More about house prices and the need to improve the way estate agents operate.

 Estate Agents  No Responses »
Nov 252014
 

It is plain to see that house prices have been running away with themselves especially in London and the South East and more recently, across the whole country.  It is equally clear that an increasing number of people wishing to buy a home for themselves simply cannot afford the current prices being achieved.  A crisis is looming and the warning signs of this happening have been apparent for a considerable time.

This is partly as a result of our present government’s monetary policy which is allowing huge sums of capital in, from wealthy overseas investors, to utilise the relatively safe-haven of UK land and buildings investments - including residential property. This is damaging the purchasing power of local employees, most of whom have far lower earning potential.

However, the cause is the housing market itself, which is dysfunctional, and not just the present government’s monetary policy bearing upon it.  The market’s dysfunction is allowing prices continually to outstrip local resident’s earnings. 

This in turn obviously damages our economy.  Therefore, appropriate intervention to help the market to operate more in synchronisation with the rest of the UK economy is overdue.  It is a responsibility of government to intervene to correct this but unfortunately to date this has not happened - for fairly obvious reasons we would suggest.

What is needed is a way to give ‘all buyers’ more leverage when trying to buy.  Ways that can enable them to negotiate harder and more successfully when prices are starting to exceed average local buying power.

If, instead of house sellers instructing estate agents to try and sell whatever they have at the best possible price, estate agents began offering a new service involving them becoming agents to both find their client’s next property and get the best price for them on their existing house, the market would begin to self-correct.  This would work by getting each moving family to engage one single estate agent to ‘find’ their next house, negotiate the best terms AND sell their present house too. This straightforward adaptation would have a profound and beneficial effect on the UK housing market, as well as improving the find-rate for individual movers.

By having buying agents, parity between what one pays and what one should get for one’s existing house would start to be properly established, thus improving the number of successful moves, or house sales in general.  (Gazumping could also be practically eliminated in this way.)

It would also help promote the use of good and objective house buyer’s surveys, as the new agent would have a more acute interest in helping the buyer to know what they are buying - instead of just trying to get the best price irrespective of current condition, which is all that the existing vendor-based estate agents really do.

The whole business of what agents should and should not do on behalf of their clients, as well as what they should and should not charge for, whom they should charge (and precisely when), is in urgent need of clarification by a revision to the Acts concerning estate agents.

The only way in which these things can be properly clarified would be for the government to modernise the law concerning estate agents.

Also with the advent of new, more efficient ways of marketing property, by using the Internet, the need for change has now become a matter of even higher priority.

For more relating to this problem and how it should be overcome, please see our earlier article:

Earlier article as updated: Full details of our proposals.

This will be updated and commented upon as soon as possible after the Chancellor of the Exchequer broadcasts his upcoming 2014 Autumn Statement.

Oct 012014
 

The price of houses is not derived purely from supply and demand for houses. It is also about what loans are available to create such price rises.

If you should want to move house, no matter how much your house is worth it is still the ratio between what one can sell it for and the price one can buy for that counts. If you can’t afford to buy at all, your problem simply endures but the overall number of house sales will suffer - as a direct result of what are currently over-inflated asking prices.

Some say the reason why house prices are rising is not due to the government or to people themselves being too greedy. They say it’s simply a case of supply and demand? They say that in less than 70 years our population has gone from 40 million to over 60 million but that as we are a small island nation with limited resources, not building the new houses to cater for the increasing population (partly because there isn’t anywhere suitable to build them) is causing prices to escalate to match increasing and unfulfilled demand. Add to that virtually unrestricted immigration and house prices can only keep going upwards, they say. We disagree.

The problem with this argument is that is takes no account of the age-old anomaly of estate agents acting predominantly for sellers and hiking up asking prices all the time, when the real market cannot support such increases.

The most desperate people out there are understandably prepared to borrow more and more to become owners (and the government is, whether they admit it or not, supporting such excessive borrowing). It is this that is fuelling these price increases.

Such growth in house prices is unsustainable whilst wage growth lags so very far behind. The price increases we are seeing are having to be found by poorer people deciding to overstretch themselves by obtaining ever larger mortgages. They then have to live in fear of interest rate increases and/or job insecurity etc. It’s a vicious circle which afflicts especially the lower wage earners in the UK and it is no substitute for real economic growth.

It’s unacceptable to produce improving economic indicators that simply look good, instead of creating actual wealth via increased manufacturing just because the latter is not able to be achieved in the timescale available before the next election. This is political short termism of the worst possible kind and proposing simultaneous tax concessions for the low-to-middle income earners is not the way to stimulate our economy. It’s just a way to try and get the majority to spend their way out of trouble which is exactly the way we got ourselves into the last world-wide recession in 2008.

As far as housing is concerned, these policies tend to serve the wealthier in society because they allow these people to arrange multiple loans from banks and building societies (just as happened before) and thus to leverage their wealth towards ever higher levels by making profits on their residential property investments.

Against this backdrop, the less well off ordinary folk can only try and borrow comparable amounts, in order to compete just to get a roof over their heads. This means that in effect, ordinary folk are actually helping to finance the house-price spiral which in turn assists the wealthier among us to become even richer!!

The trouble is, there’s no-one in high office, in a position to do anything about it any more.

For more relating to this problem and how it should be overcome, please see our earlier article:

Earlier article as updated: Full details of our proposals.

This will be updated and commented upon as soon as possible after the Chancellor of the Exchequer broadcasts his upcoming 2014 Autumn Statement.

Aug 182014
 

If you don’t know, this would indicate that you, along with quite a few estate agents genuinely do not see that there is a need for improvement in the way houses are marketed and sold in this country.

There are 3 basic reasons for this happening.

1. Too many houses which go onto the market currently fail to sell at all.
This results in an increased shortage of available properties to buy, which also tends to move prices further in an upwards direction.

I estimate the current rate of failure on agent-instructed sales is approaching 50% currently, but there appears to be no reliable data on this for some peculiar reason. I wonder why?

2. The difference between the price one pays when buying and what is obtained when selling is greater than it ought to be, the result of which is fewer actual sale completions than might otherwise be attainable; when one thinks about this.

In theory, there should be little or no difference between buying and selling prices at any one time - except for tax and stamp duty plus area or locational differences and accommodation size and quality differences. Of course, the fees and the other ancillary costs of moving do need to be accepted as being payable.

3. The price differentials caused by 2 above, i.e. by estate agents’ general over enthusiasm to get more houses onto their books all the time, is what causes the problem described in 1 above. This is what is called a negative feedback loop. That is, it has a negative or opposite affect on the operation of the market.

Until this is satisfactorily corrected, the housing market will continue to operate in its present hopelessly inefficient or imperfect way.

This must actually harm the national economy - especially when the country is trying to get out of the previous deep recession - and that is still the true situation in the UK.

IF, instead of agents continually competing with each other to increase their own individual share of the number of houses coming onto the market at any one time, agents were to actually work in harmony with each other to help those wanting to move house, the likelihood of individual house buyers simultaneously completing when buying and selling would be very greatly increased. This would have an equally substantial effect on the whole nation’s economy.

This is the primary reason why a fundamental CHANGE in the way houses are marketed in the UK is desperately needed.

P.S.
Someone (probably an agent calling themselves Steve with a given email address of:
stevejh83@hotmail.com
recently tried to post a comment here but this email does not exist!
Please provide your real name and email address, so that we know who you really are, and then we will be prepared to post your comment. It’s only fair. The editor.

Jul 312014
 

Owners thinking that higher prices may be attainable may try to get them, by increasing their asking prices.

If they do this at a time when buyers are biting, they may well succeed. Then, more owners may try (and so might their agents).

When you think about it though, higher ‘asking’ prices themselves can’t be the reason why sold prices have actually increased. There has to be another factor operating.

Similarly, when prices start falling, it’s not because owners start thinking “I am now going to lower my asking price now”, though they may well do so if they are not getting offers and want (or need) to get sold more quickly.

What causes movements in house price levels is the volume of completed sales at any one time.

If volumes are increasing, those in the market to sell tend to sense that an increase in asking price will still result in a sale. If volumes are decreasing, they will tend to want to drop their asking prices instead or they will be ignoring market sentiment.

It is the measure of the ‘volume’ of sales being completed (in each specific location) that determines current house values. Volumes of sales need to be generally at a level commensurate with local demand for the market to be working correctly or efficiently.

For more on understanding the economics of the UK housing market, please Google ‘The Hendry Solution’.

Here, we explain the reasons why owners, combined with their agents, are tending to cause house price spirals followed by corrections on a cyclical basis. More importantly still, we’re proposing the required solution to this.

It would seem that right now, we all need that!

For more information about just how this could be achieved please see The Hendry Solution: -
Earlier article as updated: Full details of our proposals.

Jun 272014
 

The main point to raise is that calming the housing market is not just a question of doing accountancy tweaks.
It’s how the market is managed that needs the tweak.

There’s a problem with the estate agent instruction-gathering machinery.

The thing is, agents are all too willing to scoop up new instructions in competition with each other, irrespective of whether the client wishes to ask too high a price for the property being sold in the prevailing market, taking account of relevant locational considerations. This is a continuously inflationary approach which has been built into the housing market for decades but need serious revision.

The problem is, there’s a cost for having too many over-priced houses on an agent’s books and this has to be spread across all the other vendor clients. That’s because of the no sale - no fee method of charging which is used. In addition, the cost of maintaining this extra sales data on the various portals does add up and is cumulative. This fundamental problem is not dealt with by tweaking the accountancy of the housing market.

It has been noted in recent media coverage that it’s the successful sellers, the ones who price their properties realistically, that are subsidising the cost of all the unsuccessful sellers, whose properties are overpriced and languish on the market for weeks at a time! Also a significant number of these vendors eventually give up altogether causing even further financial loss to the agents, as well as feeling they have had a poor service from them!

Agents should ask themselves, how many vendors would be happy to keep their property on the online portals for weeks on end if they were the ones whom had to pay for the cost up front, whilst knowingly trying to achieve an unrealistic price for their property as compared with everyone else.

What’s even worse is the practice amongst estate agents of competing with each other by chasing each prospective buyer to the extent of hounding them to make a decision to buy what ‘their particular client’ is selling before it is too late. This is basic arm-twisting and is patently bad practice, especially when the house in question either stays on the market or comes back to the market rather quickly afterwards.

Though agents appear to be trying to help the buyer, really they are trying to effect a sale on behalf of the vendor. This is the biggest turn-off for buyers as it effectively destroys any trust between buyers and estate agents and is therefore seriously counter-productive. This whole model of how best to serve buyers, whilst acting on behalf of sellers needs urgent and fundamental revision.

The Bank of England FPC’s latest proposals to re-unite the two-pace housing market are unlikely to achieve that objective.

Forgetting interest rate rises and MMR restrictions for a moment, the situation described above clearly points to the need for a complete revamp in estate agents’ core practices? If that happened we would all begin to see a new, better and more vibrant housing market in this country.

The definitive way for estate agents to achieve such a game-changing move is fully explained in our earlier article written by a retired estate agent having many years experience in the sector.

Is the government of the day likely to be doing anything much about any of these issues any time soon? “I fink-nottle!” he says.

The views of firms or individual estate agents themselves are sought for moderation and online discussion here please?

Posted by:
Earlier article produced and updated: Full details of our proposals.

Jun 122014
 

Here’s the common misconception:
Rising house prices are forcing people to have to borrow more? Wrong!

It’s borrowing (or to be precise, being able to borrow more to pay more) that results in rising house prices!!

Debt resulting from such higher house prices could actually destabilise our nation’s economic recovery.

That’s why this problem requires to be resolved.

Our ‘reasoned‘ conclusion and the solution is briefly: -

That estate agents were never originally intended to just sell houses. Their original role was in fact to manage estates.

What they do now is too much of an abridged historical agent’s role and this has become a major part of the current problem. They have become too specialised, by concentrating mainly on trying to get the best price for each vendor in what are ever changing economic circumstances.

The recent house-price increases across the housing market flow from a lack of clarity about what the true state of the market really is coupled with an inappropriate level of available mortgage finance.

Whatever the circumstances the Government owes it to us all to be clearer and more explicit about the action they are taking to stabilise the housing market and the effects they expect such actions to have on the market.

Instead it looks for all the World to us that they are tilting towards using the housing market to help get the whole economy going again; basing this on re-floating the housing market at pre-2008 prices!

The problem with this idea is its effect, which is extremely inflationary for the housing market just at a time when most people can no longer afford to pay such high prices; unless they decide to borrow very substantial sums of capital in order to do so.

If this policy should fail, those who have relied upon it and invested heavily in it, buying-in at the increasingly eye-watering prices currently being set, will end up loosing their life savings.

Our advice is that anyone thinking of risking their life savings ought to be made fully aware of what the stakes are before they consider buying-in because believe it or not, house prices do go down as well as up.

Although The Mansion House speeches of 2014 go some way towards dealing with the recent house price spikes, more needs to be done before this government leaves office in 2015.

It is clear the Government needs to apply non-monetary policies (in addition to monetary ones) to stabilise house prices at levels which most working people can realistically afford.

As well as restricting high loan to income, high loan to value and extended term loans, non-monetary measures concerning the methods used by agents to leverage house prices need to be considered for early implementation.

The reason is that the housing market is still too imperfect to be able to function correctly when our country is emerging from a downturn.

Contrary to popular belief it’s not simply about matching demand with supply. That is only true where markets are perfect ones and the UK housing market is very far from that, as most economic commentators will readily appreciate.

Full details of what needs to be done to return the housing market to ‘horizontal‘ once again and start generating an appropriate level of turnover for both house-owners and the estate agents working for them may be read in our earlier article:

Posted by:
Earlier article produced and updated: Full details of our proposals.

Proposal for dealing with the present house-price crisis

 Estate Agents, House Price Valuation  No Responses »
May 292014
 

Many of us are glad that Mr Carney, The Governor of The BoE, has raised his concern that the price rises, both in London and more recently spreading across the UK, appear to be out-of-sync with our economic recovery.

Sales bottlenecks combined with frustrated vendors resulting from the new mortgage application processing delays, illustrate one thing and one thing only.  The housing market, or specifically the price levels being quoted in the market are way too dependent upon mortgage borrowing.

Borrowing needs to be more strictly measured to make sure that those actually needing mortgage finance are given the priority they deserve, always assuming that there is a limit to the amount of money available to be borrowed of course.

The market itself is, and always was, able to cope perfectly well with any such restrictions but as many will probably understand our housing market does have problems that need to be resolved concerning the way houses are marketed currently.  Here are four of the most important financial fundamentals that need to be understood before anyone can home-in on the real problem.

1. This is of paramount importance. In the 70’s most people borrowed up to three times their earnings.  Now, it’s five times average earnings or more. This may be the latest trend but one should ask, “Is this, necessarily, the way to go?”

In 2005, bank data shows that fewer than 5 per cent of mortgages in the UK were granted using more than 4.5 times income (and even in London it was only 6%).

By comparison today, using the Help-to-Buy schemes, those who can afford to do so can now borrow very large multiples of their current earnings (up to £600,000 each transaction) by raising mortgages - at staggeringly low rates of interest in market terms owing to the cost of the nation’s structural debt!  By doing this they are leveraging their individual levels of wealth severalfold, whilst at the same time causing house prices themselves to escalate!  This is a dangerous anomaly in the marketplace and it is abundantly clear that it needs to be carefully managed.

In the 70’s the top multiplier of 3.5 times a single income or 2.75 times a joint income used to be the norm.
The serious question is, can our coalition government rise to the challenge of bringing this fundamental back towards what used to be considered normal?

2. Secondly, back in the 70’s, loan-to value ratios were thought to be too high if they topped 80%.  What’s changed, were we wrong back then?

Over in Singapore,  Liew Mun Leong, the young but now retired president of CapitaLand recently said. “In Singapore, the size of any mortgage is limited to below 60% of the current value of the property.”  This helps to ensure that there isn’t a house-price bubble.
Whilst prices still increase, they do not ‘mushroom’ in the way we are currently seeing in the UK.
Maybe we have a lesson to be leaned from Singapore, for a change?

3. The third factor that helps to stabilise house prices in other countries is the more extensive use of long-term fixed interest rate mortgages.  Using these for a majority of home loans has been found to help smooth out price spikes, by smoothing out the cost of borrowing.  Perhaps most home loans ought to be made with lenders using these instead?

4. The fourth and more recent factor is the idea that mortgage lenders are now extending loan terms beyond 30 years, in order to lessen the monthly financial cost to borrowers and in doing so, increasing mortgage debt beyond the normal working life-cycle of a human.  This can only be described as lender-centric money-marketing and as such, is utterly crazy. The effect for some borrowers is that even their offspring will never be able to fully pay off the debt!

In the UK today and as a result of relaxation in financial restrictions in these four areas, combined with rich foreign investors buying into London, houses that used to be affordable have now become UNaffordable, except by those who don’t actually need to borrow large multiples of their annual earnings but still do.  How can this possibly be sensible from the viewpoint of the majority?

We need a new and innovative set of measures to keep house prices in-sync with the main economy. We have now formulated such measures.

One thing our British island economy historically does well in, is spawning new and innovative ideas for becoming more efficient and competitive. In this we can still punch above our weight when difficulties need to be overcome.  The latest innovative idea, as well as empowering The BOE to fully manage the above four fundamentals, is to change the way the housing market is serviced by all the estate agents.

In a nutshell the proposed urgently needed fix is not a monetary adjustment or another accountant-led fix at all.  The fix we need most is a housing market ‘imperfection’ fix.

Instead of the government being ‘forced’ into having to raise interest rates, or at least to threaten to in a desperate attempt to quell the latest bubble, this fix is much more lateral-thinking in terms of addressing the house-price rise crisis, in the short term.

The fix is to improve the way the housing market itself functions, since there are too many imperfections in the way it works currently. The very first task, however, is to correctly identify the imperfections involved.

If most of these were removed this would serve to attenuate the prices within the marketplace.  This, in conjunction with the above four points, would overcome the current crisis; at least while the housebuilding industry was able to get back up onto its feet and the construction of new housing in sufficient numbers was well under way.

Doing this would also have the effect of helping to make land prices stay more affordable as the cost of land is, (and always was), directly geared to the capital value of residential property itself.

Here are the proposals:
The proposals are that estate agents should work primarily for buyers but also deal with selling the houses which their buying clients want to move out of.

To implement them, would require a change in thinking amongst present-day estate agents and so I call on them to scrutinise, discuss and hopefully agree these proposals in full in order to improve the way the market currently works.

Taking no action will mean the continuance of the status quo with continuing price spikes, more aborted sales and continuing stress in the marketplace - including per se, lower net earnings by estate agents themselves.

Full details of these proposals and how they should be implemented may already be read on:

Posted by:
Earlier article produced and updated: Full details of these proposals.

The Over-heating Housing Market

 Estate Agents, House Price Valuation  No Responses »
May 162014
 

In the 70’s most people borrowed up to three times their earnings. Now, it’s five times average earnings. This may be the latest trend but one should ask the question is it necessarily right? Back in the 70’s, loan-to value ratios were thought to be too high if they topped 80%. Were we wrong?

Over in Singapore today, Liew Mun Leong, the young but now retired president of CapitaLand recently said. “in Singapore, the size of any mortgage is limited to below 60% of the current value of the property.” This helps to ensure that there isn’t a house-price bubble.
Whilst prices still increase, they do not ‘mushroom’ in the way we are currently seeing in the UK. So, maybe we have a lesson to be leaned from them for a change?

The other main factor that helps to stabilise house prices outside the UK is the more extensive use of fixed interest rate mortgages. Using these for a majority of home loans tends to help smooth out price spikes by smoothing out the cost of borrowing.

By comparison in the UK, houses that used to be affordable have become practically UNaffordable now, except by the Über rich, who don’t even need to borrow large multiples of their annual earnings. How can this be? The answer is, it’s mostly down to the available methods of raising the finance.

Here, whilst they don’t actually need to, richer people can, under either of the Help-To-Buy schemes, borrow several multiples of their current earnings (up to £600,000 per owner-ocupier) by raising mortgages - at staggeringly low current rates of interest. The repayments will be guaranteed by the government. By doing this they are able to leverage their wealth severalfold whilst at the same time helping to cause house prices themselves to escalate! This anomaly is now clearly evident and needs to be fixed. The question is, will the government deal with this problem before considerable damage is done to the chances of the less well off getting onto the first rung of the housing market?

One escape route used by relatively ordinary folk, to try and mitigate the effects of this problem, from the 70’s onwards, has been to relocate further from their work locations to find cheaper housing but have to commute in to work each day instead.
Many have tried to swap high house prices by travelling perhaps four or more hours a day, commuting to and from their work and this is in addition to the extended hours of work which are expected of them. This hasn’t worked unfortunately because they are now facing the highest rail fares ever!

With the cost of train fares, electricity, oil etc., all having gone up as well as food prices, there’s yet more pressure on normal family’s budgets at just the time when they are least able to cope with this.

Also, salaries for the majority of the employed have simply not kept pace, meaning food and house-price inflation has been noticeably higher than the officially published annual rates of inflation.

On the other side of the coin, the top 1% of income earners have more than doubled their incomes between 1970 and 2005 and, as explained above, these people continue to be free to borrow very substantial amounts on mortgage, adding a further lever to their buying potential.

Some people have expressed their sense of hopelessness about such policies. For example, following the banking crisis and as a demonstration against this, a small group tried to ‘Occupy The London Stock Exchange’, as a form of protest.

It appears that not much notice is being taken of such protests really, so where exactly should we be going from here?

The answer has to be to find solutions to the now blatantly obvious anomalies, especially those besetting the housing market. The housing market is arguably the most fundament market of ‘need’ of modern society. The idea of letting it sort itself out is no longer a viable one, since the evidence is clear that doing so hasn’t worked in the past and isn’t working now.

A new initiative is clearly needed.
We would argue that there is clearly a need for changing the way houses are marketed up and down this country and this is the key to resolving the house-price problem - not simply relying on building more housing which is only a long term goal.

Posted by:
Earlier article on our blog site: Full details of our current proposals.

The housing market is a threat to our economic stability

 Estate Agents, House Price Valuation  No Responses »
May 012014
 

History clearly shows us that there are issues and that they are yet to be resolved. The FT has today published an interesting article about this.

It highlights the fact that there is little point in trying to react to curtail house-price increases after they have escalated, each time. The goal posts need to be moved so that prices self-adjust all the time. These particular goal posts come in the form of estate agents’ methods.

There are simple ways of achieving improvement, thus saving all the chaos of cyclical booms, which generally run out of kilter with the rest of the nation’s economy.
The government of the day is well aware of this but so far, isn’t prepared to put the necessary measures into practice owing to its political objectives.

The BBC, as one organisation among several, have spent significant amounts of money (and time recently), trying to investigate the shortcomings of UK estate agency. Clearly it believes there is a genuine need for such investigation. Equally clearly, those working in estate agency don’t see the need for any changes.

Surely, if our real economy is to pick up, sooner rather than later, something should actually be done to correct the substantial issues being discovered by these investigations.

My question is who (or what body or institution), is going to step up to the plate and determine exactly how to improve the workings of the UK housing market? If anyone can properly answer this question I, for one, should be very grateful.

In the meantime, my own proposals for making the UK housing economy self-correcting have already been given an initial airing on this blog and they appear to be capable of correcting all of the anomalies discovered by the recent investigative journalism.

For more on this please visit:

We want a functional, stable housing market.

Posted by: Peter Hendry, Consultant in Housing Valuation at Property Match (UK)

Estate Agency Needs Revolutionising Today

 Estate Agents, House Price Valuation  No Responses »
Apr 222014
 

There needs to be more balance, between the advice being provided by modern-day estate agents to vendors, and the advice needed by those wanting to buy in difficult market conditions. With the old maxim, Caveat Emptor (Let the buyer beware) still ruling in UK house buying it’s becoming increasingly vital for ‘buyers’ to get the best possible advice when finding their next house or big mistakes can easily be made. It’s vital to negotiate the most appropriate terms for purchasing any property these days. For this reason we are calling for a completely new breed of agents which we call ‘Finding Agents’ to replace all the existing selling agents right across Britain.

The need for this is demonstrated by considering the following 10 aspects of the present-day housing market, all of which need addressing urgently.

1. The need to BUILD MORE HOMES. Most of us agree that orchestrating the building of more homes would be beneficial in the medium / longer term but doing so must take time. Unfortunately the attempt to stimulate more building using the so-called ‘Help to Buy’ schemes is causing confusion because these schemes are really “Help To Sell”. When you think about it their real aim is to assist ‘sellers’ to obtain the best price, instead of helping buyers to get a fair deal. Those who still think otherwise are naive.

2. BUILDING MORE GARDEN CITIES. Whilst not a bad idea in itself, this is not going to be nearly enough to deal with the problems we’re facing on its own.

3. STAMP DUTY. This should certainly be looked at but with a view to lowering the tax as soon possible, in order to bring more buyers into the market. However, once again, doing this won’t deal with all the problems on its own.

4. LEVYING CGT ON ALL HOUSE SALES. The idea of not levying CGT on owner-occupied homes was originally to encourage more people to become owner occupiers. With the number of buyers actually in decline currently (that is with the uptake in home ownership at its lowest level in 25 years), why suddenly impose CGT on house sales? No useful purpose whatsoever would be served by doing this.

5. TAX FOREIGN INVESTORS? Doing that would probably not be seen as being very European.

6. LEVYING AN ANNUAL PROPERTY TAX. Trying to levy increased taxes on house ownership, in an attempt to curtail price increases is like trying to use a lever to change the orbit of the planet!
All very well in theory but not in practice. The problem with this approach is that it simply doesn’t address the fundamental issue - which is the need to bring the market back to equilibrium and stability, with prices broadly inline with average levels of wealth.

7. TAXING LANDLORDS MORE. This is simply not an option since we desperately need more (good) landlords. Making life more difficult for them to acquire rental property would be a totally unproductive measure as this sector is a vital part of supporting the fragile housing economy.

8. RESTRICT MORTGAGE LENDING. By contrast this is undoubtedly a yes and is so important. Not managing how much individuals can borrow when deciding to buy owner-occupier property is the equivalent to usury gone mad. It simply hands the cosh to the financial institutions - and we all know what damage that can do having witnessed the recent banking collapse. Sensible restrictions are, and always were absolutely paramount in this area. That’s one of the main and ongoing responsibilities of a diligent government . One that is perhaps not being pursued enough at present, certainly in some people’s view.

9. BETTER UTILISE EXISTING EMPTY PROPERTIES. Taxing the owners of empty flats and houses does seem to be a necessary and worthwhile idea in order to maximise the use of our existing housing stock.

10. THE MISSING OVERRIDING SOLUTION. The one measure that is missing from all of the above is concerning the old established maxim: Caveat Emptor - which is where we came in. This maxim has served the UK housing market well for many decades now but it seems to be in need of some attention. Owing to the problems we have recently been facing it’s becoming increasingly vital for all ‘buyers’ to get the fullest advice whilst finding their next house and to negotiate the most appropriate terms for purchasing it too.

That’s why we see the need for ‘Finding Agents‘ to completely replace selling agents. Estate agency desperately needs revolutionising these days and this is the only sensible way this could be achieved.

For more about HOW these changes could swiftly be implemented, please see: -

We want a functional, stable housing market.

Posted by: Peter Hendry, Consultant in Housing Valuation at Property Match (UK)