The new proposals by the Levelling Up Secretary Michael Gove are good

The new 2022 Levelling up Bill is a breath of fresh air and would introduce new ways to speed up housebuilding. It would help new homes get built to a better specification, get built in the locations which need such housing, get them built more to the requirement of the local communities that need them and be priced more in-line with the level of affordability within those communities needing them.

Scrapping the previous and much debated Planning White Paper is therefore seen as being a very necessary decision, as this has failed to stimulate the building of the housing that people actually want in the places they want them and at the prices they can realistically afford.

The new White Paper is expected to change all of this.

Among the features in the new Bill will be:

Design codes enabling local communities to set rules about the layout of new developments and the materials which could be used.

A new infrastructure levy determined locally to raise the funds for projects such as schools, hospitals and roads by basing the levy on the value of the property when it is sold instead of as it gets planning permission.

More will be added here about this, as we hear more about it.

For the correct way to deal with the present and escalating housing crisis, you can simply search on The House Price Solution. This explanation is what would restore the housing markets across our land to rude health at long last. Here is the reasoning set out in brief.

I advocate a complete reorganisation of the way in which houses are bought, sold and rented in this country, which is is long overdue.

The right formula for such a reorganisation is what now needs to be fully debated and once arrived at I am confident that the formula for change would embrace much of what I am presenting and is not only worthy of full scrutiny but is a correct formula for the necessary change and is overdue for adoption.

The explanation of how to peg accelerating house prices as well as delivering all the other housing market improvements desperately needed starts here. You can read all about these fresh new proposals at the following link:

The House Price Solution

How to Improve all local housing markets in England and Wales

Anybody who agrees with what is presented here should go and challenge their local MP asking them to properly examine this and get it fully and properly debated in The House of Commons without further delay.

Posted by: Peter Hendry, Housing Valuation Consultant
Author of:– The House Price Solution otherwise known as The Hendry Solution.

Are estate agents taking us for fools?

The continuing rise in house prices during and following COVID clearly show that the following proposals for re-shaping house-marketing are fully justified and long overdue.

The severe reduction in the number of sellers putting their houses on the market is a clear indication of their concern for not being able to successfully move house, owing to the unexpectedly rising house prices!

The explanation of how to resolve accelerating house prices begins here. Read all about these fresh new proposals at the following link:

The House Price Solution

How to Improve all local housing markets in England and Wales

Posted by: Peter Hendry, Housing Valuation Consultant
Author of:– The House Price Solution otherwise known as The Hendry Solution.

We must face the housing affordability dilemma head on

Yes we must face the housing affordability dilemma head on.

We must very soon deal with the upcoming cost-of-living crisis in energy, fuel, food and housing which are the main essentials of increasing concern to those living on tight budgets in our newly independent country. Housing is the most expensive of these.

House prices have radically outpaced affordability at a time when western economies (both here and abroad), are on shaky ground. This clearly indicates that something is seriously wrong with the operation of our housing markets as far as house buying, selling, renting and letting is concerned.

If you agree with this then what follows is a considered assessment of how best to deal with this problem.

The explanation of how to resolve accelerating house prices begins at the following link

The House Price Solution

How to Improve all local housing markets in England and Wales

Posted by: Peter Hendry, Housing Valuation Consultant
Author of:– The House Price Solution otherwise known as The Hendry Solution.

What do you think about this idea for drastically improving the operation of all housing markets potentially across Britain? Would you be interested in signing a petition to government to debate this matter in The House?

All the pages in this blog deal with the underlying reasons why the most troublesome housing affordability issue of our time has come into being over the years. It’s a marketing error not an economic one and that is quite different from the old supply and demand argument which is generally trotted out by agents in an attempt to explain the matter away.

Constructive comments are very much welcomed.

The Politics of Housing

The Politics of Housing is necessarily societal. In other words you can’t divorce housing from politics.

When canvassing for the Brexit vote in 2019 and accepting becoming our Prime Minister in July 2019, Boris Johnson promised that his government would be a government inclusive for all in society, having won the popular vote on that basis.

Whatever political view an individual may wish to take, it would appear that there are three institutions that should be held as being at the very crest of present day society. These are The Judiciary, The NHS and The Town and Country Planning Acts.

Whenever setting out to make new policy for the benefit of Britain’s populace, these three established pillars of fairness should always be fully considered beforehand.

Tough love, directed towards some parts of society, may be necessary for further improvement but it would, by its own definition, have to be based on love and nurture, not prejudice.

However even so, the noblest of decisions, taken in the quest to improve the lot of the many may occasionally fail, especially where housing is concerned.

What follows is a set of proposals specifically designed to resolve our present housing distribution problems.

FIRSTLY: Before designing a new Town & Country Planning system for the whole of Britain, it would be a pretty good idea to get a clear picture of what would make each local community thrive, and then incorporate precisely that into the new model.

To date we have seen little evidence of such an approach and practically no justification for the arbitrary zoning designations which are being proposed in the Planning White Paper currently being debated in Parliament. This does therefore deserve much further consideration.

The clear and over-riding objective must surely be for ordinary working people to be able to find openings for good new jobs close to where they may live.

This must mean the forward plan must involve a proper debate with business leaders to start searching for and employing more-skilled people, including training them up and paying them substantially more whilst expecting more productivity/profitability from them in return.

The resultant gain to industry could be achieved from increasing the incentive amongst school leavers and university graduates alike to decide on a higher-skilled career for themselves, earlier, and then to train more intensively for that.

Those youngsters who do not choose to follow this path would be likely to have to accept whatever unskilled jobs there may be at low wages (and with little or no prospects), of course.

This is, in effect, increasing the requirement on job seekers to decide what they would like to do earlier and to embark on getting the best training and qualifications they need for their choices of career.

Other successful economies have already achieved such outcomes and because this has been done elsewhere it could certainly be done in Britain if the incentives were provided.

One organisation, KPMG (the accountancy conglomerate) is already in the news for helping in the battle for greater diversity among types of job especially within the poorer communities by offering apprenticeships. It wants nearly a third of their staff to be coming from working class backgrounds by 2030. Enabling diversity of perspective, fresh thinking, and wide-ranging insight should help all businesses to perform.

People from routine maintenance and service organisations may apply. Levels of pay and prospects in life really matter to employees but so does aspiration. Van drivers, butchers and factory workers should be among those applying for schemes such as these if they should wish to do so.

What is Levelling Up really about?
Added to this post 2 jan 2022:

Levelling up is about empowering local leaders and communities.
It’s about raising living standards and growing the private sector.
It’s about spreading opportunity and improving our public services.
It’s also about boosting local pride and improving our local environments.

Young people should be empowered to learn all the skills they need and be enabled to use their passions and their abilities to help them get good jobs in the future wherever they may choose to live.

All this is can now be achieved with the localised Towns Deals which are being made available by government as well as the Community Renewal Fund and other funds also to do with Levelling Up.

Link to: Department for Levelling up Housing and Communities

Equally important however is the house price crisis itself!

To find out all about everything to do with the extreme lack of adequate and available housing on the market and how to deal with the non-affordability of it, see below.

The House Price Solution

How to Improve all local housing markets across England and Wales

Posted by: Peter Hendry, Housing Valuation Consultant
Author of:– The House Price Solution (otherwise known as The Hendry Solution).

What do you think about this idea for drastically improving the operation of all housing markets potentially across the whole of Britain?

Constructive comments are very much welcomed.

Why are house prices still rising despite the downturn?

On the thorny subject of house prices, what we have right now are house prices still rising despite the economic downturn which is following the Covid 19 pandemic.

Why is this?
The reasons are actually straightforward but the current upward trajectory is not good news for those who need financial help to become home-owners in the future.

Research from Savills released in March 2021, estimates that the UK’s housing stock became worth £7.56 trillion – more than four times the value of the FTSE 100 index on the London Stock Exchange. These are seriously head-turning economic statistics!

What is particularly interesting, are the recent stats which explain that the value of mortgaged owner-occupied homes currently is only about £2.5 trillion, whereas there is £5.0 trillion worth of UK property which is owned completely mortgage-free. In other words this is twice as much as the value of today’s homes being purchased with a mortgage.

This would suggest that the main driver of the present government’s policy, is to continue to encourage capital growth in the housing sector. Such capital value increases obviously favour those who already have substantial property assets however, of course, the converse must therefore be true. These same policies can thus only hinder first-time buyers’ ability to become owners, as their purchasing ability is dependent upon and geared to earnings not capital values.

Polly Neate, the CEO of Shelter, is reported to be saying there is a “desperate shortage” of actually affordable homes for people on low incomes.

It’s simply no good putting up with what there is, or just continuing in exactly the same way as before.
We all have to change for the better. We should do this by treating first time buyers just the way we would like to be treated ourselves, even if we own houses outright. Houses are roofs over peoples’ heads rather than capital assets expected to appreciate in value before all else!

The House Price Solution has come up with the best possible new policy for the whole of the housing sector and for stabilising house prices within it.

In a nutshell the new policy is this:
Firstly, Neighbourhood Development Plans (or NDPs), which are readily available planning tools, should be adopted across the whole country and they ought to include similar purchasing restrictions to those which have more recently been enshrined in the St Ives, Cornwall Area NDP, the H2 policies.

These are to allow local earners a better chance to become local owners and to buy (rather than continue to rent) their principal residences.
As long as there are numbers of local earners who are not becoming mortgagor/owners, these people ought to be considered in preference to those simply having greater wealth and wishing to move to a new location of their choice.

The effect of this policy would be to help retain local communities functionally intact.
The alternative, which we have seen all too much of recently, is allowing whole areas to become ghost towns, owned by richer buyers from further afield. Allowing this destroys local communities of course.

One may easily understand that the present property-owning statistics demonstrate that a new policy is needed if we are to protect local individuality and preserve communities from societal desecration i.e. suffer the same fate that has befallen high streets up and down the country having become clones of one another lacking individuality over time. Specifically, I mean that we should save the character and cohesion of localities, from outside influences such as from those simply hoping to buy into a location just to gain an additional property investment for themselves.

BUT, something more than this is required if we are to stabilise the accelerating rise in house-prices and instead make way for a fairer and more inclusive house-price environment.
What is also required is a much better way to determine house prices themselves and it is this idea which I now put forward, naming it The House Price Solution.

In essence it is all about how to market houses in a way that can balance-out the different offers from competing buyers fairly and more equitably, resulting in a better marketplace for all those wishing to buy their next homes to live in.
It involves changing the way in which houses have traditionally been sold using vendor-led estate agency, to having new buyer-orientated agencies instead. Many of those who are employed in vendor-led estate agency practices currently could fairly easily get re-trained and become registered as buyer-advising agents.

These agents would handle incoming offers in a very different way by acting for and liaising with the different buyers. Sellers would be less able to influence the prices that are achieved because offers would be received directly from the buyers competing with one another, to the relevant buyers’ agents. These offers would be passed to the appropriate vendors by their own buying agents and this would allow house prices themselves to stabilise across the various different regions of the country. The mechanism by which this could happen would be by all offers becoming primarily dependent upon local buyers’ offer-price levels.

Only houses which are exempt from the H2 residence restrictions would be available for purchase by wealthier buyers from the rest of the country, these being outside the scope of these policies.

The above would help the success rate of individual housing transactions themselves, causing a general improvement in the number of house sales able to be made.

As explained, the goal of preserving local communities by providing sufficient and affordable homes up and down the country, whilst still allowing a smaller number of the wealthier buyers to integrate, could be achieved. Better price stability within all UK housing markets also would be the clear result.

Resource links:
Savills:

https://www.twindig.com/market-views/houselungo-210321#slice

Shelter’s impact and activities:

https://england.shelter.org.uk/what_we_do/our_impact

The House Price Solution

How to Improve all local housing markets across England and Wales

Posted by: Peter Hendry, Housing Valuation Consultant
Author of:– The House Price Solution (otherwise known as The Hendry Solution).

What do you think about this idea for drastically improving the operation of all housing markets potentially across the whole of Britain?

Constructive comments are very much welcomed.

How much would you need to save a month to buy a house within 10 years?

Well in theory right now, if you were to make contributions of £200 a month into a stocks and shares Isa, (i.e. put aside earnings of £2,400 p.a.) and you aimed for a realistic yearly return of 4pc after fees, you’d reach your goal of £40,000 in nine years.
If your partner did the same, this could be £80,000.

In addition, if house prices were to fall over the same period, you could suddenly find yourself just about poised and ready to buy a place to start owner occupation in.
Unfortunately, there are quite a few ‘ifs’ in this scenario aren’t there.

The main obstacle to achieving such a dream for an increasing number of aspiring buyers is house prices themselves which, even at the lower end of the house-ownership spectrum, are out of reach for many would-be owner occupiers. This obstacle could however be removed using relatively straightforward improvements in the way that residential properties are marketed.

The present ‘government’ idea of trying to get prices to start reducing is to build many more housing units.
Unfortunately, this idea is fundamentally flawed. The reason is the effect of doing this would be marginal on price. Why?
Because unless upwards of 10% of the total number of existing houses in the system were to be constructed, little or no effect on house-prices themselves would actually be felt.

If you do the maths it becomes clear that it would be impossible to build enough new houses, even over a full ten-year stretch. The calculation tells you it would take building in excess of ten times the number of new units currently able to be built each and every year for at least the next ten years!

By deduction therefore, instead of attempting to do the impossible it would be better to look at the current methods of marketing all residential properties and change that. The sales and marketing of residential property the one thing that is highly inefficient, old fashioned and in need of significant improvement. This is the key to achieving the desired result – greater owner-occupation.

Reform the way privately owned residential properties or houses are bought and sold and you will make the process open, fair, and efficient.

Doing this would bring the prices of starter homes back within the reach of first-time buyers and they would no longer have to borrow the increasingly ridiculous amounts which are currently stopping the majority of those wishing to become owner-occupiers to do so.

The House Price Solution

How to Improve all local housing markets across England and Wales

Posted by: Peter Hendry, Housing Valuation Consultant
Author of:– The House Price Solution (otherwise known as The Hendry Solution).

What do you think about this idea for drastically improving the operation of all housing markets potentially across the whole of Britain?

Constructive comments are very much welcomed.

Will house prices ever stop rising faster than inflation?

I have worked as a Chartered Surveyor in the property sector from the 70s to the 90’s. During this time I have seen the relentless upwards direction of travel of house prices as related to true affordability, based on general earnings, first hand.

The golden dream of becoming a home owner by purchasing using mortgage borrowing repayable over the next 25 years, was something that was every young family’s ultimate ambition at one time. This has morphed into a nightmare recently. Why?

First of all, landowners have increasingly scooped-up increasing gains on the value of the land involved – by relying on the increased amounts to be borrowed by both first-time buyers and others further up the property chains.

Secondly, the banking and finance sectors have hijacked most of the profit remaining to be found and taken a big slice of it for themselves. In other words those institutions lending capital on mortgages have annexed a greater and greater share of the profits by doing what they think they are supposed to be doing – i.e. advancing increasingly large amounts of finance. More recently, they are now even prepared to increase the mortgage term length beyond the original 25 year repayment period, moving towards 30 years or more, which is highly questionable.

Simultaneously, interest rates, which have dropped to extremely low levels at the moment are enabling buyers to over extend themselves using loans they should not be being advised to take out.

The super-rich, on the other hand, are able to utilise the same unrestricted availability of mortgage finance to outbid the rest, using the collateral they already possess. The difference between the two positions is stark.

Shared ownership schemes (part rent part buy) have begun to appear which further decrease the actual dream of owning a whole building and the plot it is built on, in one’s lifetime.

House prices are being talked-up increasingly by estate agents whose primary interest above all else is to make the sale at the best price possible.

Employment is becoming more uncertain with flexible working hours making earnings unpredictable.

The actual cost of living is going up whilst basic wages are not keeping pace.

The housing market’s core buy-prices are further adjusting to match the described ‘loosening’ parameters. This has tended to happen in the past but the graph is exponential and it is set to continue in the relatively near future because house prices themselves are pegged in a practically unregulated market. In such a heady market, those who will have over extended themselves will, as a result, suddenly find they have a big financial problem.

The more wary amongst potential first-time buyers, are understandably holding back.
Apart from being wary, the main reason for this is that asking price levels of ‘so-called’ affordable housing today, are no longer truly affordable to them.

The only solution to this pernicious problem:- is to lower the buy-in prices of housing for all owner occupation.

How? That is the question?

The answer, as provided by those in the financial sector, is to offer to build more houses to increase the supply so that prices will finally and in theory reduce!

The main flaw in this argument is that it will take many years worth of building new housing (certainly if traditionally constructed), before sufficient numbers of them could push the prices down even a little. In the meantime, builders, landowners and mortgage lenders would hope to be able to carry on making their profits unhindered!
By the time the planned massive building boom will have begun to have had any noticeable effect, the players described will have made all the profits they were hoping to make for themselves!

The other and far more applicable answer would be to make the necessary changes to the way houses are bought, sold and let. Doing this now, alongside building more housing units, the best and only way to restore the housing economy into sound health once again.

The House Price Solution

How to Improve all local housing markets across England and Wales

Posted by: Peter Hendry, Housing Valuation Consultant
Author of:– The House Price Solution (otherwise known as The Hendry Solution).

What do you think about this idea for drastically improving the operation of all housing markets potentially across the whole of Britain?

Constructive comments are very much welcomed.

Simply building more houses can’t solve the housing crisis

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 required.

The market itself is in need of intervention and this does require the involvement of government. A government that can put effective policies into practice faster than the simple but over-quoted ‘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 required 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 requires 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 House Price Solution. This would not cost much to implement and would bring massive benefits to all local marketplaces.

The House Price Solution

How to Improve all local housing markets across England and Wales

Posted by: Peter Hendry, Housing Valuation Consultant
Author of:– The House Price Solution (otherwise known as The Hendry Solution).

What do you think about this idea for drastically improving the operation of all housing markets potentially across the whole of Britain?

Constructive comments are very much welcomed.

The House Price Solution: devised to resolve the current housing crisis completely – final or 3rd explanation

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

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 House 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 or reservation 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 or reservation 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 or reservation 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 or reservation agreement would expire, or lapse.

The owner of ‘the object-property’ could, of course, then carry on using their existing RHA or Registered House 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 or reservation 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 required.

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 assist, using a different MC agreement, acting on behalf of a different buyer to 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 House 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 or reservation 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 House 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 House 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 House 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 House 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 House 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 or reservation 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 or reservation 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, as long as they are a licensed RHA with a buyers MC agreement, may then legitimatelytry 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 or reservation 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 or reservation 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 repetition from the previous page giving the explanation of the logistics of the process, whilst looking forwards 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 House 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 House 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 or reservation 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, as licensed RHAs, 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, as licensed RHAs, 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, as licensed RHA, 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 would require 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 such estate agents, as licensed RHAs, 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 a free selling agent by allowing buyers and their RHAs to enquire after the property – 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 continuing to be of concern.

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 becoming licensed RHAs, 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 have 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.”

On 17th November 2019:
Our Prime Minister was giving an election speech at the CBI conference. Statistics cited in a question to him indicated that house prices for first-time buyers are running at 8 times average annual wages. The question was whether the Conservative government’s housing policy is about affordable housing for all of our workers?
The answer given did not fully address this and therefore this continues to give rise to increasing ongoing concern.

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 require careful reform.

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 require 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?

The above work employs a new concept in economics called Market Design. This is a relatively recent area of economics.
It has the potential to utilise established economic theory to rescue the British housing market.

It involves asking the question: ‘What is our goal?’
Its goal is to develop a way to make housing markets throughout the UK more inclusive, so that new buyers can further increase home ownership everywhere, as opposed to large numbers of people continuing to rent whether by choice or otherwise.

The ‘designed’ change would be to make estate agency operations within the housing sector become oriented towards listening to every buyer’s requirement so that those owning property can more easily both buy and sell when moving between two properties, by getting both transactions to happen in a synchronised way.

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

Thank you for following this. Please send in any comment or suggestions you may have for moderation.

If you would like to review the beginning of this detailed proposal please follow the link below.

Back to initial explanation


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

The House Price Solution

How to Improve all local housing markets across England and Wales

Posted by: Peter Hendry, Housing Valuation Consultant
Author of:– The House Price Solution (otherwise known as The Hendry Solution).

What do you think about this idea for drastically improving the operation of all housing markets potentially across the whole of Britain?

Constructive comments are very much welcomed.

The House Price Solution: devised to resolve the current housing crisis completely – 2nd explanation

Below is a further or 2nd explanation of the new ‘RHA’ or Registered House Agent’s strategy using the House Price Solution:

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 primarily for buyers rather than 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 assisting in the sale of 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 House 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 (as RHA) 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 but only by acting for a new buyer. 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 House Agents (instead of just having a ‘sole agency selling contract’ with one specific estate agent as generally happens now).

A pre-contract ‘lock-out or reservation 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 or reservation 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 or reservation agreements, each one involving buyers of different properties.
The primary lock-out or reservation agreement is with the vendor of the property they have agreed terms to purchase.
The second lock-out or reservation 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 House 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 or reservation 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 House Agents’ could, of course, be asked to endorse the specific lock-out or reservation agreement concerned, for added clarification.)

To explain again, this would mean there will be a need for two lock-out or reservation 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 or reservation agreement relating to the house they wish to buy first.
They should sign the lock-out or reservation 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 a 3rd (or final) explanation of this unique proposal please click on the following link.

The House Price Solution 3rd (or final) explanation

Posted by: Peter Hendry, Housing Valuation Consultant
Author of:– The House Price Solution

If there remain outstanding questions relating to my proposals I’d be glad to discuss these.