The primary justifications for sales and marketing reform in all housing markets across the UK

The cause of the failure of large numbers of buyers to be able to continue to afford to get onto the housing ladder is primarily on account of government banking and finance policy.

10 years have past since the 2008 financial crash and the effects of using quantitative easing (QE) are, at last, beginning to reveal themselves.

Virtually all capital assets have increased in value against sterling, whilst savings have simultaneously experienced a decrease in value – in real terms.  This situation, as everyone will now undoubtedly realise, does include significant price increases right across the housing markets.

The effect of this policy has resulted in a majority of millennials (i.e. people coming-of-age around the turn of the millennium) becoming unable to afford to buy houses.  Instead they will have to accept becoming long life tenants as being the only viable alternative to having to stay with their respective parents into middle age.

In my opinion, along with many others, this is a sufficiently bad effect to warrant a complete re-think of the way monetary policy is managed both by government and equally as importantly, by the separate institution of The Bank of England itself.

Here is the brief reason for this conclusion:

10 years ago (2008), the government was faced with coming up with a rescue plan to deal with the global financial crisis which was seriously affecting Britain as well as the currency markets in America and other major nations’ currency markets.  The required decisions were extremely time critical.

As a response, the government decided to authorise The Bank of England to issue digital money to purchase government bonds as loans for use to fund public borrowing by financial institutions.

The effect of this (which was well known at the time) would be to reduce the yields on such bonds owing to the increased demand for them.  The secondary effect (which would also have been known at the time), was that we were going to have to accept permanently lower interest rates across all financial markets.

This would result in banks everywhere having access to more funds to lend but (and this is a big but), they would then need to lend more money in order to earn enough from the lower rates of interest able to be earned from it.

The scale of QE engaged upon following the crisis was huge and at unprecedented levels.  Indeed such a course of action had never been tried to such a massive extent previously, even though it was deemed essential and the only plausible course to take.

Knowing that this was about to happen in the USA our government decided, along with The Bank of England, to follow suit.

The effect was going to be that suddenly, practically everyone in employment would start to have more borrowing ability and hence more purchasing power.  This was intended to help the economy to recover and save it from diving into a full blown recession.

The policy however would, at the same time, adversely affect those with savings to the extent that the interest earned on all such savings would no longer keep pace with the erosion of the value of their savings both by the risk of inflation as well as the severely reduced interest rates expected to be obtainable.

What the government was perhaps understandably somewhat coy about however was, knowing the only way to counteract the resultant inflationary pressures following the severe dose of QE which was about to be prescribed, they would have to simultaneously engage in a severe program of austerity cuts.  This they did with a determination that suggested their lives (or at least their appointments) depended upon it!

The unavoidable difficulty in doing this was that more substantial mortgages, to be available to those who could afford to borrow, would cause house prices themselves to increase very substantially.  In some places house prices have actually increased by between 40 and 60% over the past five years alone because of these policies.

As wages were never going to be able to keep pace with such increases, those having to save for a deposit to buy a house were soon finding themselves unable to save enough fast enough to keep up with expected house price increases.

The result of this, as we can now clearly see, is that many hopeful first-time buyers have had to defer and in many cases completely give up the aspiration of ever becoming home owners in their own right.  This is a tragedy for all of them and is now clear for everyone to see.

Owing to the resultant house price increases the direct effect of QE has been to cause a very significant slow-down in the numbers of houses being sold across all housing markets, certainly in England and Wales.  Whilst this is true it has not been very well documented, perhaps for fairly obvious reasons.

A further side-effect is that estate agency is suffering significantly, since they generally get paid after the sales they have actually arranged are completed.  Thus they are suffering a similar fate to other organisations more directly subject to the targeted austerity measures.

The true aftermath of the risky QE approach embarked upon is now becoming clear.  We are destined to be stuck with very low interest rates for years to come and our house prices, like a mirage appearing to stay just out of reach of the thirsty, will remain similarly out of reach of a large proportion of future home-makers or home owners.  There seems to be no easy alternative – now that we have been driven down this particular road for such a great distance and to a large extent, in our own ignorance.

There is however one way in which houses may be priced more competitively and market sales turnover thus restored.  It is what is advocated by The House Price Virtuoso Solution which is explained more fully in the link below.

Implementing this solution would greatly help both the present and future affordability of all houses by improving open market conditions.  This would allow the prices paid, to more closely match peoples’ ability to buy instead of having prices set based largely on the projected financial returns of house builders and developers – as generally happens at present.

The House Price Virtuoso Solution is a new and innovative way to make all housing markets across the land behave more in accordance with what local people can actually afford, by placing less reliance on vendors’ asking prices as being the primary price mark.

In the long run The House Price Virtuoso Solution, if implemented, would begin to restore confidence by enabling successful house purchasing across all areas, both within our towns and in our country.

I therefore strongly suggest that this proposal should receive detailed examination and I would encourage healthy debate in regard to it by all those with genuine knowledge in the housing sector.

To find out how such a significant market improvement could be achieved, please go to:

The House Price Virtuoso Solution: Full details of our proposals for properly reforming all housing markets in England and Wales.

Posted by: Peter Hendry, Housing Valuation Consultant

Supplementary reading:

BBC article on QE

propertyindustryeye article about first-time buyers and the housing market

Further justification for changing the way houses are marketed within the U.K.

Justification 2:
Before much is said about the reasons for the pricing problems perhaps the most important thing to be known and understood, is the fundamental reason why house price rises have been happening recently, despite our general economic trends falling.

Firstly, it is essential to know what distinguishes house sales and purchases from almost all other sales and purchases. It is that houses are capital assets and not chattels. This means that the values of all such assets vary in the market place, dependent upon the current demand for such assets.
In other words, such assets have an ‘intrinsic value’ which can both increase and decrease, depending upon current market conditions whereas things that are not within the class of capital asset, generally only depreciate in value as they age.

For this reason in particular, all those owning houses should treat them as such and not merely regard them as being something which can be marketed by the seller without taking the all-important ‘buyer’ considerations into account.

Justification 3:
It is of fundamental importance that houses should be regarded as having special characteristics in terms of their true current market values. If not, they cannot be bought and sold successfully in the marketplace.

The current way this is done does not have due regard to this aspect and the result is general chaos, with price disparities constantly rippling across the whole of the housing marketplace – generating unnecessary uncertainty.

The frequent delays and transaction failures which happen as a result, are testimony to this and they show that there is a need to substantially revise the way that things are done in these markets.

The way to resolve this situation correctly, is to alter the existing methods used to market these assets and instead treat them as capital assets in a similar way in which shares are traded on the stock market. I mean by this that buyers are and must be integral in deciding the prices-levels at which such assets ultimately change hands.

The House Price Virtuoso Solution gives the detail of how this may be achieved without excessive cost or delay and I hope you find these new proposals to be both interesting and worthy of consideration.

Justification 4:
In essence, what is required is to reform the methods by which estate agents operate in the housing market and this reform is now long overdue.

The necessary fix cannot simply be about building more houses to try and balance supply and demand, as claimed by many whom I have discussed this with. Instead it must be about making the housing market itself function far more efficiently. This may well (but perhaps understandably), be something which estate agents themselves are currently reluctant to seriously consider.
Nevertheless, this is what is needed, even more than starting to get additional housing units built as soon as possible.

There IS a better and quicker way, besides that of building many more houses which, by any degree of estimation, would have to take nearer ten years than just one if indeed such a proposal should even be capable of any degree of swift implementation somehow? More about that later!

Justification 5:
As stated, the housing market is broken, with prices being forced up beyond most people’s ability to pay.  This is not however solely about supply and demand, as I am keen to explain here.

It is also about money finding its way into the housing market illicitly, without sufficiently rigorous financial checks being made.  It’s essentially about selling agents (the estate agents) having become oblivious to this as well as a number of other issues – since their primary remit is simply to try and get the highest price possible for each property which they manage and sell on behalf of a vendor client.
Yes, estate agents will happily try and maintain that house prices are decided simply by supply and demand but this loose statement does not bear any serious scrutiny. A rudimentary knowledge of economic theory will undoubtedly confirm that.

Consider for a moment:
Dodgy money (or the money that requires laundering) which has caused significant house price inflation recently …
And:
Over-borrowing The rules for ascertaining who should be permitted to borrow, for what reason and exactly how much should be tightened – especially whilst such large sums are able to be borrowed so cheaply.
And:
Lack of valuation knowledge There’s a general lack of adequate valuation knowledge (and experience) possessed by most agents in the property sector currently …
And:
Bias towards vendor negotiations
There is a worrying lack of transparency concerning the way in which estate agents operate nowadays, especially as far as buyers are concerned.
Changes need to be brought in by government as agents themselves would clearly prefer not to do so whilst primarily supporting their clients, the vendors.
And:
Exaggeration
Meaning that lies, deceit and broadcasting misinformation are nowadays pretty rife amongst competing agents, whom are forced to utilise such tactics in their quest to each gain more instructions to sell or let.

It simply cannot be denied that each of these highly unacceptable behaviours are playing too great a part in deciding current-day house prices in England and Wales and that such matters have clearly not been adequately addressed so far by any responsible organisation including our government.

To find out how such a significant market improvement could be achieved, please go to:

The House Price Virtuoso Solution: Full details of our proposals for properly reforming all housing markets in England and Wales.

Posted by: Peter Hendry, Housing Valuation Consultant

There needs to be a sea-change in all housing markets across England and Wales

Why? Because the existing methods of marketing houses across England Wales are a violation of buyers’ rights and the general economic rules for arriving at fair valuations for residential property in the open market.

The methods used by estate agents are aimed at maximising prices for vendors at the expense of and to the disadvantage of buyers whilst also allowing banks to gain substantially by lending more. This is patently wrong and should be stopped.

To resolve this crisis I am asking our ‘government’ to stop the over lending by banks and borrowing institutions, causing house-price escalation in England and Wales currently. It’s time to fully re-assess this predatory and over-used policy.
It’s no good trying to prop up house prices at the expense of genuine open market affordability.

The solution to this crisis is fairly obvious.
It depends upon logical arguments, explaining how to bring about a fair and an inclusive way to buy, sell and to let privately owned houses across the whole of England Wales, especially to benefit the all-important first-time buyers and of course tenants hoping to become buyers.

There are now clear answers to the problems which such buyers are undeniably facing and these are becoming clearer as time goes by but a certain amount of bravery would be needed to effect the changes necessary to secure a sound housing market providing fair opportunities to those currently trying to buy, sell and rent houses to live in. Also, this would benefit those performing the vital agency work involving marketing and advising particularly buyers but also sellers regarding the sales and purchases which they wish to execute.

Genuine debate at a high level should be held on this.

To find out how this could be done, please go to:

The House Price Virtuoso Solution: Full details of our proposals for properly reforming all housing markets in England and Wales.

Posted by: Peter Hendry, Housing Valuation Consultant

Rough sleeping, or badly maintained privately rented housing and just pay the unaffordable rents?

What a terrible choice!

There was a great piece of journalism published by The Independent in August 2018 about the dilemma faced by rough sleepers.

It explained that the crisis which we were seeing within the UK housing market the was largely to do with polices put into place in the Thatcher era and later.

These anomalies cannot simply be wished away by trying to build thousands of privately owned and new social rented housing units.
The problem is a structural one, not relating to the building of more houses but relating to the way houses themselves are being marketed and financed.

The title of the article is:
Home ownership falls more in UK than any other EU country

The link to it is:

Aug 18 article in The Independent

I’m explaining in my proposed solution it’s no use hurriedly trying to build many more social housing or private properties for rent so that these may be provided to those in desperate need. The time required for that is simply not there even if the amount to be charged for such accommodation could be made truly affordable.

The apparently sane alternative, which is quick build privately rented accommodation, would also be too expensive for those in need, because of the shortage of houses across the whole marketplace irrespective of how many new properties were able to be constructed.

Providing housing is in a crisis because of the policies of past governments and that is why private landlords must be encouraged to provide good quality accommodation at reasonable rents; not discouraged with more and increasingly onerous tenant-centric legislation!

Secondly, those eventually stepping up from privately rented accommodation to become property owners themselves, i.e. first-time buyers, ought to be able to purchase at properly affordable prices to them.

This simply isn’t happening at the present time. The reason is: All housing markets across England and Wales have all the prices skewed in an upwards direction because of the banking and finance interests in lending each individual the sort of money they (the lending institutions) want to have to provide.

It’s time this gross over lending issue was finally confronted. This would, of course, mean confronting the lending institutions themselves!!
The precise way to do this is set out clearly in:
The House Price Virtuoso Solution.

For the complete solution to all of these issues, which could be achieved swiftly and economically, please go to:

The House Price Virtuoso Solution: Full details of our proposals for properly reforming all housing markets in England and Wales.

Posted by: Peter Hendry, Housing Valuation Consultant

Buyers need far better representation in the British housing markets

With estate agents acting primarily for sellers and land owners, buyers get poor advice or representation all too often.
Even though they are the ones raising (and usually borrowing) the money for each transaction, they are often the last ones to be told how things are progressing, especially where chains of other sales are involved. A lot of patching up of interlinked chains is frequently going on behind the scenes which is not necessarily to the advantage of buyers further down the chain.

This is inefficient and ought to changed so that the various local housing markets across England and Wales can begin to function more like perfect marketplaces; as they should.

All this happens because estate agents are primarily motivated to try and obtain the best price they can for whatever asset it is they are selling since they are contracted to act on behalf of the seller. The buyer is often the last person to be told when things are going against them and by then the only remedy remaining is for them is usually to find more cash to feed into the situation!

House prices are now returning to all time highs, but they are also increasing beyond average couples’ annual earning capacities for borrowing requirements. This is a big problem. It’s vital that a more holistic approach is offered to everyone embarking on a house move, especially if it’s a first-time purchase.

The only way this could be done would be to change the way residential property is sold by having agents acting for buyers instead of only for sellers.

What stands in the way of this happening is that existing estate agents are naturally going to be reluctant to consider such a change for as long as they can continue to control sales progress in the way they have done historically, essentially since the 1920s.

It would require the buying public to start seeing the anomalies they are having to contend with when using agents and to expect government to make the necessary improvements to bring about fairer competitive pricing across all residential property markets. Only then could house prices more appropriately track buying power in the locality in which a particular property is located.
This situation does need further in-depth explanation in order for the concept to be fully understood.

For a fully reasoned explanation about this, explaining exactly how this should be achieved please go to:

The House Price Virtuoso Solution: Full details of our proposals for properly reforming the UK housing market..

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

Latest government funded research into the crisis within the housing markets across England and Wales

Here’s news (published in February 2018) on the then recent government funded research into the crisis existing within the housing markets across England and Wales.

An awful lot remains to be done to assist those wanting (and needing) to start buying their first houses or flats and thus later to be able to move to better accommodation as and when, and wherever they may require.

The Economic and Social Research Council have funded the recent research on the decline of homeownership among young adults through the Secondary Data Analysis Initiative (grant number ES/N011872/1) and the Centre for the Microeconomic Analysis of Public Policy at the IFS (grant number ES/M010147/1).

The online link to the IFS research is:
https://www.ifs.org.uk/uploads/publications/bns/BN224.pdf
The decline of homeownership among young adults.

The IFS are so right about the decline in home ownership. It’s a societal loss.

Alongside this I have worked on producing a policy designed to resolve the current problems within all housing markets across England and Wales.

My conclusion is that there is only one certain way to resolve this dilemma. My explanation covering this may be found at the following link.

The House Price Virtuoso Solution.
How to Improve all Housing Markets in England and Wales.

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

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

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 House Price Virtuoso Solution (otherwise known as The Hendry Solution). This would not cost much to implement and would bring massive benefits to all local marketplaces.

To read more about The House Price Virtuoso Solution go to the following link:

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

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

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 Virtuoso Solution. This would not cost much to implement and would bring massive benefits to all local marketplaces.

To read more about The House Price Virtuoso Solution (otherwise known as The Hendry Solution) go to the following link:

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

Posted by: Peter Hendry, Housing Valuation Consultant.

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

If you don’t know you, along with quite a few estate agents probably do not understand 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.

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 required.

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 Virtuoso Solution. This would not cost much to implement and would bring massive benefits to all local marketplaces.

To read more about The House Price Virtuoso Solution (otherwise known as The Hendry Solution) go to the following link:

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

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

The House Price Virtuoso Solution: devised to resolve the current housing crisis completely

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

House price rises are being driven by excessively 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 ought to be the subject of urgent improvement and reform by adding a new regulatory framework.

Originally published: 5 December, 2013.
(Last updated by PH: 12th July, 2020).

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 House Price Virtuoso Solution is the best way to finally resolve this failure.

The House Price Virtuoso Solution – otherwise known as 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 much closer degree of relational parity between what you pay and what you get for your existing house could be maintained and also, gazumping should be practically eliminated.

We must change the way we decide house prices from depending on how much each buyer might be able to borrow, to how much they each prefer to afford.
It would be a simple change with profound consequences.

Fact. The definition of affordable homes is currently decided on ‘the market’ but the prices arrived at are not truly affordable to those who require housing in very many specific localities around Britain.

Instead, prices, especially at the entry level, ought to be based on what people on low incomes can afford locally.
So, in each local area we must have housing that is genuinely affordable to those living and working in that area.

It is simply not feasible to try and correct this lack of affordability by constructing huge numbers of new houses in a short timescale. In any case, the price problem itself is a market economics problem first and foremost. The shortage of housing supply is, in fact, a secondary problem and not the primary one needing to be dealt with. In any case, there aren’t the skilled craftsmen currently available to build upwards of 100,000 good quality houses each year for the next 10 years.

Also, the idea that ‘the market’ might correct for the shortage of housing by facilitating the building of more houses as and when prices rose, is not what has actually happened. The market failed to achieve that.

Improved market economics are now required. They are needed to improve the efficiency of the housing market itself.
This could be done quickly and without large government expenditure so, what is not to like about that?

We should now re-organise how house prices themselves are arrived at. This would lower them in areas where local affordability would require this. This can only be done by changing the way agents work, selling and letting housing currently on the market, yet referencing these to affordable prices in each local housing market.

Now is the time to recalibrate local housing markets and put in hand the fix of paramount importance described below.

New construction should only be a secondary remedy, to help to ensure that house prices never again spiral up to the unaffordable levels we are seeing today everywhere in England and Wales. The primary fix is to improve the way houses are bought & sold and rented & let.

The various local housing markets require this 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 requiring 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 (and separate from) 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 and be in a position to stop inventing higher offers to help secure the deal their firm aspires to winning!

If the seller (or landlord) agrees, the offer would then be formally accepted and the whole transaction process (exactly as described here) would commence.
As explained 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 should simply 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 brief description of the new ‘RHA’ or Registered Housing Agent’s strategy including using the House Price Virtuoso Solution:

We need something considerably more effective than the current Neighbourhood Plan’s H1 Affordable homes provisions and H2 Full-time Principal Residence restrictions, to help bring local house prices down further towards levels affordable to the local workforce, especially to assist local key workers. I reason that prices of full freehold registered titles of ‘affordable homes’ are still well beyond the reach of most key workers within their sectors.

The House Price Virtuoso Solution – previously known as The Hendry Solution is based on the fact that price levels in basic housing stock everywhere are driven by and ultimately depend upon how much individual local buyers can afford, including borrowings in order for local housing markets to be able to function more perfectly.

The new buyer-agents advocated here are called Registered Housing Agents (RHAs) and they could operate from either retail-based premises or online, or both and would replace present-day estate agents.

Facet 1 of explanation:
All agents (RHAs) would work by operating on behalf of buyers rather than being paid by sellers as happens at present. Their fee income would be solely from finding buyers the next houses they seek.

In other words all RHAs would have to forgo signing, to act as a selling agent completely and this would include not acting to sell a house that the client they’ve just found their next house for, is still needing to sell. This is probably the most fundamental change being advocated here.

Facet 2 of explanation:
Nevertheless, there would be no restrictions on buying agents advertising or displaying for sale, houses on behalf of non-clients in order to introduce more enquiries by the buying public or from other buying agents. This would be a quasi-selling and non-fee producing activity only.

All quasi-selling advertising would have to wait for another RHA (with a signed Moving Contract arrangement with the buyer) to bring that buyer forward.

However, each agent or RHA could introduce any of their other signed-up buyers to purchase those properties – and thereby earn a second fee from a different successful purchaser in that way. A valuable second income stream would result.

If the house was one that the RHA had been quasi-selling for an earlier client, that RHA would then be negotiating the BUY price on that house, but acting for the other buyer – not the seller. Whilst different RHAs may often be working simultaneously on various chains of purchases, they would always be working for their respective buying clients of course.
In other words because the buying agent would be working for different clients in each case, (albeit on a chain of purchases) there would be no conflict of interest.

To emphasise the main change, all agents would always be negotiating for buyers rather than sellers.

Facet 3 of explanation:
Another aspect of this is that all agents would be looking carefully over all properties being marketed, in search of its good qualities, both structurally and from locational point of view. They would always be representing their buyer-clients’ best interests in the process.

Prices paid would therefore better reflect the condition of each property currently on the market as well as better reflecting the prices which buyers might be prepared to pay.

Facet 4 of explanation:
The new Registered Housing Agents (RHAs) would need to modify their existing agency skills and abilities, to be able to best represent buyers and negotiate (generally to lower the purchase prices) on behalf of their clients instead of trying to maximise them. This would clearly involve new training schemes for any existing estate agency staff to include both the different emphasis and the extra skills required.

Facet 5 of explanation:
An important point is the actual prices being obtained would be decided primarily by different buyers’ offers, with buyers operating in competition with one another for any one individual property, using the services of multiple buyer agents (the RHAs), simultaneously having to consider the various written offers involved and get their clients instructions on which ones to accept in writing.

Facet 6 of explanation:
Borrowing levels by individual buyers ought to be a significant factor and excessive borrowing requirements should naturally weigh against some higher offers being considered. That is another reason why there should be new government initiated restrictions on such lending, including rules for lending institutions wishing to make loans specifically for housing occupancy purposes. This would help to create a more level playing field for all buyers. That ought to particularly help local buyers, because the prices they could afford would tend to become the benchmark price levels for each separate locality. This is a very important aspect of the implementation of the House Price Virtuoso Solution and should not become a secondary or separate matter at all.

Facet 7 of explanation:
Fixed-fee terms of commission must be mandatory for all licensed or RHA agencies and must be a requirement of all agency contracts made to facilitate a buyer moving from one location to another i.e. complete Moving Contracts or MC agreement would be required – please see the main explanation below for further details.

In other words, no percentage fee commissions should be allowed, as otherwise these would provide an incentive for agents to try and edge prices up which is the practice requiring to be curtailed. Also reverse percentage fees must similarly be disallowed.

Facet 8 of explanation:
The anticipated effect of this new house marketing solution would be to increase house sales turnover across the nation, reduce the amount of abortive work experienced by present-day selling agents and in so doing, increase the actual fee income potential for all licensed agents acting for buyers. This method would breathe new life into what are currently, moribund housing markets in most localities around the country.

*******
AND The $64,000 Question is:
HOW can this solution bring house prices down in your area?

As explained above this can only work if existing estate agents, acting for sellers, are exchanged for agents acting primarily for buyers instead. These agents would have to be registered or licensed to trade under a process of national registration. To distinguish these new agents from agents that no longer have a mandate to deal with housing they should be named something specific, for example, “Registered Housing Agents”. All house agents registered would be required to carry out business in accordance with the rules laid down by the registration authority.

The first difference would be that each house being sold (owned by different sellers of course) would also have several different Registered Housing Agents (RHAs) sending in offers for the present owner’s consideration.

Buyer’s agents or (RHAs) appointed by local buyers are likely to have received offers at broadly similar levels to each other.
Buyer’s agents or (RHAs) working with clients wishing to come from further afield may have higher or even much higher offers in respect of the subject property.
The existing owner, in each case, would have the choice whether to sell to a local buyer or to refuse to and instead sell to an incoming buyer.

If they should choose to sell to local buyers they will know that the price-level is based on local affordability not incomer’s affordability whereas with the present-day estate agent system – they, the existing owner, cannot be certain of this when making their decision to sell because the lower offers are soon discounted, especially by the commission-earning estate agent.

Despite this if they are moving to an area having similar price levels they need not necessarily take a higher (incomer’s) offer.

Significantly with Registered Housing Agents, the buying agent whose offer is to be accepted will not know what the other offers were – only the seller will know that so, once again, they will be protected from coercion by agents wanting to escalate the prices just in order to win the fee.

In addition, where there are Neighbourhood Plans with restrictions on the sale of certain houses in favour of local residents, local planning departments could take enforcement action against anyone conducting a sale to an incoming purchaser if there is any breach of the requirements.

Finally, if there are occupancy restrictions applicable to specific groups or classes of house in any one location, all Registered Housing Agents would be expected to know and understand this and therefore would not take on instructions from outsiders to negotiate to buy such properties in the first place! This could thus become a self-policing issue.

I hope this illustrates the advantages of moving from a selling agent system to a Registered Housing Agent one as being the main development of the solution I am proposing.

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


Below is a medium-sized description of the new ‘RHA’ or Registered Housing Agent’s strategy including using the House Price Virtuoso 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 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 (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 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 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 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 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 Housing 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 those who wish this, here is a more detailed description of the new ‘Registered Housing Agent’ strategy including using the House Price Virtuoso 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 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 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 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 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 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 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 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 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 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 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.

Peter Hendry.


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
Author:– The House Price Virtuoso Solution – otherwise known as The Hendry Solution.
Copyright © Peter W Hendry, Cornwall 2013. All rights reserved.