Monthly Archives: November, 2016

A MESSAGE TO THE CHANCELLOR…

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A message to the chancellor…

So now we know … The new Chancellor has given his Autumn Statement and we have an idea of the direction the new-look Conservatives want to take.

First the slightly disappointing news; the proposed abolition of letting fees. Let’s not forget there is to be some consultation before it actually becomes law so there’s time for lobbying for those who feel strongly that Mr Hammond has simply got it wrong. But, having said that, it’s perhaps significant that many commentators have already been reporting the move as a done deal, probably because it was presented as one of the Government’s gestures to help “the just-about-managing”.

Mr Hammond seems to believe that it’s the landlords who should be paying for letting agents’ assistance, not the tenant – which many will see as fair enough. However, there’s absolutely nothing in the statute book to prevent landlords passing the additional cost back to the tenant in the form of increased rent so, in the end, we’ll probably soon be back where we were. Indeed, tenants may be even worse off as the Chancellor also ignored calls for an end to the additional 3% Stamp Duty his predecessor imposed on buy-to-let landlords in April. Again, the move was meant to make an investment in a second home a little less attractive, freeing up more property for first-time buyers and bringing prices down. In reality, the buy-to-let market is still thriving – although rents have continued to rise, possibly to counter-balance the extra Stamp Duty the landlord now has had to pay.

But there was some good news on Wednesday too – and that came in the form of the Government’s pledge to invest in construction. Over £2bn is to be pumped into regions where there’s a desperate need for new homes and a further £1.4bn is to be invested in 40,000 more affordable homes, along with a raft of new schemes like Rent-to-Buy, Shared Ownership and Right To Buy, giving struggling first-time buyers a number of options to look at when it comes to getting a foot on the housing ladder.

But (and there are a few) we should first of all acknowledge 40,000 affordable homes isn’t many in a national context. Also we’ve yet to see the definition of “affordable”; neither do we know yet where these new homes will be built.

We’re a Yorkshire-based firm so, as you might expect, we’d very much like to see the Government back-up its rhetoric about a Northern Powerhouse with some action. If we’re going to see significant investment north of Watford, then people will need homes to live in so, hopefully, a decent slice of that money to boost construction will be coming our way.

But, in many cases, the areas feeling the “housing crisis” worst are small rural communities. Many villages have fast become enclaves for the over-50s as homes in the countryside have been snapped up as holiday cottages or have become so expensive they’re well outside the price bracket for the average rural worker.

Yes, there are pockets of London – and other big cities too – where “brown field” development could help ease the logjam and get Britain back on track when it comes to home ownership. But let’s hope rural communities get their fair share too or we’ll likely see a continued decline in a quintessentially British way of life.

What Does The Donald Trump Win Mean For The UK Property Market?

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Does Trump Mean Slump?

Many have been predicting yet more doom and gloom in light of Donald Trump’s election and US president. There’s no doubt his rhetoric in the run up to the vote was controversial, divisive and sometimes disingenuous so it’s perfectly natural that many will be battening down the hatches and pledging not to come out for four years.

But, here in the UK, we’re fortunate to have a yardstick in the Brexit referendum. Yes, the result was a shock of equal proportions and the immediate aftermath in June was much wailing and gnashing of teeth. However, almost six months on, the economic meltdown many predicted hasn’t materialised – at least not yet.

It would be complacent to say that Britain has ridden the storm. The reality is that many commercial enterprises are in “wait and see” mode and, if that continues in the long-term, that’s bound to have an impact as, eventually, less investment will begin to wear down confidence and our willingness to spend money will be eroded.

But there are a number of factors in play in the property market which are likely to mean any drop in house prices will be a long time coming. Indeed, a significant change in Government policy would be required to force prices down quickly so, we’re sorry to say if you’re a first-time buyer, Mr Trump’s victory probably won’t bring you closer to an affordable home within the next few years any more than Brexit has to date.

In short, the UK needs more homes but not enough are being built to meet demand. That means a shortage in supply is driving prices higher. As a result, many of the over 55s are cashing in on their property wealth, downsizing to help younger members of their family get a foot on the property ladder. However, that also puts “silver sellers” in direct competition with first-time buyers, which means stiffer competition for smaller properties, driving prices higher still.

Meanwhile, other savvy over-55s without family to worry about have spotted the fact that fewer homes for sale means younger generations are being forced into rented accommodation. With both revenues and property values rising, buy-to-let has become a far more lucrative option than some pensions, prompting many to cash them in and invest in property instead. More competition for the small to medium-sized home, meaning even higher house prices.

But the most recent phenomena is inactivity. The wait-and-see policies adopted by some of the big corporate players in the wake of Brexit – and now the Trump victory – are being repeated by those thinking of selling their homes, which means the number of houses coming onto the market has slowed. The likely result? Yes, you’ve guessed it. Prices will probably remain high or even continue to rise.

The Government has pledged to build more homes to ease the log jam. New initiatives have also been promised to replace Help To Buy, which folds at the end of next month. However, neither are likely to result in a sudden or dramatic drop in house prices – unless there’s an equally sudden drop in demand. But so many people have seen high prices quash their dreams of home ownership that a slump is highly unlikely; there are simply too many who would jump at the chance of buying their first home or moving up the ladder a rung or two to make an overnight crash likely.

So, if you’re thinking of selling, our advice would be not to worry too much about The Donald or even Brexit come to that. A recent levelling out in house prices month-to-month may have been reported here and there in an alarmist media which forgets to mention the average homes was still worth 5% or more this autumn than it was a year ago.

Be cautious of course. Do your homework and check out the apps on Rightmove and Zoopla which give you an idea of what homes are selling like in your area. But, if you prefer a voice and someone to chat to before you make a decision, just give us a call or drop us a line. We’d be more than happy to help.

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