Whats causing house prices to spiral?

Cash from crime lords is forcing house prices up as they launder billions of pounds worth of ill-gotten gains by making property purchases in Britain. What’s worse is that many large houses bought in this way then remain empty as they are not actually required for be lived in at all!

The Telegraph recently published an article about suspicious money finding its way into in the London property market.
Foreign criminals drive up house prices by laundering money into property - 24th July 2015

It may be seen that there is indeed legislation in place requiring solicitors to check for any obvious signs of money laundering with respect to clients purchasing houses in the UK
If you consider the situation with solicitors, one can see that they can reasonably be expected to do mandatory checks to make sure that the money being provided is not coming from illicit sources. Solicitors advising anyone, whether buyers or sellers, have a duty to disclose (to government) when funds being used may be coming from illicit sources. Solicitors are deemed to be professionals who expect to try and uphold the law first and secondly try to advise their clients as would be appropriate.

However with estate agents, because they are currently employed uniquely by the seller simply to obtain the best price possible in the (currently flawed) housing market, it is quite understandable that selling agents are hardly going to upset the bargains they are negotiating by then reporting if they fear the buyers may potentially be using money from illicit sources!

Clearly this task is one too many, for how can estate agents be expected not only to negotiate the highest price they can for the property being sold but also to cry ‘stop’ if they think that some of the money may possibly be coming from illicit sources. This is wholly unrealistic!

Once again, the logical answer would be for estate agents to be tasked to act for buyers, not sellers, and then they could certainly be expected to take into account the possibility of their clients’ money may not be coming from above-board sources and simply refuse to act for them and/or report them through the same channels used by solicitors. By acting for buyers, agents could be held to be culpable, in the same way that buyers solicitors can be, if they worked with clients whom were effectively criminals.

In the context of the millions of extra pounds in taxes which the government is collecting whilst these practices are continuing, one may be forgiven for thinking could this be why they are being somewhat reluctant to do much about the situation currently?

Simply allowing house prices at the higher-value end of the UK housing market to inflate is causing a worrying ripple effect, as wealthy buyers go looking to buy lower priced properties - forcing all these prices to rise also.

The result is the lack of affordability of nearly all the houses on the market and it’s this which is increasingly pushing householders into renting the accommodation they need instead.
This strongly suggests the problem is not only a lack of houses on the market to buy but additionally it’s the excessive ‘prices’ being asked for those relatively few houses that are currently available for purchase.

The next problem confronting those contemplating selling currently is the difficulty of subsequently being able to find and acquire suitable houses to purchase - at relatively similar asking prices! This, in particular, has been causing the number of completions in the UK to plummet over recent months whilst the number of rentals of similar types of houses has been significantly increasing.

For these reasons it can be clearly seen that the housing market is malfunctioning.
It’s SOS for the housing market so there urgently needs to be government intervention to bring ‘balance and stability’ back into house ownership.

If nothing is done, even more dramatic price swings will start to manifest themselves across a market which patently is now running out of control.

For more information on the only way to deal successfully with the current housing market problems, including helping countless numbers of households to live a better life, please refer to the previously written (but not seriously considered or commented upon) “Hendry Solution”.

Earlier article published on this blog site. This gives full details of our proposals for resolving the price inefficiencies within the UK housing market.

Posted by: Peter Hendry, Consultant in Housing Valuation

9 + four =