Property Matters

Feeling the Crunch in 2012

2012-01-11T11:55:00.000Z

The results of the latest Bank of England Survey into Credit conditions look disturbingly like those seen when interbank lending seized up after the failure of Lehman’s. A barometer for trends in mortgage lending the Survey identifies various head winds to a market recovery including increased pessimism about the wider economic outlook, greater difficulty and higher cost to Banks accessing money market funds and negative sentiment about house prices. This means Banks being even pickier about to whom they will lend with a resulting tightening of credit scoring criteria. Until the Sovereign Debt crisis is resolved there is little chance of an improvement in accessing mortgage finance and, hence, a return to a normal housing market. In the meantime buy to let remains relatively buoyant due to low interest rates but investment buyers are driving a very hard bargain. Those who have been waiting in the wings for an up turn in the market this year will likely be disappointed.

Bah Humbug!

2011-12-05T13:55:00.001Z

For our last market commentary of the year we thought we would make an effort to be festive! However, as the end of 2011 hoves into view we learn that the politicians are meddling with the housing market yet again. The latest wheeze is a taxpayer guarantee for first time buyers who cannot afford a decent deposit. Hang on a minute! Didn’t prices become unaffordable due to lax lending and a massive credit bubble? Unpalatable though it may be the plain truth is that the market will not function properly until house prices become more affordable relative to incomes. With no sign of wage inflation this can only mean that prices have to soften over time. Will sanity return in 2012 or will Tiny Tim have to scrimp and save until he is in his 40s to put together a deposit? Have a Merry Christmas one and all!

Trojan Horse returns Pandora's Box

2011-11-02T10:16:00.001Z

The Greek decision to hold a referendum on the Euro Zone bail out has roiled the markets. As if a mighty Trojan Horse has been wheeled into the City the spectre of a Greek default is on the cards again. If Greece defaults it is likely that others will follow resulting in Credit Crunch 2. Like Credit Crunch 1 only worse. Hardly a recipe for booming house prices. Will the embattled Greeks bite the bullet and thereby bequeath a massive debt burden to their off spring for generations to come? Maybe for them default would be the lesser of two evils. In the meantime the hope remains that the Chinese will bail out everyone. Until the mess in the wider economy is sorted out then the housing market will remain dysfunctional with vanishingly low turnover.

Viewing Tips for Sellers

2011-10-26T08:04:00.001+01:00

So we've arranged for a potential buyer to view your home this weekend. As it's a competitive market for people selling properties at the moment they may well have other properties that they are interested in. How do we make sure that your's is the home that impresses the most?

Here are five simple tips that will help to show your property’s best features:

Make Space

Open blinds and curtains. If its dark turn on all the lights.

De-Clutter and De-Personalise

Give the place a good tidy up. Also sometimes buyers have a hard time picturing themselves in a house that is filled with too many pictures of other people. So remove personal or family photographs from the walls, book shelves and fire mantels. Sparsely decorated walls also give the illusion of larger space. Replace photographs with plants or fresh flowers. Fresh flowers on the kitchen table or work surface also add appeal.

Eliminate Distractions

If possible have the children visit a neighbour! - Turn off the television.

Aromas

If you’ve got a bread making machine gathering dust then get it out and use it! Failing that, put on some fresh coffee or boil cinnamon sticks in water to give your home a welcoming smell.

Set out bowls of pot pourri in the bedrooms and bathroom. Put out fresh towels and new soap in the bathroom. If you have any pets then arrange to have them out of the house. Some people are allergic or just afraid of animals.

Availability

It is sensible to limit showings to the weekend and perhaps another day during the week. With this arrangement you can realistically have your house looking at its best for prospective purchasers.

Finally, when showing your house yourself don’t ever apologise for its appearance. This will only draw attention to something the buyer may have overlooked!

Is Mervyn a twitcher?

2011-10-20T11:09:00.001+01:00

Last week in the shadow of the Liver Birds Bank of England Governor Mervyn King gave a speech to the Institute of Directors. In explaining the Bank’s decision to print more money he issued some sobering strictures. Our underlying problems stem from a period of “unsustainably high levels of consumption”. On the face of it throwing more money at the situation “appears diametrically opposite to the direction in which we need to go in the long term” and the effect will be to “delay and exacerbate the size of the adjustment ultimately required.” In short, we will all have to get used to spending less and saving more. But if, in the longer term, people have less money to spend then will that include money to spend on houses? If Mervyn is right then those who are sitting tight hoping house prices will soar to previous heights may find that they have an albatross round their neck when the chickens come home to roost.

Which first - the good news or the bad news?

2011-09-22T12:31:00.000+01:00

In April last year we talked about the burden of debt repayment faced by the Banks that had tapped the Bank of England’s Special Liquidity Scheme. Launched in April 08 the SLS allowed Banks to swap illiquid assets (principally mortgaged backed securities) for government bonds thus easing their liquidity problems. However, repayment terms were 3yrs and we pointed out this would lessen Banks ability to lend to customers in the short term. Good news then as the CML reports its members have repaid all but £20bn of the £200+bn advanced. The bad news is that it is now the risk of sovereign defaults that is impacting Banks capacity to tap the money markets. If Credit Crunch 2 results then this cannot bode well for mortgage availability. Let’s hope the politicians can come up with a global solution! To end on a positive note Jaguar’s announcement it will build a new engine plant on the outskirts of Wolverhampton should provide at least some support for the local housing market.

Home ownership a pipedream?

2011-09-09T09:37:00.000+01:00

A couple of weeks ago the media were leading with a report by the National Housing Federation (a lobby group for Housing Associations) that within a decade home ownership in England would decline to 63.8%. On the other hand Government statistics show 80% of people aspire to buying their own home. Cue much wringing of hands and property experts referring to “pent up demand”. However, CML statistics show that UK home-ownership has never exceeded 71% so it seems there has always been a mismatch between aspirations and reality. It’s true that affordability for first time buyers remains stretched but as lending criteria relax over time they will be in a better position to compete with the investment buyers who are currently hoovering up most of the property in what, traditionally, has been their segment of the market.

Of Ambulance chasers and Estate Agents

2011-08-25T08:09:00.000+01:00

Last year we reported the OFT was worried about the referral fees or “kick-backs” many Estate Agents get paid by suppliers of conveyancing and other services. We showed how these combined with others such as “Sign-up” and “Withdrawal” fees meant that many agents were actually generating a healthy income without selling their Clients’ houses. The story was not well received by one of our competitors who actually rang up anonymously to complain about it! So it’s interesting to see “kick backs” making the headlines again. This time its the millions of pounds Insurers trouser from so-called ambulance chasers. Politicians are calling for a ban. However, at least there is a degree of transparency around these arrangements. For example, one insurer tells its customers that its “Preferred provider” pays £3.00 for every policy issued. If you do the sums that equates to £3.3 million pounds a year and an average of nearly £700 per accident claim referred. Ambulance chasers more ethical than Estate Agents?……… Surely not!

Waiting for Godot?

2011-07-14T12:33:00.000+01:00

A remarkable number of people are, it seems, putting off bringing their property to the market because they have the expectation that house prices will recover significantly over time. They may be in for a long wait. In the past house prices have bounced back courtesy of wage inflation which had the effect of eroding the true cost of servicing debt. This time round there is no sign of wage settlements even matching increases in the cost of living. To make matters worse we have head winds caused by an ageing population which inevitably means higher taxes and a further squeeze on disposable incomes. So even if credit conditions relax then absent a big rise in wages most people will not be able to take on debt at a level that would result in upward pressure on house prices which are presently being supported by a combination of low supply and ultra low interest rates. For those of a certain age who want to downsize and get on with their lives maybe waiting is not that good an option!

Tough!

2011-06-29T12:23:00.000+01:00

When the Bank of England, the FSA and the UKAR (the body that looks after £80bn worth of mortgages bailed out by the taxpayer) all choose to run with press releases on the same topic in the same week you can only conclude that there is a concerted effort going on to educate the public. The topic in question is that of “Lender forbearance”. Unlike previous recessions Mortgage Lenders have not rushed headlong to repossess properties in arrears but have exercised “Lender forbearance”. Examples include payment holidays and switching loans from repayment of capital and interest to interest only. It is said that some Lenders have been too lenient and some “tough love” is called for. Whilst forbearance can help some to dig themselves out of a financial hole others are just digging deeper. What’s more both the Bank of England and the FSA suspect that Lenders are using forbearance to disguise the number of loans they have in default. This gives a false impression of their financial resilience. The problem is that if Lenders suddenly start off loading more repossessions an already depressed market could see a significant double dip

Going global

2011-04-13T16:31:00.001+01:00

In its latest quarterly review the IMF looks at the consequences that house price “busts” have had for advanced economies such as the UK and the wider implications for global financial markets. According to the IMF such “busts” normally last about four and a half years and see a thirty percent drop in prices. This time round things have been different which points to the impact of the globalisation of financial markets. Looking to the future the IMF says: “It may not be sufficient to ensure that loans made to residents by domestic financial institutions are prudently managed and that the domestic housing market is sound. In future, policymakers may need to be aware of developments in geographically distant financial markets and take action to protect their financial institutions from risks emanating from these markets”. Will this result in an international “gold standard” for mortgage lending? Only time will tell but the fact is that the UK housing market cannot exist inside a bubble.

Rees Page and NALS at forefront of collaboration

2011-03-25T09:49:00.002Z

Rees Page has become the first firm of solicitors to become accredited by the National Approved Lettings Scheme (NALS). This follows on from lobbying by the firm which resulted in the Law Society and NALS entering into an affiliation arrangement.

In a largely unregulated sector Rees Page believe that it is essential that professional organisations such as the Law Society and NALS collaborate so as to ensure standards are raised.

Coupled with the Firm's Law Society "Lexcel" accreditation the NALS mark means that both Landlords and Tenants alike can be confident that they are dealing with a trustworthy partner whose focus is firmly on best practise.

Euro antiseptic?

2011-03-16T16:23:00.000Z

The forces of Europe are gathering against the laisser-faire attitude that led to so many toxic loans being dished out at the height of the credit bubble. Likely to publish a Directive shortly on the topic of “Responsible Lending and Borrowing” the EU is anxious to promoting a single market in mortgage lending and to disinfect a sector that had become afflicted by dubious practices. The medicine will likely include:
Minimum competence requirements for staff involved in selling loans; standardised information about the terms and effect of loans; transparency around mortgage brokers fees; an obligation to carry out a “robust” assessment of the Consumer’s ability to repay and to match the Consumer to the product. Finally, Borrowers themselves will be under a stricter obligation to provide “complete and correct information on their financial and personal circumstances”. Expect the medicine to provoke squeals of pain from Euro sceptics and the mortgage sector alike.

Caught between the Rock and a hard place

2011-03-03T09:10:00.000Z

It’s an age since Northern Rock roiled the financial markets but despite the passage of time and ultra low interest rates there are still scant signs of any improvement in the housing market. Transaction volumes remain historically low with mortgage finance severely rationed. Lurking in the background are the twin spectres of negative equity and the threat of increased borrowing costs. In his preface to Lloyds latest annual report Tim Tookey Group Finance Director said: “House prices fell slightly in the year and the proportion of the mortgage portfolio with an indexed loan to value of greater than 100% was broadly stable at 13%.” This implies a sizeable proportion of UK households in negative equity. Add to this the costs of moving and Lenders preference for low LTVs and it all points to a reduction in mobility for the UK workforce. Not a good thing if we are to have a sustainable recovery.

A lost generation and a lost decade?

2011-02-15T15:20:00.000Z

Today Housing Minister Grant Shapps invited Lenders to a “summit” to discuss the plight of First Time Buyers. In advance the CML put out an article pointing out that it is not only FTBs who are suffering in the current market. Present sales levels mean the lowest turn over of homes relative to the housing stock for over 40 years. We have said before that the key to restoring a healthy market is a return to affordability for FTBs. In the past this has been achieved by the ratio of house prices to income reverting to its long run average (often at the expense of inflation). We all know that price inflation is becoming a headache but whereas previous generations saw the cost of servicing debt eroded by wage inflation the current crop of would be FTBs don’t have this as a leg up onto the housing ladder. Absent a marked short-term correction in house prices (which seems unlikely) it would appear as though we are in for a long haul back to normality. In fact the CML predicts that “it may take several years” for sales volumes to revert to their historical average.

Estate Agent Ate My Hamster Shock Horror!

2011-01-19T11:58:00.001Z

Well, that got your attention didn’t it? Like the “Express” last week which trumpeted, “House prices set to surge”. For years the tabloid press has sold newspapers on the back of improbable but eye-catching headlines and when it comes to property prices they just cannot resist the temptation. However, we are inclined to a more sober approach. Before the election we pointed out that none of the political parties were saying anything about the eye watering sums Lenders are scheduled to repay as emergency support is withdrawn and the impact this will have on the housing market. According to the Council of Mortgage Lenders their members need to find a mere £110,000,000,000.00 this year with another £120,000,000,000.00 by 2014 (the noughts give you a better idea of the sums involved than does mention of “billions”). Add pressure to improve capital ratios and it all points to a dearth of money available to lend for anything let alone house purchases. A case of “All urge and no surge”

A bumpy ride in 2011........and beyond?

2011-01-06T14:16:00.000Z

Regular readers know by now that when analysing the prospects for the housing market here in the Wolverhampton area we look not only at local conditions but also wider issues. Uppermost amongst these is the cost and availability of mortgages. The latest Bank of England survey of credit conditions sets the scene for the market going forward and it suggests a rather bumpy ride. Lenders report being less enthusiastic to lend for house purchases because of concerns that prices will fall further thereby eroding the value of their security. There are also even fewer potential buyers out there. Finally, those who are prepared to take the plunge are finding that having improved somewhat the availability of mortgages at a loan to value of more than 75% has contracted again so big deposits remain the order of the day. All this adds up to a dearth of so-called “aspirational” or “discretionary” movers. However, on the plus side, we may now be some way through the adjustment necessary to bring overall prices back to a level where they are affordable to the majority of first time buyers.

MMR - more than a pin prick?

2010-11-18T10:53:00.001Z

2011 beckons but what will the New Year bring for the housing Market? In our view the key to any future stabilisation will be the Financial Services Authority concluding its Mortgage Market Review. The FSA believes that the house buying public needs protecting from its own folly. In the boom years people got over exuberant and took on ever increasing amounts of mortgage debt (often on an interest only basis) to gamble on rocketing house prices. The FSA feels that if people will not see sense then access to mortgages needs to be controlled by greater regulation. The remaining few mortgage lenders left in the market are up in arms and talk of mortgage rationing denying a generation the opportunity to get on the housing ladder. However, in reality the continuing lack of capacity is due largely to the demise of Securitisation (that’s where those who originate loans slice and dice them into bonds which they then sell to Investors). The paradox is that unless Investors can be confident about the underlying quality of mortgage underwriting then there is no prospect of attracting much-needed funds from outside of the traditional banking sector. The FSA needs to hold its nerve and introduce measures that will rebuild trust in the quality of mortgages, only then will we see wholesale markets re-open and money flow back into the property market at a sustainable level

Chinese whispers?

2010-10-19T14:12:00.001+01:00

In a recent speech Housing Minister Grant Shapps said that the now bust boom in property prices had been unsustainable and people need to get back to viewing their houses as homes rather than a pension pot. He implied that in future policy makers would act to damp down any further over exuberance in the market. He was, however, coy about what they would do. Well, maybe some hints can be found in the way in which the Chinese authorities are trying to damp down property price inflation over there which, according to Bloomberg, has seen price rises of more than 9% year on year. Aside from raising interest rates by 0.25% as a signal of intent the Chinese are introducing a property tax, banning loans for those looking to buy a third home and requiring first time buyers to put down a deposit of at least 30%. Will the Whitehall Mandarins take a leaf out of the Chinese book?

Bucking the market

2010-10-07T11:04:00.001+01:00

The International Monetary Fund recently repeated its view that UK house prices remain overvalued relative to long-term trends. This implies that prices may yet have a way to fall resulting in a feared “double dip”. When asked about the likely impact on the prospects for wider economic recovery in the UK IMF director Jorg Decressin replied “lower prices will be weighing on consumer confidence and could also lead to further impairments on loans as households are struggling to repay especially when the houses are worth less than the mortgages they have.” Not exactly an up beat message and with Wolverhampton particularly hard hit in economic terms its hardly surprising that the Land Registry continues to report historically low levels of sales in the area. Accordingly, you may be surprised to hear, dear reader, that in terms of completed sales we at Rees Page have just had our best September ever. The secret of our success? Well, for a start, we spend a lot of time working with our Clients to get their marketing strategy right for current market conditions. Then, once a sale is agreed our combined marketing and legal team remains focused on getting the deal completed. Undoubtedly, the Clients themselves play a big part as they have to be willing and able to act on our advice but then, of course, they are a discerning bunch!

Warring Bankers

2010-09-22T08:10:00.000+01:00

The term “Warring Bankers” found prominence in a series of court battles Finian Manson had in the 1990s. Aggrieved at treatment by Bankers he deployed the phrase in his statement of case. Manson was likely a fan of the spoonerism. Nowadays, banking is far from boring and the leading bankers themselves are supposedly under the spotlight. Vince Cable is losing patience with the greed of the big banks and even the Wall Street Journal headlines “UK Banks Profits on Mortgages spur Criticism.” Our US cousins ask how can it be that a UK borrower will pay typically 3.4% for a variable rate mortgage when your average Swede is paying 1.5% despite the fact reference rates in the two countries are similar? You can draw your own conclusions. The relevance for housing? We’ve said it before - until the cost of credit decreases and, above all, the availability increases then the current dysfunctional housing market will continue. Maybe it’s time for the government to outflank the Banks and encourage alternative sources of mortgage funding.

Blurred vision in a topsy turvy world

2010-09-09T10:56:00.001+01:00

In a recent speech MPC member Andy Haldane extolled the virtue of patience as being a key requirement of financial stability. For too long we have been impatient and looked to the short term. This myopia was a key driver for the credit bubble and subsequent crash in asset values. He illustrates the problem thus:-

“Ask your friends how they would feel if the price of their favourite luxury good were to rise by 10%. Then ask them how they would feel if the price of their house were to rise by 10%. The first is likely to be met with a frown, the second a smile. In general, people dislike goods price inflation, but like asset price inflation.

This feels rational right? Wrong. These perceptions suggest a sub-conscious myopia. Higher goods prices cut today’s disposable income. Higher asset prices cut tomorrow’s disposable income. So disliking goods price inflation and liking asset price inflation suggests a potential time-inconsistency in preferences. It is leaving as a bequest for your children the mortgage but not the house.”

According to a recent survey by AVIVA a surprising proportion of the over 50’s are seriously in debt, have little by way of savings and still owe substantial amounts on their mortgages. On top of this an increasing number are looking to equity release to try to bolster their living standards in retirement. Maybe the next generation will have no option but to take the long view.

Back to the future?

2010-07-29T10:03:00.001+01:00

The latest Land Registry stats show House Prices in Wolverhampton back to levels last seen in 2005. Add in inflation and the real cost is even lower. In 2005 the market in Wolverhampton and roundabouts was functioning well with healthy transaction levels. So with prices in real terms less than they were in 2005 and mortgage rates even cheaper you would expect transaction levels to have bounced back by now. Regrettably not. Year on year sales volumes show a startling picture with 2010 mustering up a paltry 477 sales to April against a healthy 873 for the same period five years ago. Why is this so? Once again the answer lies in the availability of credit. In July 2005 you could get a 5 yr fixed mortgage rate at 4.64% with a deposit of only 5%. To get anything like that deal now you would need to find a thumping 20% deposit. This is too much for many people who would like to trade up let alone first time buyers. Next year will likely see a further squeeze on mortgage lending plus tougher affordability tests so we may have to look back a long way to see what the future holds for the housing market.

Generation "Why?"

2010-07-14T11:29:00.000+01:00

Economists will tell you that the effect of rising house prices is to transfer wealth from the young to the old. The first time buyers at the bottom ultimately fund capital gains of the house owners up the chain. It is the willingness and ability of first timers to “buy in” which allows the market to function. So when you get to the stage where the average first time buyer is nearly as old as the Chancellor of the Exchequer it’s clear that the market is not functioning properly. This is reflected by the Land Registry stats which show very low sales volumes. In truth there is a generation out there who would like to buy a home but unlike their parents and grandparents before them there is no realistic prospect of them being able to afford to do so. That’s why until property becomes more affordable to them a generation currently in their 20s and 30s won’t be helping their elders to cash in their chips.

Low interest rates:- do the risks outweigh the rewards?

2010-06-29T10:51:00.001+01:00

The Bank for International Settlements (BIS) is the Bank for Central Banks including our Bank of England. With a remit to promote stability in world banking you have to be concerned when it highlights the risks associated with current ultra low interest rate policies. Low rates and cheap credit got us into this mess in the first place resulting in a search for yield which in turn saw house prices boom. BIS observes that low rates allow High Street Banks to make super profits and thus rebuild their balance sheets (assuming they don’t blow it on bonuses). Not difficult if your business involves borrowing short-term money at less than 1% and lending long at 5%. However, if you leave rates too low for too long you risk creating an even bigger “bust”. On the other hand if you raise rates too fast and unexpectedly then you frighten the horses of recovery. So BIS says:-
“Signalling policy rate changes early can help to allow markets and institutions to make a smooth adjustment to the anticipated shift in asset prices and funding costs”.
Coincidentally at the last meeting of the MPC Andrew Sentence voted for a 0.25% rise in base rate thus signalling the beginning of the end for ultra low rates.

None so deaf as those who will not hear

2010-06-15T11:13:00.000+01:00

In July 2007 we said in these pages that cheap credit had been driving up house prices. The credit bubble continued to inflate for a little while longer only to start leaking after Northern Rock and then burst with a bang upon the demise of Lehman Brothers. Since then the Bank of England has slashed base rate and pumped billions of pounds into the economy. This has put a prop under the housing market and according to our London centric media the party has started again with prices surging in the Capital. Unfortunately, it seems some people are once again turning a deaf ear to the fundamentals and at the same time building up false expectations. Lets look at the following stats for Wolverhampton courtesy of The Land Registry:

Month/yr Ave price Volume of sales
05/06 £116k 309
05/07 £121k 302
05/08 £127k 216
05/09 £105k 119

The figures for May 2010 have yet to be released but as you can see the big problem is volume. Of course if you’re truly hard of hearing you can try turning this up. For house prices this would mean the Banks making more cheap money available to borrowers.. …….an unlikely prospect you may think.

Warning 300,000,000,000 pound elephant in the room!

2010-04-22T09:32:00.001+01:00

Imagine a room big enough to take an elephant of this size. Then imagine squeezed into it with the elephant three men called Gordon, David and Nick. They know the elephant is in the room with them it’s so big they could hardly miss it. But the elephant makes them feel uncomfortable. They turn their back on it and pretend it isn’t really there. Looking out of the window they see people passing by on their way to vote. Seeing the three men in such a squeeze people stop and offer their sympathies. It’s so difficult to get your foot on the first rung of the housing ladder these days and having to share your room with such a big elephant must be really hard! “What elephant?” the three exclaim. “If you’re worried about housing we’re the men to come to for all your problems”. “I’ll widen home-ownership” promises Gordon. David pledges to “create a property-owning democracy where everyone has the chance to own their own home”. Nick is rather more downbeat.“I’ll investigate the potential for Councils to borrow against their assets to build more housing”.

“But how can you do all this when you’re stuck in the room with the elephant ask the passers by?” “What elephant?” exclaim the three men.

From 2011 mortgage lenders have to start paying back £300 billion lent to them by the taxpayer to keep them afloat. The question is how can they do this and at the same time make mortgages more widely available. It would be nice to know the answer.

The Darling Buds of May

2010-03-25T10:04:00.001Z

Spring is in the air at last! Sellers are confidently returning to the market, stock levels are rising and first time buyers are being wooed by none other than our Darling Chancellor of the Exchequer. The Stamp Duty “holiday” he announced in the Budget certainly grabbed the headlines and let’s face it as Estate Agents we have a vested interest in talking up the market. Darling we love you!

OK let’s be realistic. In truth the latest measure is a bit like resorting to that small bag of fertilizer you unexpectedly found Spring Cleaning the Potting Shed. In your heart of hearts you know it’s not enough to do a really good job but every little bit helps and the harshest winter for 30 years has left the garden in a sorry state.

What we really need for both the garden and the housing market is a decent barbecue summer….. and a World Cup victory (if you’re English). So what of the long range forecasts for these areas? You can forget the weather as the Met Office has given up after last year’s debacle and rumours of “Rooney’s knee” fill us with a sense of football foreboding. The housing market? Regrettably, the prevailing wind is still from the North. A continuing lack of mortgage availability brings the risk of frosty conditions and a threat to those tender Spring buds. Good Estate Agents like good gardeners will be keeping an eye on the weather this year.

Paying the price

2010-03-01T11:06:00.001Z

The OFT is worried about referral fees or “kick backs” that most “traditional” Estate Agents get from suppliers of conveyancing services and HIPs. The payments work to the detriment of consumers……Of course, along with other trickery they also enable Estate Agents to make money without selling houses. But who pays the price and how does it work? Here’s some idea of the additional income Estate Agents can generate.

“Sign up fee”(you pay for the privilege of simply signing up) £200.00
Referral fee from HIP supplier £200.00
Conveyancing referral fee £125.00
All adding up to a cool £525.00

Not bad but the opportunities don’t end there. Many agents point purchasers in the direction of the agent’s “preferred” conveyancer. That’ll be another £125.00
Then there’s commission on mortgages £ lots!

Could this explain why some agents are marketing properties at 2007 prices. Over priced to sell but, hey, why bother when you can charge for adverts £plenty when the client gets fed up there’s a “withdrawal fee” £100.00

Who pays for all this? We’ll leave it to you to figure out. Is there an alternative?

Rees Page……a break with tradition.

Something better change

2010-02-10T08:19:00.000Z

Low interest rates have created something akin to Alice in Wonderland or, as Andy Haldane at the Bank of England would have it, they have provided temporary relief for a Debt Hangover. What happens when the medicine runs out? Haldane says if long term interest rates reverted to a more normal 5% then UK households debt servicing costs would almost double relative to income bringing them to levels last seen in the 1990s recession. Hardly a recipe for a booming housing market you may think. More controversially, Haldane observes some economists arguing for mortgages to be designed to avoid the repeat of a credit-fuelled boom and bust. Instead of being fixed in money terms the size of the mortgage would vary with house prices. Tying repayments to the loan to value ratio would mean when prices go up in a boom the repayments do likewise thus damping down speculation. Conversely when prices fall in a recession lower repayments help people when they are most cash strapped. An extreme step but the fact it’s been considered suggests the Regulators feel that something has to change. Will the political classes turn a blind eye though? Who knows, but if you’re thinking of selling can you afford to wait and see?

Not so Golden Brown

2010-01-27T12:46:00.001Z

Last week’s rather anaemic growth figures suggest the economy emerged from recession at the turn of the year. Whilst sceptics have pointed to the fact that the stats may yet be revised downwards at least the respected IMF sees things improving here in the UK. Closer to home MPC member Andrew Sentence in a speech to the British Property Federation focused on the outlook for the Housing Market. Here “Uncertainty” seems to be the key word. Particularly around the general economic backdrop and future interest rates. The problem is that UK inflation has been consistently above expected levels for a long time so base rates may have to rise sooner than is to be hoped. Meantime it’s ironic to see the banks that got us into the mess able to benefit from the lack of competition for mortgage business. With remortgaging difficult except on low loans to value they are able to charge more to their “back book” customers and new customers are having to jump through lots of hoops. Back in July 2007 we cautioned that it was the supply of cheap and easy credit that had fuelled the surge in house prices and that this was not sustainable. At the risk of making some people frown it’s worth repeating that until money for house purchases becomes more plentiful and cheaper then house prices are unlikely to take off again. So if you’re unsure about selling we suggest you ignore the Siren songs about golden times ahead…… otherwise you could spend a long time tied to the mast!

Grabbing the Headlines

2010-01-18T12:18:00.000Z

Newspaper headlines have recently been trumpeting hikes in house prices. Normally this follows from the publication of a so-called “House Price” Index. Should we in Wolverhampton take any notice? Probably not! In our humble opinion the only Index worth even considering is the one published by the FT in association with Acadametrics. That Index also suggests an upward trend. However, if you look behind the headline average figure you see wild variations between regions and in particular between London and the rest of us. London prices are severely skewing the national average. Believe it or not house prices in Richmond upon Thames are at an all time high. So how does Wolverhampton measure up against Richmond upon Thames you may ask? A visit to “Up My Street” .com gives a flavour of what the typical resident is like in this posh part of London -“affluent urban professional”, “mostly single or couples”, “very few children”, “mostly living in flats”, “in the winter they go skiing and take at least one other holiday which is usually far flung”……in short they are “Yuppies”….just like your average Wulfrunian? Make up your own mind! The fact is if you want a real insight into what the market is doing here in Wolverhampton don’t take any notice of the Headlines instead talk to those who are really in the know.

Rock the Casbah

2009-12-01T10:45:00.000Z

If you think that the road to recovery in the UK property market is somewhat rocky then spare a thought for Dubai. With prices down 50% from their debt-fuelled peak the Dubai dream has lost a lot of its lustre. By comparison the property market in Blighty looks rather good!
Of course, not all Rocks are bad. A fact born out by the EUs decision to allow Northern Rock to be split into a “good” bank and a “bad” bank. Mortgage Finance Gazette reports this will allow the State-backed “good” Rock to more than double its mortgage lending from £4bn in 2009 to £9bn in 2010. Which is good news for the UK housing market going forward. With the supply of credit continuing to be squeezed in 2010 any increase in lending should help underpin a modest growth in the number of transactions. However, outside London and the South East don’t expect much by the way of real price increases. A flat (ish) market is more likely. Not so much Rocky as undulating. So you see things do seem to be getting a bit better.
Anyway, since this is the last of our ramblings for 2009 here’s wishing all our readers a Very Merry Christmas and a Happy New Year. Hope to see you in 2010.

Lost in the supermarket

2009-11-17T14:52:00.001Z

We were surprised to receive a call the other day from a pleasant enough chap who wanted to know if we would like to advertise our properties in Tesco. Now we’ve got nothing against Tesco (nor ASDA for that matter who had a rather unsuccessful foray into the estate agency business recently) but the prospect of encouraging Joe and Josephine Public to treat buying a home the same way as buying beans did not seem to us to make sense. Particularly when the OFT has just published a detailed survey into what the public most want which includes:-

Good advertising/marketing
Help with arranging viewings
Guidance on the selling process
Advice on market appraisal/valuation
Help with negotiations
The convenience of accompanied viewings
Advice on offers
A good conveyancing service
Help with HIPs
Someone who will help them get the deal done.

Professionalism and reputation were the most valued attributes. Only a minority of sellers based their decision on the level of fee. It appears the public is rather more discerning than we may have been led to believe. What’s more if you go to the right agent you can even get Waitrose quality at Tesco prices. So you see you can shop happily after all!

Working for the Clampdown

2009-10-22T10:55:00.000+01:00

The FSA Discussion Paper “Mortgage Market Review” has already attracted quite a lot of press comment…..”No more Liars Loans” (self-cert mortgages to you and me), regulation of “buy to let” mortgages, interest only loans under the microscope etc etc. This is all the stuff of headline writers. However, there is something more fundamental at the root of changed FSA thinking – “We believe that irresponsible borrowing has been just as much a part of the problem in the mortgage market as irresponsible behaviour by firms”. You see, for years the FSA believed in the notion that the free market model is perfect. “Our policy approach to date has been underpinned by a view that mortgage consumers will act rationally to protect their own interests”. So regulation wasn’t necessary! No, seriously, that is what they thought! But now “We believe that we need to change that approach, recognise the behavioural biases of consumers and be more interventionist to help protect consumers from themselves”. So there you have it. The Punch Bowl may have been given back to the City Bankers but Jo Public will no longer be able to gamble on the housing market. It seems that there is a determination to prevent another unsustainable rise in house prices. Truly “No more boom and bust”. So sitting tight and hoping for a return to the dizzy heights reached by prices in 2006-2007 does not look like a viable option. Does it?

It's London that's turning

2009-09-25T11:11:00.000+01:00

Most of the media in this country is London centric. So when the property market in London shows signs of improving then the National Headlines scream “Green Shoots of recovery”. The fact is that the London market is isolated from the rest of us. As a leading world capital London has always attracted purchasers from overseas and the combination of falling house prices coupled with the pounding that sterling has taken on the currency markets makes London look pretty cheap…….if you’re buying in Euros! When the national house price statistics are compiled London’s inclusion distorts them. If you look at the detail then the English Regions including the West Midlands are continuing to struggle. However, there is some good news as we have definitely seen sale volumes picking up (albeit from historical lows) and the prices achieved for some types of property have begun to stabilise. Whilst it’s London that’s turning at least we’ve stopped burning!

Darling can we afford £1750 on another holiday?

2009-09-07T09:46:00.000+01:00

In September last year Chancellor Alistair Darling introduced a Stamp Duty “holiday” to try to breathe some life into the stricken housing market. The previous zero rate threshold was increased from £125k to £175k. The resultant saving of up to £1750 was a welcome relief for first time buyers faced with the need to find bigger deposits and tighter loan to value ratios. However, the Holiday is due to end on the 31st December unless the Chancellor relents and extends it in his pre-budget announcement due roundabout November. With the Treasury strapped for cash it would be unwise for buyers to bank on Darling delivering this time round. If you’re budget is up to £175k then you need to act quickly to be sure of securing this important saving.

Should I stay or should I go?

2009-08-25T07:49:00.000+01:00

A lot of people are agonising about whether or not they should bring their property to the market. Mention of “green shoots” and a recovery in the wider economy has been building a false expectation that house prices will surge at some time in the near future. Why not sit tight and wait for the market to recover? It could be a long wait. A look at the housing derivatives market sees traders forecasting a second dip in prices in the next couple of years, a small bounce back thereafter and then stagnation for some years to come. RBS (not renowned for its ability to predict the future) is looking at a double digit fall next year whilst the RICS (not much better at forecasting than the met office) is talking about price rises towards the end of this year although they are rather coy about future trends. So if indecision is bugging you then now might be as good a time as any to test the water before everyone else starts taking the plunge!

Political Posturing

2009-07-27T07:52:00.000+01:00

“A proposal within the Green Paper on Quality and Choice aims to ensure that everyone has the opportunity and greater choice of a decent home….it emphasised the need to examine the potential for mortgage backed securitisation in the UK as part of developing a more efficient delivery mechanism for mortgage products”
“Fannie Mae (the US government backed lender) has a target to lend a trillion plus dollars to marginal home-buyers”.
Both of these quotes come from a research paper published in September 2003. So when the Chancellor is reported as summoning the bankers to number 11 for a ticking off they may well remind him that we have got into this mess because politicians on both sides of the pond wanted to artificially raise the level of home-ownership. They even relaxed regulation to let the Bankers rip and boy did they do that with a vengeance! Going forward you can expect policy makers to start changing their tune. Expect the rental sector to flourish as higher mortgage costs keep a lid on significant house price rises for a very long time indeed.

"It's loans!" moans Bovis

2009-07-10T10:08:00.002+01:00

In November 2007 (Bovis Moans) we said that the house builders share performance suggested house prices were about to start moving south also. Unfortunately, we were right! So how has the housebuilder been doing in the meantime? According to the BBC over the first 6 months of 2008 its average new build sold for about £160k. Down about 18% from a peak of roughly £196k in 2007. What isn’t clear is if Bovis has been able to bolster the ticket price by offering sweeteners on part exchanges as well as cash back deals. Some builders have favoured these so as not to appear to be discounting too aggressively. The problem for most of us is that second hand stock has to compete with new builds. What about the future? Bovis says that depends on the availability of mortgages. Hmmm where have you heard that before?

Told you so!

2009-07-02T12:52:00.001+01:00

Avid readers will recall that in July 2007 we wrote that cheap credit had driven house prices up to the levels seen that year. We pondered what would happen if it dried up. The rest of course is history. But what about the future? A recent Bank of England Credit Conditions Survey suggests that Mortgage Lenders believe access to credit will become easier over the coming months. Lenders report an increased appetite for risk including higher loan to value ratios (which means smaller deposits) and less stringent credit scoring. There may even be signs of life in the market for residential mortgage-backed securities. All this could mean that a floor will be put under house prices and that this year will see the stabilisation in price we talked about in our last piece. However, significant price increases seem unlikely given the general economic recession and the growing threat to jobs. Expect a return to more normal transaction levels late this year and early next albeit at more realistic prices.

Have House prices reached a sustainable level?

2009-06-19T09:57:00.000+01:00

According to Land Registry statistics Houses sold recently in the Wolverhampton area have been achieving sale prices at levels last seen in late 2004 / early 2005. This equates to a fall of about 20% from the market peak in late 2007. Have we now reached a level that is sustainable going forward? Bank of England Governor Mervyn King and his colleagues on the MPC seem to be hoping that further significant falls will not occur. This is what the latest MPC minutes said on the topic:-
“A stabilisation of house prices at current levels would benefit homeowners, limiting the reduction in their net wealth and capping the scale of negative equity, and would provide support to the balance sheet position of banks”.
If the Bank’s sentiments are correct then both buyers and sellers will need to adjust their expectations. At present there is a stand off with many sellers who missed the boat unable to stomach the reality that the market will not bounce back any time soon and buyers reluctant to commit because they fear further sharp reductions. Only time will tell but with hindsight it may turn out that 2009 wasn’t a bad time to do a deal! We have certainly seen a greater willingness to strike deals in recent weeks but, after all, our Clients are a pretty “savvy” lot!

Why pile 'em high?

2009-05-20T07:52:00.001+01:00

According to Rightmove in April Agents persisted in bringing over-priced property to the struggling housing market. Various explanations were suggested including stubbornness on the part of would-be sellers who won’t accept that they’re affected by falls in the market. But if an Agent is already listing 500-600 properties that they can’t sell why would they take on more? Why not say “sorry Mr and Mrs Seller I don’t think we can achieve what you’re looking for perhaps you should try someone else?” After all, that would allow the Agent to concentrate on those clients who are realistic on price and help bring in those sales fees. It’s also an honest and open approach! Hmm perhaps there’s more to this than meets the eye. Coincidentally, in May Channel 4 News ran a piece on kickbacks paid by HIP companies to Estate Agents. A hundred pounds or so isn’t uncommon. On top of this some agents charge for advertising (where they can make a margin), some get kick-backs on conveyancing referrals and others even get away with charging Sellers a “registration fee” of a couple of hundred quid before they will condescend to market their house (reverse psychology at its best!). So you see some Agents make money out of not selling houses! Now that is clever.

A miscellany of modern property terms

2009-05-18T11:17:00.000+01:00

Changes in the world of Property have, in the past few years, seen the advent of a whole host of new initiatives most of which are known by obscure acronyms or jargon. In an attempt to shed some light upon the matter and advance the cause of Plain English there follows a list of definitions along with some back ground information which will hopefully assist you in getting to grips with what’s been going on and what the future may hold.

HIP – Home Information Pack – a ruse by which the Government acquires information about your home at your expense. It also helps line the pockets of its friends in big business. By law you must have one in order to market your home to the public. Often justified on the grounds that it helps would be purchasers make better informed decisions about house purchases. Regrettably, hardly anyone asks to see them other than “Conveyancers”. This is because the average purchaser doesn’t understand the contents and Estate Agents detest them.

EPC – Environmental Performance Certificate – a compulsory component of a HIP-
A ruse by which the Government finds out how energy inefficient your home is probably with a view to levying some sort of environmental footprint tax in the future (they’ve done it to cars so why not do it to our other “obsession” houses?) – it also helps line the pockets of government’s friends in big business. Here’s how it works – you let someone into your house who is nominally independent but really acting for the Government and you let them roam around freely. Unlike the police they do not need a warrant (MPs, Mr Speaker and the Sergeant at Arms please note). They then charge you for a report which tells you how unfriendly to the environment your home is. The money goes to the new HIP “industry” which is run by the Government’s friends in big business who helped them to set up the scheme in the first place. You then include details in your sales particulars so your intended purchaser can ask you to drop the price to cover one of those nice green boilers that a German sounding company started advertising on telly about the time HIPs became law.

PIQ – Property Information Questionnaire – a new compulsory HIP component. –its full of questions about your property and you have to fill it in before you can put it on the market. It duplicates in part another form your “Conveyancer”will ask you to complete later if your purchaser hasn’t been put off already. If you are having difficulty in filling in the form your Estate Agent probably won’t help because they are scared of being prosecuted under the Property Misdescriptions Act. However, your Estate Agent will be happy to get a HIP provider to sort things out because they will probably be paid a referral fee or“bung” for pointing you in their direction.

AHIPP – Association of home information pack providers
“Founded in 2005 by a number of key players in the emerging market” – an exclusive little club of HIP providers whose members are mostly big business, friends of the Government and “bulk” Conveyancers. They have come up with their own code of conduct. Their members often seem to know about changes to HIPs before they are made public They seem a bit like a new professional body. However, with an annual membership fee of £12000.00p it’s a bit more expensive to join than your average professional body. So small businesses needn’t bother.

E-conveyancing – an opportunity for the Government to make more money out of the property market and to cement the position of its friends in big business. Central to this is something called the “Chain Matrix” which is a clever computer project which the Land Registry can no longer afford because of “The Credit Crunch”. This is despite hikes in Land Registry fees and the fact that for years the Land Registry returned big “Negative Deficits” (or “surpluses”) which seem to have been spent on other things. By “seeding the market with the prototype” and “developing good examples of technical functionality” the Registry (sorry… Government) has paved the way for its friends in big business to take up the baton in the wider interests of the public.

“Property owning democracy” and “Home ownership” – intrinsically very good according to the Government. Buying your own property means you have the chance to make a big contribution to the Treasury by paying an extortionate amount of Stamp Duty. When you die there is the opportunity to pay a further hefty slug of tax Also very good for Government’s friends in big business because Home Ownership is a vehicle for selling lots of credit (debt). In the US they had a target for home ownership and this helped promote the market in “Sub Prime” mortgages which was once considered very good but is now thought to have been very bad. Some would like to see the phrases “Debt Laden subject of a bankrupt State” and “On my way to owning my own home by the time I’m about 70 but will then need to sell it to pay for my Residential Care Home” replace the existing terms as they are not “Fit for purpose”

“Conveyancer / Conveyancing Industry”

Terms that are not recognised by my spell-check but are liked by “web-based” organisations that offer conveyancing services but employ very few if any “solicitors”. Perhaps they would prefer it if everyone forgot the word “solicitor”. They often extol the virtues of out-sourcing work to India and advertise their services to Estate Agents by poking fun at “solicitors”.

“Solicitor”

A Professional whose existence is still tolerated by big business and Estate Agents for the following reasons:-

They provide lenders with a free copper-bottomed form of title indemnity guarantee through their professional indemnity insurance.

They are prepared to pay Estate Agents a referral fee or “bung” for sending them work and at the same time allow the Agents to claim conveyancing services as part of their brand.

They are prepared to pay Mortgage Lenders a referral fee or “bung” for sending them standard conveyancing and re-mortgage work and at the same time allow them to claim conveyancing services as part of their brand.

“Government Review of Regulation & Redress in the UK Housing Market”

The latest initiative by Government to meddle in the UK housing market. Starting with a report by Colin Jones Professor of Estate Management at Heriot-Watt University in Edinburgh. Despite the fact that the good professor is based in Edinburgh he completely overlooked the fact that in Scottish cities most houses are sold by Solicitors rather than Estate Agents. Accordingly, Solicitors didn’t get a mention in his report. This probably suits big business and traditional Estate Agents as they would prefer not to have competition from local Solicitors offering Marketing, HIPs and Conveyancing all under one roof.

The author is a Partner at Rees Page Wolverhampton – a High Street firm of Solicitors which in addition to undertaking Conveyancing also produces its own HIP and provides Estate Agency Services …….all under one roof.

Landlords lose out if they don't look at the bigger picture

2009-05-08T10:00:00.001+01:00

When choosing a Letting Agent it’s tempting for Landlords to look at the prices quoted by Agents and go with the cheapest. However, this can have unexpected pitfalls. The fact is that a lot of Letting Agents have other streams of income that they can discretely use to bulk up the money they make out of Letting a Property. They can then use the subsidy effect to produce what on the face of it are attractively low fees. Two areas spring to mind. First Milk the Tenants! Charge all would-be Tenants high fees for submitting applications to rent a property and then hit the successful ones with a big bill for the legal documentation that goes along with the process. “Fine” you may say “it’s simply transferring the cost from the Landlord to the Tenant” but the fact is fees vary. Ranging from as little as £35 to an eye watering £75 per Tenant application and £50 to £150 for documentation. In fact from reasonable to rip-off. If you’re a Landlord and your Letting Agent gets a reputation for ripping off Tenants then this is not good for your business. With plenty of property on the market Tenants can vote with their feet. The other area concerns referral fees or “bungs” to you and me. In reality Milking the Landlord without them knowing about it! In a largely unregulated sector there’s nothing to stop the unscrupulous from, for example, agreeing to source some improvement work for a Landlord and then trousering a kick-back from the supplier without disclosing it. Good business for the agent not so good for the Landlord who is unwittingly paying more than they need to.

Shooting Blanks !

2009-04-22T13:50:00.001+01:00

Ex Tory Chancellor Norman Lamont, Labour’s Business Minister Baroness Vadera and Ben Bernanke of the US Federal Reserve have all at differing times met with cries of derision for mentioning “Green Shoots” of recovery. But with Spring in the air even broadsheets such as The Daily Telegraph have been casting around for evidence of new growth in the housing market. The market which was struck a hammer blow when the Credit storm rolled in from the US nigh on 18 months ago is said to be showing signs of life as mortgage lending trends are on their way up again. Well let’s look at the statistics from the Council of Mortgage Lenders shall we. According to them the estimated lending for the first quarter of 2009 is £33bn which sounds like a lot of money. However, the like for like figures for 2008/07 were £75bn and £84bn respectively. At the market peak in 2007 a staggering £360bn was lent out. The truth is we are back to lending levels that are more comparable with 2000 when the total for the whole year was £120bn. A time when a mere £71000 pounds would buy you an average semi in Brum. Sorry but anyone who truly thinks that a return to the mortgage madness that bust the banks is on the cards needs their head examining.

Shabby Bank

2009-03-30T15:29:00.001+01:00

Just when you thought the arrogance of senior bankers had reached its limit along comes a shabby little initiative from one of the high street names that should know better. Last month Abbey wrote out of the blue to hundreds if not thousands of law firms across the country saying that they would no longer do business with them because of their supposedly paltry volumes of work (“doh” there is a housing crash out there!). About 6000 law firm offices were unceremoniously dumped off the Abbey panel. Clients who were part way through house sales and purchases involving Abbey mortgages suddenly found themselves panicking about whether or not their deals would collapse, so were their estate agents and anyone else involved in a chain. Why would Abbey choose to dish out such shabby treatment to their customers at this point in time? Cynics might suggest that the bursting of the housing bubble and resultant market crash provides a great pretext for them to channel business through their “preferred” suppliers (who may or may not pay them a referral fee for the privilege) or maybe even take the work “in house”. Why does this matter to Joe Public? Well, just look at how they’ve performed in their core business of banking…… and then imagine them calling the shots when it comes to your housing transaction! Abbey needs to realise that the concept of choice cuts both ways. Those it has inconvenienced may justifiably choose not to do business with it in the future.

Market in free fall inspires leap into the void!

2009-03-16T08:29:00.000Z

Taking inspiration from the highs and lows of the property market Sue Sheppard, our stalwart Estate Agency Department Assistant, is set to take part in a 10,000 foot freefall parachute jump in aid of Beacon Centre for the Blind. Eagerly anticipating her hair-raising venture Sue is banking on a “soft landing” which is perhaps more than can be said for property prices. The parachute jump scheduled for May is part of a number of fund-raising events organised by “Skyline”. Rumour has it that our Property Consultant Daryl Clayton will be on hand to give Sue a friendly push in the right direction should last minute nerves get the better of her. Good luck Sue!

Not so fast!

2009-02-24T14:59:00.000Z

When it comes to putting their property on the market would be Sellers quite understandably have an expectation that their Estate Agent will start marketing from day one. No sooner is the ink dry on the agency agreement than a For Sale board has been ordered and plans made to get the advertising sorted out. Well that’s all about to change. Thanks to yet more government red tape the process of getting a property to market is going to take quite a bit longer (may be up to a couple of weeks). First up is the imaginatively named “Cancellation of Contracts made in a Consumer’s Home or Place of Work etc Regulations 2008.” These were meant to be aimed at high pressure doorstep selling of things like utilities but are wide enough to catch estate agency and other contracts for services that are signed in the Consumer’s home. The regulations prescribe a seven-day “Cooling Off” period. The Seller’s cancellation rights must be set out in a prescribed form of notice. Failure to comply renders the agreement unenforceable which could cost agents two or three thousand pounds on a typical sale so they would be unwise to take the risk! Then we have the changes to HIPs which come into effect at the beginning of April which mean that more documents must be included in the HIP before Sellers can market their property.

Drop dead not so gorgeous...and mind your P's & Q's

2009-01-29T11:08:00.000Z

First a declaration of self-interest – we at Rees Page Solicitors and Estate Agents produce our own Home Information Pack (HIP) in-house as part of our “one stop” Estate Agency and Conveyancing package. So you might expect us to be big fans of HIPs. Well, surprisingly, we’re not! In theory HIPs could contribute to a smoother and less stressful property sale but in practise they have become a political football. This has resulted in a half-baked product that is of little value to anyone except the “factory” operations set up to make a killing out of them at the peak of the housing market bubble. If you think they were bad then they are about to get worse. From April this year a new document called a Property Information Questionnaire (PIQ) must be included in the HIP before marketing can commence. It is similar to the Questionnaires that Solicitors ask clients to fill in as part of the conveyancing process after a sale is agreed. Homeowners will have to do their homework in order to complete it. Traditional Estate Agents will be put off from helping because the Property Misdescriptions Act will catch them out if there are any inaccuracies. If that isn’t bad enough then the Government is being lobbied by the big HIP providers to introduce a “Drop dead” date on All Fools Day (1st April to you and me) which, if implemented, would mean that all properties that came onto the market before a HIP became compulsory would need one.

When it really comes to the crunch!

2008-12-15T14:59:00.000Z

In July 2007 we mentioned the possibility of a credit crunch and the impact that one would have on house prices. We went on to say “it is the availability of cheap credit that has been driving the housing market and if the plug is pulled then we are in for a bumpy ride.” 18 months down the line the “bumpy” scenario now seems a bit optimistic. But could things get even more difficult in 2009? According to the Bank of England a total of about $200 billion of European corporate debt matured in 2008 and required re-financing. In 2009 the figure will be about $800 billion and most of that in the financial sector. In the past many big corporations found it easy to raise cash through the bond markets and didn’t have to go cap in hand to their bank manager. Not so now. In short, this year the demand for credit is set to leap whereas the availability is still constrained. The crunch is set to get crunchier. The debt figures don’t start getting back to 2008 levels until 2013. This points to mortgage lending remaining constrained and the cost of funds being relatively high. Which means when it comes to housing it’s likely to be a buyers market for some considerable time yet.

Mervyn swerving?

2008-11-07T12:08:00.001Z

This time last year we reported that the Governor of the Bank of England had said in a speech to the Northern Ireland Chamber of Commerce that interest rates:-
“Will not be set now to insulate the banking system from the re-pricing of risk.”
Of course, that was then and this is “now”. Now it’s fashionable to quote Keynes’ line “when the facts change I change my mind”. The problem is that only a couple of months ago the Bank of England was refusing to cut rates because it was worried about inflation remaining above target for a prolonged period. Now it’s saying that the cumulative cut of a full 2% since then is because of concerns that inflation will fall from the current 5% to way below the 2 % target. Not so much a swerve as a complete about turn. If the Bank does not explain itself very carefully then people will begin to lose confidence in both its independence and judgment. If that happens then the latest attempt to kick start the economy could back fire just as we are beginning to see signs of more activity in the local housing market.

Bubble Trouble

2008-10-13T11:04:00.000+01:00

In July last year readers of this column may have wondered why we were writing then about CDOs and warning that cheap credit was under pinning house prices rather than market fundamentals. After all most agents were still encouraging clients to put big ticket prices on their properties and TV schedules were still stuffed with property related hyperbole. Turns out the ride has proved to be rather worse than the “bumpy” scenario we had considered. The market is so depressed that we now have more time to carry out esoteric research! One particularly good read is “Phantastic objects and the financial market’s sense of reality” – available as a free download from University College London. This is a psychoanalytical view of the stages of market behaviour. Hopefully, once we have worked through the stages of “panic” and the ensuing “blame” and “vengeance” we will get back to a collective frame of mind where a house is considered as a home rather than a speculative investment.

What a performance !

2008-09-12T08:37:00.000+01:00

Whilst the rest of us were munching our Easter eggs earlier this year the government was hatching a cunning plan which is about to come to fruition. It will mean yet more expense and red tape for thousands of people who are already finding it difficult enough to get their houses sold. We’ve spoken before about Energy Performance Certificates (EPCs) which are an integral part of Home Information Packs (HIPs). However, there are currently thousands of houses on the market that were offered for sale before HIPs became compulsory. No HIP meant no EPC and a considerable saving of time and money. No longer! Where a contract for the sale of a house is entered into on or after the 1st October the seller will be under a legal obligation to provide the purchaser with an EPC in relation to their property. In practical terms sellers will need to have an EPC in place in time for exchange of contracts.

Hands across the ocean

2008-09-09T10:00:00.001+01:00

21st August IPE real estate reported that the San Francisco City Retirement Fund had invested a substantial sum into the Apollo European Principal Finance Fund. Launched in May 2007 Fund Managers had seen significant investment opportunities in the non-performing loan market in Europe. Financial Institutions would come under pressure from Regulators and competitors to dispose of their non-performing real estate loan portfolios (mortgages to you and me). There was profit to be made out of “relaxed underwriting standards in the past, overleveraged customers and softening real estate markets”. The UK is seen as a target area which makes sense as Apollo has a big interest in Countrywide PLC owners of Dixons, Bairstow Eves and many other UK estate agency brands. Coincidentally, Countrywide has a nice looking website (which includes a tasteful picture of a padlock) devoted to their Repossessions “Solutions” Service which is targeted at the very Financial Institutions that Apollo sees to be under pressure. Some may call it synergy. Cynics may view it as Private Equity profiting from the mayhem in the financial markets that they helped to create by over leveraged / covenant lite deals. The next time you take advice from an Estate Agency you might want to consider who is behind them and what they are up to.

Exactly what does it say on the tin?

2008-08-01T12:41:00.001+01:00

Chris Ames (see London – Reuters 01.08.08) asset-backed securities portfolio manager at Schroders has come up with an eminently sensible proposal for restoring investors’ faith in the market for mortgage backed securities. He says that there should be a statutory definition of what amounts to a “Prime” mortgage-backed security.

As we have observed before, the reason the markets have seized up and mortgage funding become tight is that there is a lack of trust in these products as the default rates have not lived up to their often “triple A” rating. This is something Mervyn King alluded to before the Credit Storm broke when he said that the label on the champagne bottle was one thing but the contents might turn out to be flat when you opened it!

Ames reckons that if you have a label you can trust then it will be easier to persuade people to start investing again in “Prime” mortgages………..”Sub-Prime is, of course, another matter.

Short Sharp Shock ?

2008-07-18T11:44:00.000+01:00

It isn’t that long since certain pundits were talking of a so-called “soft landing” for the housing market……hopefully none of them are airline pilots! As long ago as last August we predicted in these pages that the gathering turbulence in the credit markets would deprive the housing market of the buoyancy effect provided by cheap credit. This had allowed prices to reach stratospheric heights compared with incomes. Having observed the market first stall and then tip into a nosedive the question is how far and how fast it will fall before reaching a sensible cruising altitude. Unfortunately, the answers to these questions largely hinge upon behaviour in the Financial Markets. There the picture seems dire but is in reality somewhat mixed. Some Banks did not adopt the same attitude to risk that afflicted those at the helm of the likes of Northern Rock and Bradford & Bingley. Those who were more sensible are still making profits and once they have repaired their balance sheets will be ready to start increasing the volume of their lending. Realistically, next Spring is probably the earliest we can expect credit terms to start easing significantly. By then prices will have fallen some distance and may have a little way further to go. However, the bottom of the market is likely to be called rather faster than has been the case in previous cycles.

Overvaluation in a falling market

2008-06-06T11:50:00.000+01:00

We have commented in the past about the damage that some estate agents do in deliberately overvaluing properties to get them on their books. In a rising market they get away with it because eventually the rest of the market catches up. In a falling market it’s different. So why do they do it and how can you spot them? Maybe its force of habit or maybe they think that if they can get enough properties on their books in a given area they can effectively create their own little internal market by churning them...who knows? As far as spotting them is concerned that’s quite easy. If you get three appraisals and one is wildly optimistic then it will stick out like a sore thumb. Phrases like “It’s worth £400,000.00p in the current market but lets put it on at £450,000.00p to give us some room for negotiation” are another tell-tale sign. This form of delusion is bound to fail since most would-be purchasers can access historical house price data on the internet and that big ticket price will simply put them off. If you’re selling then it’s best to go with the agent who will tell it straight and help you price your property at a level that will create interest.

Damn lies and statistics

2008-05-30T14:13:00.000+01:00

Why isn’t there one definitive set of statistics to judge house prices by? Every month we get bombarded with figures from lenders and the estate agency industry which seem to say different things. The fact is that many house price surveys look at asking prices rather than prices actually achieved. So these can be distorted if the original asking price was unrealistically high. The best bet is to look at the Land Registry figures. These record the actual price that a property sold for. However, even these are distorted by the time lag between agreeing a deal and completing the registration which could be 2 to 3 months or so (longer in some complicated chains). So what do the stats for Wolverhampton show? For the year to April 2008 there was a very small increase in prices of the order of a percentage point or so. This means that prices actually fell in real terms when you bear in mind general increases in wages. However, the annualised figure masks more recent monthly changes which point to an increasing trend for prices to fall. In April 2008 alone there was an average fall of 1.2%. Of course averages can of themselves be misleading since they smooth out the differences between different types of property (for example our own experience is that the price of flats where there is an oversupply has been falling steeply for some time whereas more traditional properties in the mid-price range continue to generate interest but then only if marketed at the right price.)

Fear and Greed

2008-05-14T13:02:00.000+01:00

Neither of the above is an attractive notion but both can result in irrational behaviour when it comes to Property. Those who see their home primarily as an investment are riding a roller coaster that can be both exhilarating and terrifying with the added spice of not knowing what is round the next corner. Getting on or off at the right time is the key to success or failure. Naturally, this scenario makes for attention grabbing headlines and a feeding frenzy amongst the media. As the roller coaster shoots skywards there are oohs and aahs of approval followed by shrieks of anguish as it plunges down the other side. The majority of people, however, are sensible enough to view their house primarily as a home with the possible bonus of some profit if they sell up and down – size at some stage. For these the main concerns are finding a property which is of good quality, in a good location and at a good price. Good old-fashioned common sense.

None are so deaf as those who will not listen

2008-04-30T08:49:00.000+01:00

When questioned by MPs the other week Mervyn King was asked about what the Bank of England could do to influence the activities of Bankers and curb their tendencies to excess and folly. His reply was to the effect that he and his colleagues made speeches. Problem was they couldn’t make the Bankers take notice of what they said. Snippets from the past include…that bottle of champagne with triple A rating on the label may prove flat when you open it (Collateralised Debt Obligations)…. the risk premia are too low (you’re not properly assessing the risk of loan default) and more importantly for us a whole host of head scratching about how the price of houses could get so out of kilter with earnings and why hadn’t people woken up to the fact that in a low inflation economy the cost of debt repayment over the life-time of a loan is not eroded by healthy pay rises as had happened in the past. For us the risk now is that those who got sucked into the hype about soaring house prices will lurch to the other extreme and expect a crash. We’ve said before that a modest correction is to be expected and is healthy as it helps first time buyers and those who are trading up.

It's the Economy Stupid!

2008-04-16T11:56:00.000+01:00

Bill Clinton beat Bush Senior to the White House in 1992 by concentrating on domestic policy. A recession in the US saw Bush side tracked by foreign policy. Sounds familiar? With harder times looming in the States and the UK politicians are fretting over the housing market. Middle England gets grumpy when house prices fall and that can cost seats at Westminster. The problem is that this time round it is Bankers who seem to be holding the reins. Failing to pass on interest rate cuts is unpopular and makes politicians look ineffectual. Expect politicians on both sides of the Pond to start pressing for much tighter bank regulation. This will be followed by protests from the Banking community and then a half-baked compromise which allows the powers that be to say they have made progress on behalf of Jo Public. The fact is that there is no quick fix and everyone in the housing market needs to appreciate that things have changed fundamentally. Forget the spin. If you are serious about selling you need to move with the market. Fundamentally you need an Agent who has experience of difficult market conditions and there aren’t many of them left!

Rates rise as lenders seek more wriggle room

2008-04-07T11:54:00.000+01:00

It used to be received wisdom that when the Bank of England cut interest rates then the Mortgage Lenders would follow. That is no longer the case. Not only are Lenders failing to pass on rate cuts but in many cases they are actually increasing them. This is particularly so where the loan to value exceeds 25%. All this suggests that Lenders judge that house values are falling and if they have more than 75% at stake themselves then they want a premium for the risk of default. Added to that we have the demise of the “slice and dice” lenders such as Northern Rock which along with the Credit Crunch has restricted the amount of credit available to would be borrowers.

Credit Crunch benefits Rental Sector

2008-03-17T10:54:00.000Z

With the turmoil in credit markets showing no signs of easing Landlords are looking to benefit from the consequential drying up of mortgage finance for would be buyers. As lenders demand bigger deposits and look to rebuild profit margins by failing to pass on interest rate cuts to borrowers many would be first time buyers, in particular, are having to throw in the towel and resign themselves to staying in rented accommodation. Good news for Landlords.

Overvaluing and Under-Feeing

2008-03-10T12:05:00.000Z

There is an increasing impression that more Estate Agents are engaging in a combination of Overvaluing and Under-Feeing. Telling someone that their House is worth more than it really is is a good way of getting someone hooked. Similarly, quoting what on the face of it seems to be a low fee appeals to the bargain-hunter in all of us. In reality both practises are bad for those who are serious about selling their Property. Bringing a Property to the market at a bloated price can have only one effect and that is to alienate prospective Purchasers. Cheap fees mean a penny-pinching approach to Client Care and Marketing. In a difficult market serious sellers need to be savvy about their choice of Estate Agent.

What Price Oatcakes?

2008-02-25T11:01:00.001Z

Two rather contradictory reports over the course of the last few days. First the Daily Express front page trumpets about house price inflation taking off again and then MPC member Kate Barker visits Stoke to talk about Oatcakes and matters of rather more fundamental economic importance such as the impact of falling house prices. According to Barker even if house prices fell by 15% then only 2% of households would find themselves in negative equity such has been the rate of house price inflation over the past decade. Of more concern is the unwillingness of lenders to lend. So there you have it – the Bank of England will not be setting interest rate policy to accommodate those who were unfortunate enough to borrow big to buy at the top of the market and now see their house worth less than the price they paid for it. For the other 98% of households who haven’t used their home as an ATM and have controlled their borrowing things look pretty good. You may get a bit less for your home than you would have a year ago but if you’re moving up the ladder then your purchase should be that bit cheaper too and you shouldn’t have to mortgage to the hilt.

Sale and rent back rip-off claim

2008-02-18T10:41:00.001Z

As a financial chill sets in you see more and more adverts offering cash for the homes of people in debt difficulties. Some of the organisations offering this sort of scheme were branded “rip-off” merchants by Adam Sampson of “Shelter” speaking on Radio 4’s Money Box last week. The problem is that this sector is largely unregulated and whilst this is the case horror stories of people only getting 50% or 60% of the true value of their home are not going to go away. For many the promise of a solution to their debt problems and the opportunity to continue to live in their home is very beguiling. However, selling on the open market and moving on may actually be the better option long-term.

Get your retaliation in first!

2008-02-01T14:51:00.001Z

A lot is being said about interest rates at the moment. Some pundits are saying reductions in Bank Base Rate will have the effect of reinvigorating the housing market. Problem is we do not have mortgages with the Bank of England but with high street Banks and Building Societies and they don’t have to pass on interest rate cuts. Instead they can look to rebuild their profit margins and battered balance sheets. This attitude was signalled in a new CML “newsletter” targeted at MPs which aimed to silence recent criticism about the failure to pass on interest rate cuts:-
“It is incorrect to assume that a base rate reduction will (or should) automatically result in a cut in standard variable rates or discounted rates”.
Expect some political pressure to be brought to bear upon Lenders who don’t play ball.

Overvaluation in a Falling Market

2008-01-16T13:08:00.000Z

We’ve said before in these pages that agents who deliberately over value properties to get them on their books do no one any favours. It’s bad enough in a rising market but then the culprits are often spared their blushes because rising prices eventually make up some of the ground so as to mask their initial unrealistic assessment. However, in a falling market agents who do this not only damage their own Clients prospects of a sale at a reasonable price (not to mention their expectations) but run the risk of adding to the tendency for Bubble psychology to develop. If a house starts off over priced by 20% what do people think when it sells for 25% less than the original asking price……answer “its lost 25% of its value. Time to panic.” Wrong! Its real value has declined 5% which is not great news but no big deal.

Don't Panic Captain Mainwaring!

2008-01-09T08:24:00.000Z

We’ve said before that Sentiment is a crucial factor in determining the path of House Prices and we seem to have been having a major helping of doom and gloom at the start of the year.
A brief look at the financial pages today sees Marks and Spencer reporting its first same-stores sales decline in over 2 years and fears about the rising cost of imports from China fuelling inflation. I thought I might find some solace in the TV schedule but then came across a programme called “Britain’s biggest house price falls”! You get the feeling that the media which stoked up over exuberance in the housing market is now about to lurch to the other extreme. It needn’t be that way. The fact is that a modest correction in what was an unsustainable level of growth can only be healthy but there is certainly no need to panic. Be sensible in your pricing strategy if you are selling and make reasonable offers if you are buying.

Christmas

2007-12-04T07:49:00.000Z

The property market is gearing down for Christmas as attention focuses on the annual festivities. Which brings me to the London Interbank Offered Rate or LIBOR. The interest rate at which bankers are prepared to lend to one another. I was amazed to see that back in the summer of 2003 the rate for a one year contract was as low as 1.2%. If only I could have got a mortgage at that rate! Of course, it couldn’t last. Those rates were very low by recent standards. The same money now would cost you the banker about 4.5%. There was lots of cheap money available so like Santa the banks dished it out and some people ate rather too much for their own good. A bout of indigestion was bound to follow and that is what we have been experiencing of late. So what now? Well, after the excesses of Christmas we go on a bit of a diet, exercise a bit more, resolve to be more sensible and before long the Yuletide flab has burned off. By the time Spring comes around we are back to normality and balance has been restored. Much like the Property Market. So on behalf of everyone at Rees Page here’s wishing you all A Very Merry Christmas and if you’re looking to sell your property in the New Year why not resolve to get in touch with us. We’d be delighted to hear from you.

Not all doom and gloom

2007-11-19T14:40:00.000Z

According to the latest Rightmove survey the average asking price for property in England and Wales fell by 0.7% during the period 10th October to 10th November. This national average masked a much higher fall in the West Midlands of nearly 2.5%. Clearly if you bought a property at the height of the market then this is not good news. However, for the vast majority of homeowners these things are all relative. Indeed, a readjustment to more affordable levels should help not only first time buyers but also those who are looking to trade up. After all most sellers are buyers too. The fact is that even in a tight market there are still deals to be done.

Where there's blame

2007-11-13T08:31:00.000Z

“I blame the government for not regulating our business more, like they do with banks. They should have seen this coming”
“I blame homeowners for basically using the equity on their homes as an ATM machine.”
“I blame the banks and lenders for approving people for homes who had no business buying one in the first place.”
“I also blame the banks and lenders for coming up with teaser rates and interest-only products that are confusing to your average consumer”.

( Marc Cardullo Mortgage Loan Officer of Maine USA - the BBC 08.11.07).

“ The UK’s currently buoyant housing market (is) an enticing proposition. Bolstered by first time buyers keen to get on the property ladder and high earners investing in second homes and property to rent, this growth shows little sign of abating”

(UK – FSA regulated mortgage broker - web site - 08.11.07).

If we in the UK are to avoid the blame game now being played out in the US then everyone involved in selling, buying and financing property needs to inject a good dose of realism.

Bovis Moans

2007-11-06T12:50:00.000Z

One of the interesting things about companies quoted on the Stock Exchange is that they need to be careful about what they say. Self-interest needs to be tempered by the requirement not to mislead would be investors. So when Bovis Homes announced today that consumer confidence had been rattled by events in the financial markets leading, in turn, to lower than expected sales volumes this autumn many commentators sat up and took notice. A look at the Bovis share price shows an inexorable decline from a high in April of this year. Perhaps investors have already priced in their expectations for the housing market going forward?

Estate Agents and Conveyancing

2007-11-01T14:15:00.000Z

Estate Agents are now actively pushing their own Conveyancing services to entice would be sellers. Often the fees quoted seem to be very attractive. That is until you start looking at the extras (favourite ones are charging extra for submitting the stamp duty return and dealing with mortgage instructions). They often stress that you don’t have to take time off work to go to a Solicitors office and SMS texting, e-mail and all sorts of electronic ways of finding out what is or is not happening will make everything seem better. The fact is that very few Estate Agents have an in-house Conveyancing service. Most refer this work to an external organisation in return for a fee. In effect you the client are being sold to someone else. You are a commodity. To help pay the fee the work is often done hundreds of miles away by people with no local knowledge. The next time you’re offered such a service why not ask where the Conveyancer is based and whether or not the Estate Agent is paid a fee in return for recommending them? Then ask yourself is that really in your best interests? Of course you could come to us. We are Estate Agents and Solicitors so we can offer a genuine one-stop solution all under one roof. You can even pop in and speak to a real person about what is after all probably one of the most important transactions of your life……the sale of your home.

A Winter Chill

2007-10-23T12:28:00.000+01:00

There is an emerging consensus that the housing market is cooling at a time when an Indian Summer is normally on the cards. When the Chancellor decides to have a swipe at the mortgage lenders role in stoking up house price inflation you know that sentiment is changing. Indeed, the latest NAEA survey confirms that the number of unsold properties continues to rise in the face of greater reluctance on the part of purchasers to take the plunge.
“In this competitive market, homeowners are strongly advised to heed the advice given to them by their estate agent on matters such as valuation and property presentation.” Not the words of the author but of the President of the NAEA and he’s right.

Get Real

2007-10-16T09:15:00.000+01:00

A common complaint about some estate agents is they overvalue properties to get them on their books. This does no one any favours. The hapless seller is given unrealistic expectations, buyers show no interest because the property is overpriced and the agent is carrying stock that will not sell. When, inevitably, the property is re-priced you see big reductions. Big reductions get people talking about a price crash and sentiment gets rattled. Today the FT reported that a one bed flat in Birmingham had seen a price reduction from £158950 to £99950 (some 37%). The report did not mention whether or not the price was realistic to start with. My guess is that if it had then it wouldn’t have been newsworthy.

Unswerving Mervyn

2007-10-10T11:12:00.001+01:00

In his speech to the Northern Ireland Chamber of Commerce last night the Governor of the Bank of England Mervyn King took the opportunity to respond to critics of the way in which the BoE handled the Northern Rock crisis. He also had this to say about the BoE interest rate:-

“ ..it will not be set now to insulate the banking system from the re-pricing of risk. But you will be sure that we will do whatever is necessary to keep inflation close to the 2% target.”

So there you have it. With signs of inflationary pressures building in the wider economy the Housing Market is unlikely to benefit from a premature easing of interest rates urged upon the Governor by Bankers who have seen big holes blown in their balance sheets. So, it may be prudent for people to plan for interest rates to remain at or about the current level for some time to come. That can only contribute to a further dampening down of House Prices.

Toil and Trouble

2007-10-04T14:07:00.000+01:00

For some time International commentators have been speculating about the existence of a bubble in the UK Housing Market. The point being that when a bubble bursts, as it surely must, it can have un pleasant side effects. Remember the dot com debacle? Whilst buyers of houses have been less frenzied than their dot com predecessors, nonetheless, a mixture of cheap credit and optimism has underpinned activity. The credit bubble having burst it would seem as though there is not much cause for optimism that prices can continue to head towards the stratosphere. Indeed, a lot of properties currently listing came to the market at its peak. As a result some of the price tags are looking a tad optimistic in current conditions. All in all we seem to be heading for more troubled times. Sellers and agents will need to work harder to get properties sold.

Market Stalls

2007-09-26T09:03:00.000+01:00

Talking to a contact the other day who supplies and erects “For Sale” boards to Estate Agents throughout the Midlands. This puts him in a fairly unique position as he gets a feel for the number of boards that are going up in the region and, more importantly, the number of “Sold” strips that are being put on those boards. He said that the market was “very difficult”. He’s right. Before the Northern Rock crisis hit the market was already beginning to cool. The jitters that have followed are having the effect of undermining buyers’ confidence. As ever, there are still committed buyers out there but if you are serious about selling you need to be realistic on price.

Rocking the Boat

2007-09-18T11:10:00.000+01:00

The problems that have beset Northern Rock may well prove to be atypical as far as the mortgage industry at large is concerned. However, one factor that applies across the board is attitude to risk. With rapid house price inflation Lenders can afford to be relaxed about Valuations, as they know that if they have to repossess a property then it is likely that its value will have appreciated since the loan was made. In the current market Lenders are becoming more circumspect and an increasing number of Sellers and Buyers may find that the price they have struck is not supported by the Lenders Valuation.

Crisis what crisis?

2007-08-21T11:24:00.000+01:00

Last month we ran a piece about CDOs and speculated about the possibility of a credit crunch and the impact that one might have on the UK mortgage market. Well the crunch came rather quicker than one might have expected and also demonstrated the global nature of credit markets. As predicted UK lenders are becoming more risk averse with those active in the sub-prime sector pulling products and tightening up on lending criteria. Mainstream lenders who rely on raising liquidity through the money markets are finding that their costs are going up and will seek to pass these on to borrowers. Meanwhile, the Council of Mortgage Lenders has reported yet another record month for loans and at the same time asserted that UK lenders are more prudent than their US counterparts were. To some this may sound conceited. Remember the Money Programme report in Feb 2004 that showed on camera people being encouraged to lie about their incomes on mortgage applications? As we have said before it is the availability of cheap credit that has been driving the housing market and if the plug is pulled then we are in for a bumpy ride.

Us and the US

2007-08-14T08:29:00.000+01:00

The US perspective on the UK housing market is beginning to make interesting reading. As the Americans ruminate over the wreckage left by their burst housing bubble they are looking at the UK market with something akin to morbid fascination. Two main threads emerge from US reporting, firstly that the UK market has already seen the peak of its cycle and, secondly, that UK sub-prime lending has been no less imprudent than that which in the States led to the recent crunch in global credit markets. Indeed, Bloomberg recently suggested that the UK sub prime market was even more at risk because of higher personal indebtedness and a record gap between the current and the long run average ratio of incomes to house prices. In the meantime we Brits reassure ourselves that the fundamentals are OK and there is a shortage of housing supply which must result in a shoring up of values. Only time will tell who is right.....

The Future of HIPs

2007-08-01T12:20:00.000+01:00

The future of HIPs is still rather uncertain despite the delayed launch today. As the only Wolverhampton based Solicitor & Estate Agent able to produce its own HIPs we at Rees Page keep a close eye on the latest developments in the HIPs saga. Our current thinking is that HIPs could be discreetly shelved at the end of the year. The acid test will be whether or not the Government moves quickly to extend the scheme to three bedroom properties this autumn. Our prediction is that by then there should be sufficient Home Inspectors to meet the extra demand that this would create. If the Government does not extend the scheme then this might suggest that it is looking at different methods of delivering Environmental Performance Certificates.

Collateralised Debt Obligations

2007-07-26T09:29:00.000+01:00

What on earth do these have to do with the Housing Market you may ask?
At first sight not a lot. However, access to cheap credit has been the main driver for the housing market over the past few years. In recent weeks we have looked at the possible effect of an increased supply of property coming to the market combined with higher interest rates. We concluded this would most likely result in a significant cooling. Indeed there are signs of this happening already. But what happens if Lenders become more risk averse? CDOs package portfolios of debt such as mortgages into high yielding bonds. Very attractive to Financial Institutions because the returns can be very high. The problem is that many CDOs are reliant on sub-prime lending which has a higher risk of default. With the virtual collapse of two major US hedge funds reliant upon CDOs for finance the markets are suddenly becoming more Risk Averse. The market for credit is truly global and so you can expect UK Mortgage Lenders to start becoming more risk averse. The sub-prime sector will most likely come under the spotlight first. If Lenders become more choosy about who they lend to and on what terms then this can only act as a further brake on the market. Could the combined effect of all these factors see it go into reverse? More than ever its important for Sellers and their Agents to be quick on their feet, anticipate market changes where possible and adapt their marketing strategies to suit.

Rate rise sees a return to a buyers market

2007-07-12T12:18:00.000+01:00

Right Move the leading Property Portal saw Estate Agents stocks of un sold property increase by 10% in June. Aside from HIPs it seems as though the rush to market may also have been fuelled by sellers who wish to cash in on the gains seen in property values over the past few years. The combination of increased supply on the one hand and worsening affordability due to higher interest rates on the other could well result in a softening of prices. In commenting on the situation Miles Shipside Commercial Director of Right Move said – “…..sellers must price more aggressively to attract possible buyers”.
In a changing market good estate agents will work with their Sellers to get the pricing strategy right.

Flat prices now trailing houses

2007-07-04T08:16:00.000+01:00

So wrote the BBC Economics Editor Evan Davis when looking at the latest Land Registry figures. These suggest that flats in some parts of the country are now losing value. Over supply is one issue but is not the whole answer. Indeed, Davis suggests that the market in flats may simply be experiencing an earlier or more pronounced cycle than the rest of the property market. Of course the concept of a cycle may be hard to grasp for a generation used to cheap credit and an ever accelerating housing market but the fact remains that the market is a two way street. Prices can go down as well as up. A correction is bound to happen sooner or later. The problem is in predicting when and by how much. If flats provide an example of the supply side of the equation then interest rates impact on demand. The recent rises mean that the cost of servicing debt is now at record levels and the Bank of England may yet have another rate rise up its sleeve. If cheap credit has been the driver for a decade of accelerating house prices then those days would appear to be over.

Buyers can afford to be choosy

2007-06-19T16:46:00.000+01:00

According to the RICS home owners rushed to put their properties on the market before the aborted HIP deadline of 1st June. Whatever the reason, there does seem to have been a surge in the number of properties coming onto the market in our area. As with any market these properties are competing with others to secure a sale. Gone are the days when Purchasers were queuing up to buy. Affordability constraints coupled with more properties to pick from means that purchasers can afford to be more choosy. Whilst viewings are still fairly brisk the feedback is becoming more negative. Purchasers tend to talk in code, for example, “The garden is too small” really means “We have seen a house with a bigger garden for the same price.” More than ever the key to selling is to work with your agent as a team. Getting the price right is the first crucial step.

The US Long Bond in Far East Trading

2007-06-13T15:53:00.000+01:00

"The US Long Bond in Far East Trading" is a phrase that I used to puzzle over when waking up to the sound of Radio 4 in the morning. It was one of those things that was mentioned on a daily basis in the Financial Slot but had no relevance whatsoever. Well, if BBC Business Editor Robert Preston is right then the current performance of US Bonds ought to be a wake up call for everyone who is in the business of debt. Preston observes that one of the unusual things about the last decade or so has been the ability to borrow on low long term interest rates. This has fuelled housing markets, private equity take overs, highly leveraged buy-outs and equities.When government stock is in demand the interest paid on them is low. Conversely, when demand is low rates have to rise to attract investors. In recent years China and the Far East have had a voracious appetite for government stock and so yields have been low. However, this has now changed. There has been a sharp fall in the price of 10 year US bonds (Treasuries) and yields have shot up to 5.333% to compensate for lack of demand. This means that the bench mark price of borrowing long term is on the way up. Since mortgage lenders have to compete for funds on the market the cost to them of lending will rise and, in turn, be passed on to borrowers.If borrowers are unable to service high level of debts then affordability constraints will bring downward pressure to bear on house prices.....

HIP Up date

2007-06-13T15:25:00.000+01:00

After the recent set-back to its implementation of HIPs the Government has published revised Regulations that seek to address the two main areas of concern that resulted in their postponement. Firstly, the shortage of Home Inspectors (HIs) and, secondly, the shelf-life of Environmental Performance Certificates (EPCs). The main points are as follows:-
Three phase implementation of HIPs starting with properties with 4 or more bedrooms on 01.08.07 to be rolled out to 3 beds and then the remainder once there are sufficient HIs.
Properties on the market before 01.08.07 do not need a HIP but an end date for this exemption will be set in due course.
The EPC can be up to 12 months old when included in a HIP.
Properties marketed before 01.01.08 need not have an EPC in place on the first day of marketing.
Properties marketed on or after 01.01.08 can have the EPC left out of the HIP if it has been requested not less than 14 days before the property is marketed. The EPC has to be added to the HIP once received.
Interestingly, there is as yet no definition of a “bedroom” and this is eagerly awaited!
And finally, the Government “will carry out an assessment of how well HIPs are working by the end of the year…..” which may yet give a new administration under Gordon Brown the opportunity to bury them once and for all!

Is Buy to Let running out of steam?

2007-05-30T11:08:00.000+01:00

Is 'Buy to Let' running out of steam?

The latest RICS Lettings Survey suggests that many Landlords are now finding themselves squeezed between two worrying trends. Firstly, rising interest rates are seeing significant costs increases for those who are highly geared and, secondly, gross yields for rental properties are falling. The combination of increased overheads and reduced income is causing more “Buy to Let” landlords to put their properties on the market than has been the case for the past two years. However, as always, there are both winners and losers because with more supply on the market due to the rush to avoid the up-front cost of HIPs there are signs that the market in general is less tight for buyers.

HIPocracy?

2007-05-25T11:04:00.000+01:00

This week saw an amazing series of Ministerial Cartwheels as the government policy on Home Information Packs started to unravel. The catalyst for all this confusion was an RICS legal challenge coupled with the realisation that come the 1st June there would simply not be enough accredited Energy Assessors to produce Energy Performance Certificates (EPCs). In a political climate that now sees focus on the global climate EPCs are being trumpeted as the be all and end all of HIPs…..how times change! Some feel that if the government agenda had always been focused on this topic then a different and more practicable solution to the issue would have been found. As it stands HIPs are now scheduled to go off like a damp squib at the beginning of August with the watered down proposals initially focusing on properties with 4 or more bedrooms. We all await with baited breath the Statutory definition of a “bedroom”…assuming the Parliamentary Draftsman or Draftswoman can come up with one!

Home Information Packs and Insurance Backed Searches

2007-05-22T12:58:00.000+01:00

HIPs and Insurance backed Search Reports

Home Information Packs are here to stay…..well not just yet! Last minute attempts to block them seem to have resulted in a re-think with the government mulling over a delay in implementation. When or if they do come to pass one thing that is likely to become a bone of contention is Local Searches. You must include information from Local Authorities in a HIP but traditional searches can be both expensive and slow. Because of this and the fact that HIPs are price sensitive HIP providers will be using cheaper and quicker insurance backed search reports from specialist search companies rather than going direct to the Local Authorities. This is fine for sellers because it keeps the cost of the HIP down. But will buyers and their mortgage lenders accept them? The problem is that the data used to compile reports may not be bang up to date so you might get a clear report on a property despite the fact that there has been a recent decision to put a new road through the back garden! If you’re buying and have accepted the sellers Search Report at face value then all you are left with is an insurance claim but will a cheque ever compensate you if you have to live with a road in your garden? Expect prudent buyers and their Solicitors to commission their own searches rather than accept an insurance backed Search Report!

What We Do

2007-01-10T15:37:00.000Z

Rees Page offer a complete range of estate agency services:

Valuation – as we are regulated by the Law Society you can be sure that our experienced valuers will provide you with a fair valuation for your home and not the empty promises of some rogue agents you may have read about who over value properties simply to take them onto their books.

Marketing – we’ll advise on how best your property can be marketed to achieve your sale.

Legal Advice – unlike other estate agents we are also solicitors which means that we’ll be able to deal with any legal issues affecting your home quickly so as to avoid any delay.

Progress – our job doesn’t stop when the “SOLD” sign goes up. Our solicitors and estate agents will closely monitor the progress of your Buyer to ensure that your sale is kept on track.

It all adds up to a quicker less stressful sale.If you’re serious about selling your home then call us now on 01902 577 775 to arrange for your FREE no obligation market appraisal.

Stress Free Moving

2007-01-10T15:36:00.000Z

The more preparation the easier the move.

Check out this guide from bbc.co.uk:

http://www.bbc.co.uk/homes/property/moving_movinghouse.shtml

Little Changes - Big Difference

2007-01-10T15:34:00.000Z

Little changes can make a big difference to your selling price.

Check this article from bbc.co.uk for quick and easy tips:

http://www.bbc.co.uk/homes/property/selling_sellingtips.shtml

Welcome to our new website

2007-01-10T15:28:00.001Z

Welcome to our new site which over the coming weeks and months will develop into a one stop shop to help you make your move easier and less stressfull.

We'll be bringing you regular news on the state of the local and national property market together with practical advice for both buyers and sellers.

Why not regsiter for the RSS feed or the newsletter to be notified as new articles are posted?

Stress Free Moving

2006-08-08T21:33:00.000+01:00

The more preparation the easier the move.

Check out this guide from bbc.co.uk:

http://www.bbc.co.uk/homes/property/moving_movinghouse.shtml

Little Changes - Big Difference

2006-08-08T21:31:00.000+01:00

Little changes can make a big difference to your selling price.

Check this article from bbc.co.uk for quick and easy tips:

http://www.bbc.co.uk/homes/property/selling_sellingtips.shtml

Building Regulations

2006-08-08T21:28:00.000+01:00

Improving your home - don't forget to obtain the proper approvals - if you don't you cuold find that your sale is delayed.

This link will take you through to a useful article on bbc.co.uk:

http://www.bbc.co.uk/homes/property/improving_buildingregulations1.shtml