HomeOwners Alliance calls for £1,000 ‘reservation agreements’ to tie in buyers and sellers

Anyone responsible for a property purchase falling through should have to pay £1,000 to the other side if they pull out.

The call has come from the HomeOwners Alliance, which says that fall-throughs are costing buyers and sellers over £500m a year.

It is proposing a £1,000 reservation agreement – a legally binding bond paid by both the buyer and seller and held by their own solicitor – in answer to the Government’s latest call for evidence into the home buying and selling process.

The organisation is also calling for estate agents to publish fuller particulars of sale for a property at the time it is listed.

The organisation claims that providing the TA6 particulars of sale form earlier, as well as introducing a reservation agreement, would iron out any problems earlier and speed up the process.

The HOA said: “Sellers will have to fill out TA6, the standard property information form which includes all material information such as length of lease and ground rent if leasehold, before the reservation agreement.

“This is simply good practice, and there is no reason they cannot do this before putting their house on the market and the estate agent can provide it to the buyer, and the estate agent can then provide those details to the seller before they make an offer.”

If a prospective buyer then decides to make an offer, a refundable reservation agreement would need to be paid by both sides to their respective solicitor.

Here is how the HOA proposes a reservation agreement would work:

– Before the reservation agreement, the buyer will need proof of funds such as a mortgage in principle. In the reservation agreement, the buyer’s solicitor will confirm to the seller’s solicitor that the buyer has sufficient funds.
– Both sides agree to pay the other side £1,000 if they pull out of the transaction for any reason.
– Both pay their conveyancer/solicitor a repayable £1,000 bond to cover the payment if they do pull out.
– If any previously undeclared material issues emerge during the surveys and searches that potentially affect the value of the property by more than 1%, then either side has the right to renegotiate. If they can’t agree a change of price, then the side that is detrimentally impacted will have the right to pull out without losing their £1,000 bond.
– If either side breaches their commitment to being a “genuine” seller or buyer – such as by putting the property back on the market, accepting a higher offer from another buyer, or the buyer putting in a lower offer after the sale price agreed, then they will be deemed to have pulled out of the transaction, and are liable to pay the other side the £1,000. If either side pulls out over matters that are financially less than 1% of the value of the property (eg over whether a cooker is included) they will be liable to pay the other side £1,000.
– If either side is worried about being able to afford the £1,000, they can take out home buyers/sellers insurance.
– There would need to be a backstop date for completion of the purchase, say three months after the reservation letter. If both sides want to continue with the transaction, they can agree to extend the deadline, but if one side has failed to meet their requirements, then they will be deemed to have pulled out, and have to pay the other side £1,000.
– Interpretation of a fall-through and any disputes should be covered by standard industry guidance, or failing agreement between the conveyancers, by the Property Ombudsman or the small claims court.
– Only those that cause the collapse of the chain will have to pay and will pay £2,000 if they are both buying and selling and pull out of both transactions at the same time.

The consumer group estimates consumers waste £500m a year on failed attempts to buy and sell properties.

It come to this figure using the Government’s call for evidence on the home buying process that claimed – without a source – that failed transactions cost on average between £695 and £744 for buyers, and £582 and £740 for sellers.

There were 1.24m property transactions last year according to the ONS, which the analysis then multiplies by 28%, which is the estimate of fall throughs by property buyer Quick Move Now.

This comes to 344,000.

It then adds the £744 and £740 figure to give a cost of £1,484 for both sides of a sale. This figure is then multiplied by the £344,000 to give an estimated sum of £511m wasted per year.

Paula Higgins, chief executive of the HOA, said: “This is the true cost of the UK’s not-fit-for-purpose home selling and buying system – home owners losing more than £500m down the drain every year.

“It is no surprise that some parts of the property industry have too often resisted previous government attempts at reform – this is extra business for them.”

‘Stamp duty is UK’s worst tax – scrap it to help housing market’

Stamp duty on property sales is gumming up the housing market, stopping people from moving to the jobs they need, and keeping people in houses that are too large for their needs, according to a free-market think tank.

A new report released by the Adam Smith Institute suggests that stamp duty is the most damaging tax Britain has, and scrapping it should be top of the Chancellor’s agenda in the run-up to the Budget on November 22.

The paper argues that stamp duty is deeply damaging to the UK housing market.

Economists in Australia found that a similar tax there was costing 75p for every £1 raised: the institute claims that with stamp duty costing British people £12 billion a year, this means the tax may cause as much as £10 billion worth of what it calls “deadweight losses.”

This happens because it says stamp duty gums up the housing market  by penalising people from moving house. While the lack of supply of new houses is still the biggest cause of the housing crisis, it is exacerbated by the duty stopping the existing housing stock from being used efficiently.

“By penalising older people for downsizing after their children have left home, for example, stamp duty stops larger homes from being sold to new families, making the effective supply of family-sized homes even tighter” says a statement from the institute.

“Since stamp duty creates a built-in cost to moving it also creates a roadblock to people moving from one part of the country to another to find work, trapping people in low pay and preventing them from advancing” it adds.

The institute’s analysis says that the UK is home to around £7.5 trillion worth of property, with homeowners taxed regressively against values last updated in 1991, and charged stamp duty at rapidly escalating rates. The report proposes instead to abolish stamp duty altogether, covering the cost by raising council tax bills on the most expensive properties in the country.

“This policy is probably the most effective tax cut the Chancellor could go for, boosting growth and improving the fundamentals of the housing market at a stroke” says the organisation.

Although the increased economic activity would likely offset some of the losses in the long-run, the paper suggests revaluing council tax and creating a new band for the most expensive homes as a way of making the move revenue neutral if necessary.

“Stamp duty is the worst tax we’ve got, almost as bad as setting fire to the money instead of raising it in tax. The reason is that Britain’s productivity problem is in large part a mobility problem. People cannot move to where the best jobs for them are because the houses aren’t being built, and that’s made even worse by stamp duty keeping older people in family homes that are too large for them.” says Sam Bowman, executive director of the Adam Smith Institute.

Brexit impact on property industry is one of 58 unpublished reports

It has been revealed that a paper on Brexit’s impact on the property market, prepared by a government department, is one of 58 sector analyses which so far remain unpublished.

The Department for Exiting the EU is now known to have prepared the 58 impact studies: they range from advertising to wholesale market and include one entitled Real Estate – this is believed to cover Brexit’s impact on residential and commercial property markets.

In total, the government says the 58 sectors analysed account for 88 per cent of the UK economy.

The full list – but no content – was released in the annexe to a letter from David Davis, the Secretary of State for Exiting the EU, to Baroness Verma, the Parliamentary Under Secretary of State for International Development.

Ministers have resisted calls to publish the impact studies arguing that some findings “would undermine the Government’s ability to negotiate the best deal for Britain” were they made public.

House prices continue to rise – south west up 6.4% annually

Pockets of the UK are continuing to experience mini house price booms despite transactions falling in all regions in the year since the Brexit vote.

Figures from the Land Registry show that UK house prices in August rose 5%, up from 4.5% in July, to £225,956.

On a monthly basis values were up just 0.5%.

Regionally, many parts of the UK are seeing annual growth above the average, although most are struggling to get above the average monthly growth rate of 0.5%.

The north west leads the annual growth tables, up 6.5% to £159,865 during August, and also has the largest monthly growth among the English regions at 2.3%.

Prices in the east of England during August were up 6.4% annually, although flat on a monthly basis, to £288,440.

The east midlands had the same rate of annual growth and was up just 0.3% since July to £183,762.

Similarly, the south west was up 6.4% annually to £188,447, up 0.6% on a monthly basis.

Prices in London were up by the least annually at 2.6% and down 1% on a monthly basis to £484,362.

House prices may still be rising annually, but the Land Registry data gives the first official snapshot of transactions in the 12 months since the Brexit vote and shows a different story.

In June 2017, the latest figures available, the number of property transactions completed in the UK decreased by 6.7% year-on-year to 85,528 sales, the Land Registry said.

Much of this decline was due to an 11% drop in England to 66,082 sales, with the rest of the UK experiencing increases.

Transactions in Scotland were up 19.3% to 10,473 on an annually basis, 5% in Northern Ireland to 5,106 and 1.4% in Wales to 3,867.

Further analysis of the Land Registry data shows sales volumes have fallen across all English regions during those 12 months.

London had the steepest decline in the 12 months to June 2017, falling 20% to 6,768, while the South-West and East England saw 14% drops to 7,928 and 7,795 respectively.

The street names that put off buyers…

House buyers have a wish list when they view a property and the name of the street probably won’t be on that list. However, research  reveals that a controversial, rude, extreme, or silly street name could put off potential buyers, with the number of house sales up to four times lower than on neighbouring streets with more neutral names.

Researchers looked at the number of house sales over the past 20 years on some of the UK’s more unusually named streets; such as Backside Lane, Stalin Road and Spanker Lane, and compared with the number of house sales on adjoining streets with more conventional names, that aren’t likely to make people chuckle or cringe.

Take Dumbwomans Lane, in Rye – a street name likely to raise quite a few eyebrows. Not surprisingly, house sales have been few and far between since 1997, with four times fewer house sales (-333%) than on neighbouring Station Road.

Spiders Lane (-308%), which is likely to tap into many peoples’ phobias, and Lickers Lane (-306%), possibly too embarrassing for many buyers, have also had four times fewer property sales than on neighbouring streets Lime Grove and Parkwood Road.

Devils Lane and Stalin Road may not sit comfortably with many buyers, and that’s possibly reflected in the number of house sales over the past two decades on these streets. Neighbouring Chiltley Lane has had more than three times (243%) more house sales than on Devils Lane. And Stalin Road, sharing its name with the Soviet Union dictator, has had 70% fewer house sales than nearby Barn Hall Avenue.

While, Rats Lane has had just five sales since 1997 and Loveless Gardens only four sales.

The following table lists some of the more unusual, controversial and extreme street names in the UK, and compares the number of house sales over the past 20 years with sales on neighbouring streets.

Unusual Street name Neighbouring street Town, Postcode % lower/higher house sales on unusual streets since 1997
Dumbwomans Lane Station Road Rye, TN31 6 -333%
Spiders Lane Lime Grove Exmouth, EX8 5 -308%
Lickers Lane Parkwood Road Prescott, L35 3 -306%
Loveless Gardens Henderson Gardens Gateshead, NE10 8 -275%
Devils Lane Chiltley Lane Liphook, GU30 7 -243%
Cockshot Road Chart Lane Reigate, RH2 7 -163%
Cock-A-Dobby Sylvan Ridge Sandhurst, GU47 8 -114%
Spanker Lane Shop Lane Nether Heage, DE56 2 -70%
Stalin Road Barn Hall Avenue Colchester, CO2 8 -67%
Rats Lane Manor Road Loughton, IG10 4 -60%
Snakes Lane Western Approaches Southend-on-Sea,

SS2 6

-31%
Backside Lane Glebe Street Warmsworth, DN4 9 -20%
Chicken Road High View North Wallsend, NE28 9 -19%
Adolf Street Amulf Street London SE6 3 -5%
Crotch Crescent Derwent Avenue Marston, OX3 15%
Titty Ho Wellington Road Wellingborough, NN9 6 34%

Surprisingly, on two of the streets  researched, the number of sales were actually higher on the more unusually named street. Possibly tapping into the British sense of humour, Crotch Crescent and Titty Ho, have likely raised a few chuckles over the years. But they also seem to have boosted house sales, with sales on Crotch Crescent 15% higher than nearby Derwent Avenue and 34% higher on Titty Ho than on neighbouring Wellington Road.

Average room price is double average UK salary: ONS

The latest ONS statistics for house price per square meter and per room has revealed that the average room price the UK is £57,065 – double the average UK annual salary.

Between 2004 and 2016 the price per habitable room in England and Wales has risen by around 45%.

The highest house price per square metre (which includes both houses and flats) is in London with an average cost of over £6,500 for each square metre.

Between 2004 and 2016, price per area in London nearly doubled (98%) with the East of England and the South East both increasing by around 55% over the period.

The borough of Kensington and Chelsea is the most expensive area to buy a house, with an average price of £19,400 per metre squared, around eight times the England and Wales average.

At the lower end you would pay £777 per metre squared in Blaenau Gwent, a third of the England and Wales average and less than 5% of the prices in Kensington and Chelsea.

Andy Sommerville, Director at Search Acumen, commented: “Today’s figures crudely highlight the extent of the affordability crisis that is hindering the dream of home ownership for millions. To put today’s figures into context, the average price per room in the UK is £57,065, double the average UK annual salary.

“While these figures highlight a widening North/South divide, the issue of making property more affordable remains a nationwide one.

“Our research shows that England will reach a housing shortfall of a million homes by 2020. With Theresa May’s pledge for affordable housing only expected to fund 25,000 additional homes, it is clear government’s current appetite for intervention will not bring the dream of homeownership back to reality.

“The industry must act now to address this shortfall to stop the cost of homes for everyday people reaching premium and prime levels.”

18m Brits set to inherit a property – most will not live in it

New research among 2,000 UK adults by bridging lender MFS has revealed the intentions of those expecting to inherit a property.

The survey found that 36% of people across the country will be inheriting a property – equivalent to 18.64 million people.

According to the findings, of those in line to inherit a property:

• The expected market value of the property they are due to inherit all or part of is £347,500

• 67% will not choose to live in the property they are inheriting, totalling 12.49 million UK adults

• 55% will sell the property as soon as possible so they can re-invest the money in a different asset of their choosing – equivalent to 10.25 million people across the country

• 32% will be refurbishing their inherited property so that it is in a better condition to sell or rent·

• 25% do not know what to do once they inherit a property and will require advice

At a time when those aged 55 and over own more than £1.5 trillion worth of property in the UK alone, new research by bridging lender MFS reveals the intentions of those set to inherit homes from family or friends.

Based on an independent, nationally-representative survey of more than 2,000 UK adults, MFS found that more than a third of UK adults (36%) will be inheriting property in some form – equivalent to 18.64 million people. Furthermore, the expected market value of the property they are due to inherit all or part of is £347,500. The findings coincide with research from Royal London, which estimates that £400 billion worth of property will be passed from grandparents to younger generations in the coming decade.

When asked what they intend to do with the house they will be inheriting, 67% of respondents said they have no intention of living in it. Faced with the future prospect of unintentionally owning a property, the research found that over half (55%) of respondents will be looking to sell as soon as possible so that they can re-invest the money in a different asset or property of their choosing – amounting to 10.25 million UK adults. However, nearly a third (32%) are looking to take advantage of the long-term returns on offer by undertaking some form of refurbishment so that the house is in a better condition to sell or place on the rental market.

While a significant number of adults already know what they are planning to do with the property they are inheriting, MFS’ research also revealed that one in four (25%, or 4.66 million adults) still have no idea what to do with the real estate being passed down to them. For millennials, this number jumps from 25% to 39%, with nearly two fifths of 18-34 year olds requiring advice to help decide what to do with their inherited property.

What are the top things which will devalue your property?

Moving house is an exciting time, and the first step is getting your property valued. However, there are several things which homeowners are sometimes surprised to hear have devalued their home, rather than made it more desirable.

Installing solar panels

While solar panels may save you money on energy bills in the short-term, and they’re environmentally friendly, they might not actually add any value to your home. The problem with technology is that it ages quickly, and it can be expensive to upgrade. The same applies to built-in kitchen appliances, which are great to start with, but within five years are out of date. Solar panels can also appear as unsightly and unattractive, and those more concerned with aesthetics than the environment don’t usually want them stuck on the side of their roof.

Over personalisation

Of course when it comes to decorating your house, you should design it to suit your personal taste. However, if your taste is particularly colourful or bold, it’s might be worth re-decorating before you start to market your home. Typically, modestly decorated homes are most desirable, as homeowners can easily see how their own belongings would fit into the space, and how they could make it their home.

Swimming pools

Although great fun for a weekend or two in the summer, swimming pools in Britain aren’t usually considered an attractive house feature. They’re expensive to maintain, use up a lot of space, and the great British weather means you can’t actually use them very often – often making them a lot more fuss than they’re worth.

Planning permission and building regulations

If you have had any works carried out while you’ve been living in the property, such as extensions or conversions, make sure you obtained appropriate planning permission and building regulations, and have access to these documents.

Darkened rooms

If you have two identical properties, and one is bright and airy while the other is dark and dingy, nine times out of the ten, the brighter one will be worth more, because it’s more desirable. Foliage around windows, and large trees should be cut back before marketing your property to give the impression of a light and spacious home.

Japanese Knotweed

The infamous weed, Japanese Knotweed, is more common than you think – and it can damage the foundations of your home and significantly devalue it if it’s at risk of subsidence as a result. If you think you can see any in your garden, call a professional to excavate is as soon as possible.

Increasing house prices create record number of millionaires

One in 79 Britons aged over 21 is now a ‘millionaire’ as a result of rising property prices and increased prosperity.

That figure is up from one in 84 people last year, and is the highest on record, according to Barclays Wealth.

The number of millionaires in the UK rose by 44,000 (or 7.6%) during 2016 to total around 625,000. However, the new figure still only represents less than 1% of the UK population.

Scotland was the only region of the UK where the number of millionaires did not rise.

Why is this happening?

The report said most areas of the UK were more prosperous than they were a year earlier, due to rising earnings.

House price growth is also likely to be a major factor behind the growing number of millionaires, with the strong gains in property values seen in recent years significantly increasing individual wealth.

The fact that nearly half of all millionaires in Britain live in London or the south east, where property values are highest, also indicates house price rises have played a role in boosting the number of millionaires in the UK.

 

Above: Looking for a three-bedroom Victorian home in the capital? This one is for sale in Acton, West London, for £1m.

Who does it affect?

London, where Barclays says the average property costs just over £480,000, has the biggest number of millionaires at 165,000, closely followed by the south east, where homes cost £320,000, at 130,000.

But the East Midlands and south west actually saw the biggest increase in millionaire population last year, with numbers rising by 11.1% and 10.5% respectively.

There were around 12,500 millionaires in both Wales and Northern Ireland, nearly 9% more than a year earlier.

 

 

Above: On the market for £950,000 in Newport, Wales, this period home offers five double bedrooms and mature gardens

Sounds interesting. What’s the background?

Barclays Wealth said the UK saw uneven rates of prosperity growth during 2016.

While most areas of the country are more prosperous overall than they were 12 months earlier, cities generally outperformed their regions, leading to gaps opening up in average earnings.

This pattern is reflected in house price growth, with property values in cities typically rising quicker than those in the surrounding region.

Hometrack recently revised its house price growth forecast for the major cities to between 6% and 7% for 2017, significantly higher than the 2% economists have pencilled in for the UK as a whole.

London is the exception, where house price growth remains subdued due to stretched affordability and the uncertainty caused by Brexit.

It should be noted that Barclays’ data is based partly on assets, including property, and not cash alone.

Zoopla currently lists more than 10,000 properties in London costing £1m or more. This compares to 109 in Wales and just 42Scotland. None are currently available in Northern Ireland.

Above: Offering five bedrooms and a detached garage in the estuary village of Lympstone in Devon, this house is for sale £1.1m

Thank you

Thank you for making our move into our new home really pain free!
Thank you Steve for taking a chance on a stroppy email.?!?
Looking forward to our time here.
Kindest Regards