want to move, what their ideal timescales are and how you can help them in the process. This can be particularly important if they are elderly.

Competition

• You also need to find out what the competition is. Ask the agent if it is worth viewing the property if you only have budget of £x (set discretely below the guide price): if he says no then you know that they feel in a strong position, if yes then it may indicate that there will be room for negotiation.
• When looking around the house ask how many other viewers there have been and how long it has been on the market for.

Hidden Costs

• With this information to hand you must also work out what you are able to bid for a property and what it is worth to you.
• There are many hidden costs that you will have to pay, not the least of which is stamp duty which, at its highest and most penal rate, is charged at 4% of the value of the property. Add to that legal fees, the cost of improvements and moving, then the net funds available to bid with are soon reduced

Final Offers

• How you submit your offer will depend on how the sale is being conducted. “Best & final” offers are submitted in writing and have to be with the agent before the relevant deadline.
• Otherwise a verbal offer by telephone will usually suffice...but make sure that you keep a record of the agent’s name and time of your call. It is also often worth putting a deadline of, say, 48 hours for your offer to be accepted otherwise it is withdrawn: this makes it more difficult for the agent to use this to get other prospective buyers to submit a competing bid.
• Unless submitting a best and final offer (which needs to be exactly that) you should pitch your opening offer at slightly below the price that you would be happy paying.
• It is quite normal for an agent to ask for a better bid and, that you have offered below what the vendor is expecting, may well help to readjust their sights accordingly. Offering the guide price first time is not normally a good tactic!

Room for Negotiation?

• The agent has a legal responsibility to report your offer in writing to their client. Beyond that the vendor decides on what course of action should be taken, often as advised by their agent. Particularly in the current market you need to be clear as to whether you already have a mortgage agreed in principle and whether your offer is subject to survey or any other conditions.
• The cleaner your offer, then the stronger your negotiating position is and the more likely that an offer below the guide price will be accepted.

If all this fills you with horror, then you can always ask a buying agent to represent you in the process, but otherwise the best advice is do not set your heart on a house until the vendor’s signature is on the contract....only then do you have certainty!

Posted by Ben Henzell at 05:14 PM | Permalink | Comments (1)