Category Archives: Estate Agents

Sharing good / bad experiences when using estate agents
(be careful not to name/shame explicitly to avoid unwanted law suits)

Fundamental changes still necessary to all housing markets in England and Wales

Published / by Peter Hendry / Leave a Comment

The BBC has very recently published an article about deemed improvements to the housing market in England and Wales and which should be incorporated in the White Paper coming before Parliament shortly.

In a survey carried out for the Local Government Association (LGA) concerning this, Martin Tett, LGA housing spokesman, is reported to have said that an opportunity to boost housing supply and improve affordability now presents itself to government.

He explained that the government must recognise that a substantial increase in house building by councils will be crucial to help ensure the availability of a mix of affordable homes both for rent and to buy for the people that will need them.

For the full article, please go to:
BBC article on improvements to the housing market

My proposal for the way housing (within England and Wales) should be marketed, is based on changing from vendor-centric estate agencies to buyer-oriented ones, as described in The Hendry Solution. This would not cost much to implement and would bring massive benefits to all local marketplaces.

To read more about ‘The Hendry Solution’ please go to the following link:

Improve The Housing Market.
How to Improve the UK Housing Market.

Peter Hendry, Consultant in Housing Valuation

The housing market is desperate for economic reform to bring everything back into line with local affordability.

Published / by Peter Hendry / Leave a Comment

It’s so obvious that the housing market is desperate for economic reform, to bring everything back into line with local affordability?

Please see:
The state of the UK housing market in five charts: The housing market is desperate for economic reform to bring everything back into line with local affordability.
An especially good article with graphs by Tom Ough – 2nd Sept 16.

My proposal for the way housing in England and Wales should be marketed, is based on changing from vendor-centric estate agencies to buyer-oriented ones as described in The Hendry Solution. This would not cost much to implement and would bring massive benefits to all local marketplaces.

To read more about The Hendry Solution go to the following link:

Improve The Housing Market.
How to Improve the UK Housing Market.

Peter Hendry, Consultant in Housing Valuation

Simply building more houses can’t solve the housing crisis

Published / by Peter Hendry / Leave a Comment

Obviously we need to get more houses built, both for rent and to buy but developing this as a strategy for calming the housing market is not going to remedy the prices uplift which we have recently experienced. It cannot do that simply because building more can’t achieve anything for as long as the considerable time it would take to actually complete the building of the extra housing needed!

The market itself is in need of intervention and this does need the steady hand of an experienced government. One that can put effective policies into practice faster than the simple and well-thumbed ‘build more’ idea.

My solution is to overhaul the way in which houses are marketed, both for sale and to let by changing the way agents themselves operate.

A more market friendly method is needed so that house prices can be attuned more towards peoples ability to pay, with less of the speculative pricing by agents, whom currently act only for the vendor legally. It is this which needs urgent attention.

A more transparent housing market would not only take the froth out of asking prices but would have the added effect of calming rent levels too. For more information please go to the link below:

My proposal for the way housing in England and Wales should be marketed, is based on changing from vendor-centric estate agencies to buyer-oriented ones as described in The Hendry Solution. This would not cost much to implement and would bring massive benefits to all local marketplaces.

To read more about The Hendry Solution go to the following link:

Improve The Housing Market.
How to Improve the UK Housing Market.

Peter Hendry, Consultant in Housing Valuation

The residential property market is in trouble!

Published / by Peter Hendry / Leave a Comment

If Kate Faulkner advises “The residential property market is in trouble!”, it genuinely must be in trouble!

I’m saying the primary reason why it’s in trouble is not entirely to do with:

1. Insufficient numbers of houses existing in the overall pool of built properties in the whole country.
OR
2. A general lack of money-raising ability amongst individuals wanting to start owning or just moving to larger properties.

Instead it IS to do with the way that sales of houses and purchases are being transacted – and the price-levels being raised by the existing worn-out methods of marketing.

If these methods were updated and improved, things would be far less stressful out there – for everyone.

What we urgently need right now, even more than someone magically building tens of thousands of new homes, (which by the way is impossible in the short term – even for Nick Knowles) is … we need a big upgrade in the way houses are marketed.

If this was achieved, and it could be in a very short timescale, the relief and help available to everyone needing roofs over their heads would be simply astonishing.

If our elected government can see this they could change the performance of the whole UK housing market for the better in the short term and this would be a guaranteed way of their ensuring that they’ll get re-elected at the next General Election (and probably several elections to come)!

For more information on the best and only way to deal with the current housing market problems (including helping countless numbers of households achieve better housing), please refer to the previously written “Hendry Solution”.

My proposal for the way housing in England and Wales should be marketed, is based on changing from vendor-centric estate agencies to buyer-oriented ones as described in The Hendry Solution. This would not cost much to implement and would bring massive benefits to all local marketplaces.

To read more about The Hendry Solution go to the following link:

Improve The Housing Market.
How to Improve the UK Housing Market.

Peter Hendry, Consultant in Housing Valuation

Why have UK house prices risen now and become way out of line with the rest of the economy?

Published / by Peter Hendry / Leave a Comment

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 inefficient and 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.

My proposal for the way housing in England and Wales should be marketed, is based on changing from vendor-centric estate agencies to buyer-oriented ones as described in The Hendry Solution. This would not cost much to implement and would bring massive benefits to all local marketplaces.

To read more about The Hendry Solution go to the following link:

Improve The Housing Market.
How to Improve the UK Housing Market.

Peter Hendry, Consultant in Housing Valuation

There is a problem with the estate agent instruction-gathering machinery

Published / by Peter Hendry / Leave a Comment

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 my earlier article I am a retired estate agent with many years experience in the property sector.

The government of the day doesn’t seem to be doing anything much about these important issues unfortunately.

The views of firms or individual estate agents themselves are sought for moderation and online discussion on this web site.

My proposal for the way housing in England and Wales should be marketed, is based on changing from vendor-centric estate agencies to buyer-oriented ones as described in The Hendry Solution. This would not cost much to implement and would bring massive benefits to all local marketplaces.

To read more about The Hendry Solution go to the following link:

Improve The Housing Market.
How to Improve the UK Housing Market.

Peter Hendry, Consultant in Housing Valuation

Proposal for dealing with the present house-price crisis

Published / by Peter Hendry / Leave a Comment

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 assuming sufficient availability of increased mortgage borrowing.

But, what is actually needed is borrowing which is more strictly measured to make sure that those actually needing mortgage finance are given the priority they deserve and that there is a limit to the amount of money available to be borrowed of course for macro-economic reasons.

The market itself is, and always was, mature enough to cope perfectly well with 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, a sustainable way to lend?”

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 holding down interest rates!  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 much more 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 government rise to the challenge of bringing this fundamental back in order to mirror 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 in finance? We were not 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.  A debate should be tabled as to whether most home loans ought to be made with mortgages using long-term fixed interest rate loans instead. This could, of course be dangerously inflationary however.

4. The fourth and more recently worrying 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, high risk money-marketing as it must stoke up house prices even where forced sales are the probably outcome. The effect for some borrowers will probably be that will loose their homes at some point and also that even their offspring would never be able to fully pay off the debt!

One has to ask the question, is all this money-lending geared to mop up the quantitative easing which the government has had to sanction, owing the 2008 but still enduring serious financial crisis?

In the UK today and as a result of relaxation in the financial restrictions in foreign currency allowing rich foreign investors to buy into London and buy houses that used to be affordable but 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 those needing homes in the main cities?

We need new and functional measures to keep house prices in-sync with the main economy. In the absence of these I 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 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 estate agents.

In a nutshell the proposed urgently needed fix is not a monetary adjustment or an accountant-led fix at all.  The fix I am advocating is a housing market ‘imperfection’ fix.

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

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

If each imperfection was systematically 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.

If no such action is taken that would 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 my proposals and how they could be implemented may be read on the link below:

Improve The Housing Market.

My proposal for the way housing in England and Wales should be marketed is based on changing from vendor-centric estate agencies to buyer-oriented ones. It is called The Hendry Solution. It would not cost very much at all to implement and would bring massive benefits to all local marketplaces.

It is how to improve the UK housing market.

Peter Hendry, Consultant in Housing Valuation

The Hendry Solution – devised to resolve the current housing crisis completely

Published / by Peter Hendry / Leave a Comment

Here is the answer to the ongoing housing crisis, dealing with severe buyers’ problems directly resulting from the present methods of marketing residential property.

House price rises are being driven by lax bank lending restrictions following QE and are the primary cause of the UK housing markets to overheat price-wise.

Secondly but just as importantly, the way in which properties are traded on the market currently needs to be the subject of urgent improvement and reform.

Originally published Dec 5th 2013
(Last updated by ph, June 17th 2019).

True market prices can only be determined by supply and demand in a perfect marketplace. The present UK housing market as a whole is very far from perfect. The Hendry Solution is a workable solution to finally resolved this failure.

The Hendry Solution

In brief it is essentially about engaging one single estate agent to ‘find’ your next house, negotiate the best terms AND sell your present house too! This is a relatively simple but a profoundly important proposal, though nobody else has proposed anything like it before.

By doing that, a degree of relational parity between what you pay and what you get for your existing house would be maintained and also, gazumping should be practically eliminated.

To use an analogy, doing this would be closely akin to employing a stockbroker whilst you are buying (but also when selling) shares.
Such methods are well tried and tested in business investment markets and they could easily be rolled out across the UK housing market as well.

The various local housing markets need such an improvement and the best way to accomplish this is to legislate for a complete new breed of estate agent (instead of trying to build thousands of new houses in a vain attempt to satisfy a supposed national demand.

For the purposes of this paper let’s call them, “RHAs or Registered Housing Agent(s)”.

The main job of these new agents would be not only to sell (or indeed let out) clients houses but also to ‘find and secure’, for their client, the house which they are seeking for themselves and their families – whether to rent or buy.

How could this be achieved?
RHA or Registered Housing Agent’s Moving Contracts (or MC agreements) should replace the traditional vendors’ selling contracts with buyer contracts.

Similarly, ‘Letting Contracts’ (or LC agreements) would be the instructing instruments for agents advising tenants wishing to move from one rental property to another.
All this would be a relatively simple but a game-changing improvement to the way residential property transactions occur at present.

The proposal is that we should do away with old estate agents’ sole selling contracts altogether and bring in Registered Housing Agents’ ‘MC agreements’, where each RHA or Registered Housing Agent engaged would be contracted to try and facilitate a vendor’s complete move from one property to another.  The aim of this is to bring greater satisfaction to all those in the throes of moving house and to get the whole UK housing market operating far more smoothly – in all possible economic conditions and, it should be said, without the need for government-backed mortgage guarantees for those needing to get onto the first rung of the housing ladder either.

As a professional valuer (although now retired), I am claiming that this new method would help to stabilise house-prices broadly across all regions, instead of tending to make them rise a lot in some areas but not anything like as much in others. That alone would be a very significant market improvement.

In addition, estate agents would be more empowered by becoming more responsible for ‘the progress’ of sales and lettings of properties across the whole UK and would gain more control of the volume (or throughput) of house sales and lettings completions.

By contrast the earlier government’s plan to increase the availability of mortgage finance, including to people becoming first house owners was clearly not the right approach. As has been seen subsequently, that resulted in higher prices; the very thing that buyers simply do not need or want, then or now.
‘Help To Buy’ government mortgage guarantee schemes have more recently been taken up in substantial numbers. This is resulting in upwards pressure on house prices as more money in the form of long-term loans must have this affect on asking prices.

In some locations, the excessive price levels which we have recently seen, have been generated, in part, by significant corporate purchases of larger residential properties as investments, some financed by business loans. These loans were mainly advanced to private landlords for buying and renting out multiple units and not for owner-occupation. This has been one of the catalysts for the general increase in house prices as well as increases in rent levels.

This issue is in addition to though caused by the unregulated way in which current day estate agents negotiate and agree terms of sales with unsuspecting house buyers, whom are generally unaware of the scope of other offers (if indeed there actually are any) claimed to be being made on the object-property around that time.

A certain amount of regulation in the marketplace would go a long way to helping resolve these drawbacks.
With appropriate regulation, Registered Housing Agents could improve themselves in competition with other agents by becoming more efficient and more factual.
They could, for example, correlate from the current data they would have available from all the applicants, the maximum sustainable rents or buy price levels currently feasible and deduce using their training and expertise, exactly what the mean, median, and mode price should be on any specific property to be acquired.

Having selected the best applicant for the property in question, they could then advance the most suitable offer to be made on behalf of each buyer.

If the seller (or landlord) agrees, the offer would then be formally accepted and the whole transaction process (exactly as described here) would commence.
There would be no question of agents ‘tweaking’ buyers’ (or tenants’) offers upwards any more as to do this would contravene their business ethics as well as putting in jeopardy their licensed (or regulated) business registrations.

Here are the three main benefits of using this new marketing solution.
Included below are the most significant advantages which the various different local housing markets around the country could derive benefit from. They could be used to increase sales and lettings throughput right across the whole of the country.

  1. First-time buyers (or renters) of both new and second hand houses, would not have to budget for agency fees when making their house purchases because these buyers/renters would not need to engage a buying agent or sign a Moving Contract (or MC agreement) with any agent. The arrangements would not therefore penalise first-time buyers financially. These applicants would simply need to approach the agent marketing the property in question. (The agent involved would already have a fee arrangement with the person moving from that property to their next one.)
  2. Registered Housing Agents would benefit since it would become more difficult for owners or landlords wishing to transact their own sales, purchases or lettings without using them. Indeed with this system, it would even be possible for government to declare that such a practice would be banned if they should decide there is a need to do so. The extra sales/lettings throughput generated by making all of the local housing markets around the country more efficient would further enhance RHAs’ profitability.
  3. It would also be possible to identify, specifically, all those transactions that involve house purchasers who are moving a long distance, when in the process of buying the house in question. Additional taxation could thus be applied to second home purchasers if it was deemed appropriate. For example the government could start to levy a tax on all second home buyers. This would tend to help reduce prices in those areas where second home buyers have been pricing local residents out, thus helping first time buyers as well as raising taxes for the government.


Below is a condensed description of the new ‘RHA or Registered Housing Agent’s strategy:

In order to become more even-handed in their dealings, and so be of better service to all of their clients, estate agents must start acting both for buyers and sellers, instead of only for sellers or vendors.

This means traditional estate agents would need to become involved primarily in searching for and introducing the present seller to their next property (as buyer), as well as selling their existing house (if any).

To do this the forward purchaser’s agent would become the agent that negotiates both the terms of purchase of the next property and the terms of sale of the house to be sold as part of the move. We’re calling these ‘RHAs or Registered Housing Agents’. They would, in fact, be advising the buyer as their client on both finding and selling houses in this explanation.

In order for this to happen, estate agents must stop using sole selling contracts and begin offering agency ‘Moving Contracts’ or ‘MC agreements’ for their clients instead.

This would mean that the primary work of the estate agent would become to locate and then introduce acceptable houses for each buying client, whilst at the same time, retain responsibility for negotiating the sale of the client’s existing property – the one to be disposed of as part of the proposed move. One thing this solution can do is to massively reduce the rate of sales chain failures.

To explain how this would work in practice, let’s use the term ‘the subject property’ to mean the house being sold, and the term ‘the object property’ to mean the house to be purchased.

Two new documents would be involved with this new process :
An ‘MC agreement’ entered into by buyers initially just with one agent, or a series of ‘MC agreements’ with different Registered Housing Agents (instead of just having a ‘sole agency selling contract’ with one specific estate agent as generally happens now).

A pre-contract ‘lock-out agreement’ with a set time duration, during which the vendor of the property concerned could not accept other offers until the specified lapse-time occurs without incurring defined penalties. These would primarily be aimed at the vendor if they should default without just cause, but some form of recompense, payable to the vendor, ought also to be reserved in the event that the buyer was the party that decided to withdraw prior to actual exchange of contracts.

Clearly, all buyers would be advised to ensure that property surveys will first have been carried out and are satisfactory, regarding the object properties being bought, before signing their lock-out agreements. Having a professional survey is normally advised for most types of residential property being purchased anyway.

Once the whole scenario is fully understood and implemented, these new methods would prove to be self explanatory and perfectly straightforward to follow.

The following is an explanation of the logistics of the process, whilst looking forwards, by going up the sales or lettings chain.

  • Vendor 1 sells to Buyer 1 (that’s property 1 of course); with buyer 1’s solicitor doing the conveyancing.
  • Then, when Vendor 1 goes to buy forward they become Buyer 2 (of property 2 ); buying from Vendor 2 (with Vendor 2 and Buyer 2’s solicitors doing the conveyancing, as is usual).
  • The new bit is that Buyer 2’s solicitor pays the RHA out of funds provided by Buyer 2. (The seller pays no separate fee.)
  • Then to progress further up the chain, Vendor 2 becomes Buyer 3 (of property 3); and buys from Vendor 3 (with Vendor 3 and Buyer 3’s solicitors doing the conveyancing, again as usual).
  • Once again the new bit is that Buyer 3’s solicitor pays the RHA out of funds provided by Buyer 3: – and so it continues all the way up the chain.

As explained, each separate vendor signs two lock-out agreements, each one involving buyers of different properties.
The primary lock-out agreement is with the vendor of the property they have agreed terms to purchase.
The second lock-out agreement is with the purchaser of the property they currently own and wish to sell.

NB. Under the revised arrangements, no selling agent fees are involved anymore in either case of course. The buyer’s solicitor will arrange payment of the buyer’s RHA fees, on satisfactory completion of the actual sale and purchase – where previously the vendor’s solicitor paid the vendor’s estate agent.

To reiterate, it should be noted, the ‘RHA or Registered Housing Agent’ is always paid on completion by the buyer (instead of by the seller as happens now).

Each agent that was working on the ‘sale’ of each property, would simply be informed, generally by the specific vendor or through their solicitors, when to stop marketing at the appropriate time. That is, after a lock-out agreement has been signed by them. This is broadly what happens currently, after terms are provisionally agreed by each vendor.

(If deemed important in the particular situation at hand, relevant ‘RHAs or Registered Housing Agents’ could, of course, be asked to endorse the specific lock-out agreement concerned, for added clarification.)

To explain again, this would mean there will be a need for two lock-out agreements to be signed by each vendor.

The first with the purchaser of the property that they are in the process of buying.
The second, between themselves and purchaser of the property which they are simultaneously selling.

It should be emphasised however, that each buyer should always sign the lock-out agreement relating to the house they wish to buy first.
They should sign the lock-out agreement for the house they are selling second. Both would, of course, generally be signed at the solicitors office, one immediately after the other.

Doing this should not be any more complicated than owners signing the various legally binding pre-contract papers which they currently need to sign.

This process must involve each vendor hearing from and responding to the two different solicitor’s firms involved. It would of course be feasible for their own solicitors to deal with this much as at present.


For those who wish this, here is a more detailed description of the new ‘Registered Housing Agent’ strategy:

Firstly from the vendor’s viewpoint:
A. Under the Moving Contract or ‘MC agreement’, the agent would still act for vendors (as now), but instead of merely being a selling agent, would act primarily as their buying agent.  In other words, the same agent would find them their next house, ‘the object-property’, negotiate the best terms with that property vendor’s agent (whether that agent has an ‘MC agreement’ or not), and also sell their existing house.

As a follow-up but unlike the existing arrangements, the RHA or Registered Housing Agent with an ‘MC agreement’, acting for the buyer, would request ‘the object-property’ vendor to instruct their solicitors to sell their property to buyer 1.

At the same time a two party pre-contract agreement called a ‘lock-out agreement’ would be signed, the parties being as mentioned above but with the option of including, as a third party, the relevant RHA(s) if deemed necessary in specific circumstances.

The basis of each agreement which would be legally enforceable would provide for a set lock-out time, during which the forward vendor (i.e. the seller of the property in question ‘the object-property’) would not continue marketing the property or show any more viewers around it and agree not to canvas for or take any other offers prior to an ‘exchange of contracts’ with the named buyers, providing that this occurs within the agreed time limit.

If the terms of the agreement were broken, the party disadvantaged may seek to claim the sum set down in the agreement by way of damages or compensation.

In addition to bringing more certainty in concluding negotiations between the parties, the effect of this would be to stop (or substantially reduce) gazumping happening in the intervening time. As stated earlier one thing this solution will also do is to massively reduce the rate of sales chain failures.

[N.B. If the agent which happened to secure the best deal for the vendor, both for the sale of their existing property and the purchase of their preferred next property did not already have an ‘MC agreement’ with that particular client at the time, one could be signed retrospectively, or in other words at the same time as the lock-out agreement was to be signed by ‘the object-property’ owners; and this would effectively over-ride all other ‘MC agreements’ in the same way that a last Will and Testament over-rides all prior wills.]

B. If an existing, or alternatively a new agent were to obtain an offer involving a higher price on ‘the object-property’ – acceptance of this would become subject to the expiration of the pre-contract lock-out agreement and would merely give the existing buyer of the house in question, added impetus to make sure that a legal contract for the sale of land and buildings was concluded as swiftly as they could do so and within the lock-out timescale. There should be penalties specified in the agreement aimed primarily at the vendor of ‘the object-property’, if they should default without just cause but also in respect of the purchasers. However the opportunity to default if either party wished to would remain, as no contract for the sale of land would yet be in place.

All legal conveyancing would be carried out primarily in the way that it is done at present.

C. In the event that the lock-out time period was unavoidably exceeded or formal contracts for sale were not exchanged within the prescribed time, the pre-contract lock-out agreement would expire, or lapse.

The owner of ‘the object-property’ could, of course, then carry on using their existing RHA or Registered Housing Agent, and/or instruct more RHAs, by using ‘MC agreements’, both to find them their next house and sell their existing one – the one that was the subject of a recent abortive sale.

The vendor of ‘the subject property’ however, (i.e. the buyer whose lock-out agreement has just lapsed), may simply carry on with their search for another suitable property, again using their existing RHA via an ‘MC agreement’, or signing up with additional agents using more ‘MC agreements’ if this should be deemed necessary.

It should perhaps be explained here that existing estate agents with traditional selling contracts would, in the interim period and while these new procedures became fully accepted, slightly confuse the picture until sufficient numbers of estate agents began offering this new and improved service. For this reason a consensus in favour of the necessary change, including Government legislation confirming this would undoubtedly be needed.

Secondly looking at this from the buyer’s viewpoint:
1. An estate agent with an ‘MC agreement’ would initially be commissioned by a vendor as above, both to find that particular buyer their next house, ‘the object-property’ and negotiate the best terms they can on that purchase, as well as conclude the sale of their existing house (if any).  Once ready, the relevant agent (or the agent offering the buyer the best overall terms), would request the forward vendor to instruct their solicitors on the terms agreed for sale, as in ‘A’ above.

The successful ‘RHA or Registered Housing Agent’ would be paid on completion of the combined sale of the purchaser’s existing house and the legal completion of the house being bought, ‘the object-property’, using similar machinery as currently exists with conveyancers.

A pre-contract lock-out agreement, as explained in the vendor’s example above, would be signed again by ‘the object-property’ vendors, the buyer, and their ‘RHA or Registered Housing Agent’, if deemed necessary.

As already explained above, this would simply provide for a set lock-out time during which the forward vendor (i.e. the seller of ‘the object-property’) would agree not to continue marketing the property or show any more viewers around it and would agree not to accept any other offers prior to exchange of contracts with the named buyers, provided that this occurs within an agreed time limit. However, as previously explained, there would remain the opportunity to default if either party wished to, as no contract for the sale of land would yet be in place.

As explained above, the primary effect of this would be to stop (or substantially reduce) gazumping happening in the intervening time, by formalising the terms provisionally agreed between the parties which would be an extremely valuable addition.

In other words, unlike existing ‘selling agents’, the RHA or Registered Housing Agent with an ‘MC agreement’ would be primarily helping the buyer to find their ‘object-property’, and would assume responsibility for both transactions, but importantly, they may also sub-contract out the sale of the existing house to other RHA or Registered Housing Agents if this should prove to be necessary, e.g. where the RHA concerned is not active in the area in which the existing property is located.

This would mean that the active RHA or Registered Housing Agent with an ‘MC agreement’ would have had to have found a buyer for the house being sold (‘the subject property’) before they could conclude a deal for the forward purchase ‘the object-property’. This, of course, should happen in the normal course of events, in most cases, anyway but currently it does not always.

2. Again, if any other agent should attempt to contact the owner, or the owner’s ‘RHA or Registered Housing Agent’ handling the purchase of ‘the object-property’ with a different offer worth considering, they would be told the house is currently sold, (subject to contract), of course. An agreed pre-contract lock-out agreement with a set time duration would be running, such that the vendor of ‘the object-property’ could not accept other offers prior to exchange of contracts. As already explained this is designed to stop, or substantially reduce, the occurrence of gazumping within the agreed time-scale but would not be an actual contract for the sale of land so would be straightforward to have executed.

As a result, any new estate agent (even one with an ‘MC agreement’), may still offer a higher price – making the offer subject to the expiration of the existing lock-out agreement. Again, this would merely give the existing buyer more impetus to make sure a legal contract for the sale of land and buildings to them was concluded as swiftly as they could do that.

3. In the event that the time was exceeded and the lock-out period expired or lapsed, ANY estate agent may then legitimately try and finalise acceptance of a new offer and if they did so, new terms with new people would then be substituted. Under these circumstances it is easy to see why having an effective lock-out agreement would help the performance of the housing market as a whole, primarily by setting down agreed time-scales for the progression of conveyancing under the terms of the offer.

Assuming the new introducing agent was working for a different or prospective buyer but still via an ‘MC agreement’, then again a new pre-contract lock-out agreement having a new lock-out time provision would be executed with the new purchasers (to replace the expired one).

Obviously in these circumstances the earlier purchaser would, by that time, have lost their rights to conclude a purchase of that particular property.

The following is a repeat of the explanation of the logistics of the process, whilst looking forwards, by going up the sales or lettings chain.

  • Vendor 1 sells to Buyer 1 (that’s property 1 of course); with buyer 1’s solicitor doing the conveyancing.
  • Then, when Vendor 1 goes to buy forward they become Buyer 2 (of property 2 ); buying from Vendor 2 (with Vendor 2 and Buyer 2’s solicitors doing the conveyancing, as is usual).
  • The new bit is that Buyer 2’s solicitor pays the RHA out of funds provided by Buyer 2. (The seller pays no separate fee.)
  • Then to progress further up the chain, Vendor 2 becomes Buyer 3 (of property 3); and buys from Vendor 3 (with Vendor 3 and Buyer 3’s solicitors doing the conveyancing, again as usual).
  • Once again the new bit is that Buyer 3’s solicitor pays the RHA out of funds provided by Buyer 3: – and so it continues all the way up the chain.

NB. No selling agent fees are involved anymore in either case.

In each case, it should be noted, the ‘finding’ or Registered Housing Agent is paid on completion by the buyer (instead of by the seller as has happens up until now).
The agent which had been working on the ‘sale’ of each property would be told when to stop marketing by the vendor at the appropriate time (as happens currently).

In essence this means that the agent doing the selling, only has to market ‘the subject property’.

After a buyer is found, it’s the buyers agent that would do all the ongoing work, including managing each purchase through to completion – instead of the selling agent as at present.
Except when the transaction involves only a sale, it’s the buying agent that gets paid the fee.

If the transaction is purely a sale, arrangements would need to be made, via the vendor’s solicitor, for that agent to submit his account and be paid – in a similar way to the historic arrangements.

The Effects:
In the above situation it is then possible for the ‘failed’ buyer to conclude a deal to buy a different house using either the same (or a different) ‘Registered Housing Agent’ using ‘MC agreements’ with whomsoever they appoint as agents.
Flexibility for each buyer is thus is significantly increased.

Once terms have been provisionally agreed on a different ‘object-property’, and they have a purchaser for their own house, they could again arrange for a pre-contract lock-out agreement to be executed for that property.

This new method of securing an offer on a house should mean increased choices becoming available for buyers, because each buyer would have increased access to more estate agents helping them to find suitable properties.

It would also enable buyers to make final decisions based on the very best opportunities currently available, both in regard to the selling of their existing house and in regard to the purchase of their preferred next house. As just explained, this would be accomplished by enabling buyers (if they should think it necessary) to appoint multiple estate agents to work for them in their search for the property that best suits their requirements.

By freeing up buyers in this way, the housing market would start functioning more like a perfect market than it has in the past. This would be of considerable advantage to all the players involved – both business-wise, and by increasing the choice of property for buyers.

Essentially, the only thing that an estate agent would not be able to do, using ‘MC agreements’, would be to act solely for a vendor of course, and this is the primary change which I advocate should now happen.

I accept that ideally this might need the government of the day to give it their backing, if (and as is most likely) traditional estate agents are reluctant to make such a change themselves. It should be stressed however, that the advantages for estate agents would seem to me, patently to outweigh the disadvantages by a very considerable measure.

[As an aside, there would need to be a retained flexibility for those vendors without any forward purchasing intentions to sell without having to use a new ‘MC agreement’ and instead merely use an estate agent as their selling agent – as happens at present. However for this to work, there would need to be a provision in agency law that if a later ‘MC agreement’ were signed by the same client it would take precedence over a traditional sole or multiple agency selling contract and that the latter would be superseded by the former.]

Unlike the plan to build large numbers of houses very quickly, which is doomed to fail in the short-term because of the logistics of building them, this improvement to the way in which the housing market functions could be made very swiftly indeed.


TV programs such as BBC 1 Panorama’s ‘The Great House Price Bubble?‘ investigating the pros and cons of ‘Help To Buy’ mortgage guarantees, screened on Monday 11th Nov. at 2030hrs, and Channel 4’s Dispatches ‘The Property Market Undercover’ the week before, have recently investigated the current situation and found continuing serious misfeasances in the way that houses are sold. Since we are still in the aftermath of the worst financial crash since the 30’s, with interest rates still at rock bottom, it’s only right that something fundamental and of significance should be done to change and improve the operation of the housing market.

But why?
Let’s look at the following extracts in the news following the 2008 financial crash:

Seen 11 Nov 13:
www.estateagenttoday.co.uk/news_features/House-prices-in-astonishing-leap-across-country-claim

Seen 14 Oct 13:
www.estateagenttoday.co.uk/news_features/Brian-Murphy-Blog
“In the period 1997 to 2007 significantly more than a million housing transactions took place each year in England & Wales. In the period 2008 to 2012 the number of transactions has not been above 662,000 with numbers averaging 640,000 over the last five years.” These numbers quite clearly demonstrate how constrained the market has become, with many would-be borrowers citing the inability to save the level of deposit required by lenders as their primary reason for not entering the property market.

Increased borrowing arrangements have come on-stream since the 2008 recession and these have contributed to a rise in average prices, which is accelerating ahead of net wages increases. This is concerning; once again.

Seen 22 Feb 17:
www.gov.uk/government/uploads/system/uploads/attachment_data/file/592364/UK_Tables_Feb__cir_.pdf
The seasonally adjusted figure for residential sales completions to Jan 2016 (prov) was 1,231,400 with a broadly similar number of sales completions for the 2017. The uplift in House prices recently having been seen may be fairly attributed to excessive bank finance, with the resumption of more lending following the 2008 financial crash and which is, in my opinion anyway, a primary cause cause the housing markets to start overheating yet again.

What could existing estate agents do better?
Much – based on the explanations above.

For a glimpse of some of the current and ongoing problems associated with traditional estate agency, please see the following links, which will open in a new tab or window. These would all be resolved by estate agents using ‘MC agreements’ instead of ‘Selling Contracts’.

communicate your way to faster completions – earlier pdf on estateagenttoday (but no longer available).

Also seen Fri 11th Oct 13:
www.thetimes.co.uk
Chris Leslie, Shadow Chief Secretary to the Treasury, said: “If ministers are serious about helping first-time buyers, they should bring forward investment to build more affordable homes.
“Rising demand for housing must be matched with rising supply, but under this Government house-building is at its lowest level since the 1920s.
“Unless George Osborne acts now to build more affordable homes, as we have urged, then soaring prices risk making it even harder for first-time buyers to get on the housing ladder. You can’t tackle the cost of living crisis without building more homes.
“Rather than waiting a year, the Bank of England should immediately review the details of the scheme. How can it make sense that a policy which should be about helping first-time buyers will allow taxpayer-backed mortgages for homes worth up to £600,000?
“And we need to know how much the Treasury intends to pocket in fees from people who take out Help to Buy mortgages. How will this money be accounted for in the public finances? George Osborne shouldn’t make struggling first-time buyers pay over the odds as he desperately tries to fill the hole in his failed deficit plan.”

So, what should be done?
Recognise that there are problems with the knee-jerk reaction simply to build more houses. The problems are twofold.
Firstly, as we all know, to build substantial numbers of houses takes time. This needs ‘forward’ planning. It simply cannot be done in an instant, or even in a year!

Secondly, however many houses are quickly built, they will only form a tiny percentage of the total number of houses already available and so can only have a tiny affect by lowering the prices being paid for them. Doing this will not therefore resolve the problem.

Instead, the way to improve the market and in so doing, get fair prices for all is to change ‘the way’ houses are currently marketed by improving current methods.
The methods used by estate agents nowadays, have been used for several decades, without change, and understandably now need a radical shake-up.

Unlike the plan to build large numbers of houses very quickly, improving the marketplaces could be done very swiftly.

I forecast that by replacing traditional estate agents’ selling contracts with MCs, turnover in the housing market would quickly start to recover and the direct result of this would be, more builders starting to build more houses, as there would then be a ready market for these.

Some Earlier Quotes:
housing-minister-role-is-relegated-to-a-junior
Richard Lambert, chief executive officer of the National Landlords Association, said among other things:

“It is extremely disappointing to see The Coalition reduce the significance of housing within Government. Given the significant challenges facing households throughout the country, it is essential that housing takes centre stage in the political debate.” We agree.

Help-to-Buy-second-phase-opens-to-business
And Andrew Tyrie, chairman of the cross-party Treasury Select Committee, said that ministers had failed to allay its concerns about the housing market. He warned that with the “chequered history of government interventions in residential property, great care will need to be taken”.

Also, ‘Help to Buy’ was labelled mad and “very dangerous” by the Institute of Directors.

I do agree with this remark too, which then begs the question:
“Exactly what should be done, by whom, and when by?”

The answer clearly is: – The present government should bring in ‘Moving Contracts’ or ‘MC agreements’ to replace ‘Selling Contracts’ before the next General Election.

Here’s food for thought?
It’s definitely within the grasp of top estate agents to permanently improve the UK housing market themselves. But why don’t they?

I’d certainly be interested in your thoughts and observations and would be happy to publish any that are constructive.

Peter Hendry, author of this report.


Bibliography:
Earlier online articles involving discussion amongst estate agents, which illustrate the problem generally.

www.estateagenttoday.co.uk/news_features/House-prices-in-astonishing-leap-across-country-claim

www.estateagenttoday.co.uk/news_features/Mortgage-lending-the-highest-in-five-years-says-Bank-of-England

www.thetimes.co.uk/tto/news/politics/article3901688.ece

www.estateagenttoday.co.uk/news_features/New-Get-A-Move-On-campaign-aims-to-shake-up-home-buying-and-selling

www.estateagenttoday.co.uk/news_features/Dodgy-estate-agency-practices-put-under-spotlight-in-TV-programme

www.estateagenttoday.co.uk/news_features/Asking-prices-up-again-as-property-supply-dwindles

www.estateagenttoday.co.uk/news_features/Shelter-calls-on-ministers-to-rethink-Help-to-Buy

www.estateagenttoday.co.uk/news_features/Talk-of-a-housing-bubble-is-hysteria-says-think-tank

www.estateagenttoday.co.uk/news_features/New-OFT-guidance-issued-on-definition-of-estate-agents

www.estateagenttoday.co.uk/news_features/Sarah-Beenys-private-sales-site-Tepilo-to-relaunch-as-online-agent

www.estateagenttoday.co.uk/news_features/A-tale-of-two-Britain-in-bipolar-housing-market

www.estateagenttoday.co.uk/news_features/Estate-agents-are-an-army-of-invaders-who-must-be-stopped-says-Cable

www.estateagenttoday.co.uk/news_features/RICS-call-to-cap-house-prices-is-shot-down-in-flames

www.estateagenttoday.co.uk/news_features/Second-steppers-still-stuck-in-first-homes

www.estateagenttoday.co.uk/news_features/Supply-plummets-in-London-property-drought

www.estateagenttoday.co.uk/news_features/Housing-market-recovery-threatened-by-low-volume-claim

www.estateagenttoday.co.uk/news_features/Asking-prices-hit-their-highest-ever-says-Rightmove

www.estateagenttoday.co.uk/news_features/Estate-agents-and-surveyors-beg-to-differ-on-state-of-market

Posted by: Peter Hendry, Housing Valuation Consultant

Misrepresented market values are not the vendor’s fault

Published / by Peter Hendry / Leave a Comment

Many people seem to be missing the fundamental point about the need for the reform of estate agency.

The reason why new methods of transacting house sales are needed in England and Wales is that estate agents have, for a long time, misrepresented market values by skewing current house prices, causing untold damage to the smooth operation of the property market.
Successive booms and busts in house prices are absolute testimony to this. There is no reason why house prices should need to fluctuate anything like so wildly, even when our economy itself is in crisis. The damage being done under the auspices of getting the so-called ‘best’ price instead of the market’s equilibrium price is now becoming increasingly clear.

If you examine the situation closely, you will see that houses, being a basic need of society, should tend to command a relatively stable price. This should depend primarily upon current wealth and not on borrowing capabilities. Relatively stable prices are achieved in many other equally prosperous countries. The sole reason this isn’t possible here is the over-exuberant activity of estate agents, who generally guess what prices to ask and then try and force unwitting buyers into paying these by borrowing ever increasing amounts of capital – with the aid of the lenders of course. Many agents even help by arranging for buyers to borrow the money by providing financial advisers in-house!
It is time a new, more professional and more reliable method was found for transacting house sales.

Vital market transaction-prices information for doing house valuations is now publicly available. It only remains for buyers to use this themselves if estate agents can’t (or won’t) do this properly. Both buyers and sellers should be able to do perfectly adequate valuations for themselves using such information.

If agents don’t, can’t or even simply won’t change their business model I think that the government ought to put in place changes to the way houses are marketed by estate agents.

The latest improvements in transparency within the housing market, as outlined in our front page proposal, would have a considerable stabilising affect on the whole British economy. This has very considerable merit, especially in the aftermath of the 2008 financial crash and the continuing unsettled economic situation.

In my view the graph of ‘throughput’ of completed sales over time should remain fairly smooth if the market is working efficiently. This is the acid test to be applied but stability of sales levels is not happening, and has not happened for several decades prior to the present moment.

My proposal for improving this is to improve the way housing in England and Wales should be marketed. It is based on changing from vendor-centric estate agencies to buyer-oriented ones as described in The Hendry Solution. This improvement would not cost much to implement and would bring massive benefits to all local marketplaces, whether in the owner-occupier or the rental sectors.

To read more about The Hendry Solution go to the following link:

Improve The Housing Market.
How to Improve the UK Housing Market.

Peter Hendry, Consultant in Housing Valuation

Defining a modern-day estate agent

Published / by Peter Hendry / Leave a Comment

Can anyone accurately define the present function and purpose of the modern-day estate agent?

Can you go further and define what the precise function and purpose of a modern-day estate agency should be?
We’re also hoping to hear from people who can re-define what they really want from estate agents, including what they could to do better:

Current Definition:
A person (or organisation) that tries to get the best possible price for a house whilst acting on behalf of a property owner, usually rewarding themselves with a percentage of the price they manage to achieve on the legal completion of each sale.

Problems resulting:
This basic remit permits them to do almost anything, even if it happens to be outside the law, or against the economic trends of the market itself. For example, they may take bids from gazumpers (real or imagined), obtain extra mortgage finance for a buyer as a condition of finding a property at the named price, or just pretend additional offers are being made at any stage when in fact, they are fictitious. They may also fail to take the current condition of the property into account and may even misrepresent the true state of the property market itself, not only to prospective sellers simply in order to gain the initial selling instructions but also ‘guild the lily’ as to the present state of the property market to prospective buyers as well!

An analogy which can highlighs these defects:
If you eat or drink more than your body can comfortably handle the result will be, you will soon put your own body in peril.

In just the same way, if a house owner (or indeed his agent) should try (through nefarious means) to extract more than the current market value of a property from buyers, he is by doing this, putting into peril the operation of the whole marketplace. He is thereby not acting in his client’s best interests at all! This seems to be what has been happening recently. This no longer relates to the role for which estate agents were originally conceived.

Alternative and new proposal:
New and improved estate agencies should be renamed ‘Registered House Agents’ or ‘RHAs’ for clarity.
A person (or organisation) whose primary function is to locate and assess suitable properties, establishing their true value in current market conditions. Their instruction would be to act primarily for the buyer, not only in the capacity of finding and presenting to them the best choices of property to purchase for their specific purposes but also to engineer the best overall sale and purchase package for their client and if instructed to, see the agreed package right through to combined legal completions.

If more modern estate agents or ‘RHAs’ knew they would have to show a client that their’s was the best set of proposals for that client in the present market situation, they would automatically be seen to be earning the level of fee that they would expect to be charging for that service.

This would mean that less external regulation for agents would thus be needed, not more.

My new proposal, which is to improve the way all housing in England and Wales is marketed, is based on moving away from vendor-centric estate agencies and instead use buyer-oriented ones as described in The Hendry Solution. This would not cost very much to implement and would bring massive benefits to all local marketplaces.

To read more about The Hendry Solution go to the following link:

Improve The Housing Market in England and Wales.
How to Improve the Housing Market in England and Wales.

Peter Hendry, Consultant in Housing Valuation