The announcement, in the recent budget, of a reduction in Stamp Duty for first time buyers of houses up to £300,000 (and other buyers of houses up to £500,000), from next April is widely expected to cause prices of houses to further increase though the government is playing this down as likely to be relatively insignificant!
I disagree and believe this proposal will have the very opposite effect to that which is currently needed. House price increases could easily swallow up a larger part of this tax break under the present estate agency contract arrangements because there are no arrangements helping buyers determine the appropriate price to pay on any given property.
I fear that The Office for Budget Responsibility’s estimate of how much prices are likely to go up by, following this tax break may turn out to be very wide of the mark. It is only an estimate.
Instead of short-term tax breaks like this, what is needed is a root and branch upgrade of the way in which house prices are currently negotiated by providing far better negotiating leverage to all buyers and by improving the success rate of all housing transactions.
To achieve this would require a change in the client-agent relationship from the present one, which is a contract between vendors and the appointed agent, to a buyer-centric relationship which would involve the buyer instructing the agent instead.
This would place the all-important and necessary price negotiating information in the hands of buyers for the very first time and equip them to pay the true current market price in the local market in which the property is situated.
Buyers don’t currently have access to the specific price comparison figures when they are dealing with vendor-appointed agents and because they refuse to declare what other offers they have received, buyers tend to have to pay above true market price.
While banks, other lending institutions and developers may all prefer this arrangement there is no logical reason why this ought to be the case even though it has continued unchallenged, certainly since the end of the war.
This method is outdated and in need of urgent improvement.
The Hendry Solution is designed to correct this anomaly and thus substantially improve the efficiency of the housing marketplace across England and Wales.
The policies I am advocating could be put into effect easily, swiftly and inexpensively.
For more information about exactly how this special new policy could be put in hand, please see ‘The Hendry Solution’:
Improve The Housing Market in England and Wales.
How to Improve the Housing Market in England and Wales.
Peter Hendry, Consultant in Housing Valuation