A Challenge to Estate Agents to Improve The Housing Market in the UK

A CHALLENGE TO ESTATE AGENTS TO IMPROVE THE HOUSING MARKET IN THE UK

We all deserve a better housing market in which to find and purchase houses and flats for ourselves so I now challenge all estate agents and the landed professions to a full debate on the merits of my prescribed solution to the present and unacceptable house-price crisis, as well as to discuss the pressing need to correct the insufficient number of houses currently being purchased for owner occupation.

“There’s currently NO genuine competition between sellers who employ their own agents, as happens at present. I propose that instead, estate agents should be working for buyers in a similar way to travel agents and sales of tickets in the airline industry.” Travel agents help travellers to find the best value holidays for their chosen destinations.  This is what should also be happening with housing.

House prices themselves should find a level based on real competition. For this to happen, housing should be priced in a similar way to the methods used in the travel industry.

Fair competition should be introduced into our housing markets so as to achieve best throughput in the market, whilst maintaining price stability by using The House Price Solution.

The proposition:
Here is the essence of what I am saying by using this method.

It involves a complete and permanent change in the way estate agents deal with residential house sales.

As far as residential sales are concerned, to use this solution, only Registered House Agents (RHAs), would be licensed to deal with residential sales & purchases. The key difference is, this would involve a new type of agent which would always be acting for the purchaser rather than the vendor.

Existing Estate agents could continue to offer both sales and management services to all their existing clients except on residential or part residential property sales. In other words, sales of all types of property other than residential property may be dealt with in exactly the same way as before by existing estate agents.

Only Registered House Agents (RHAs), would be licensed to act in dealing with the sale and purchase of residential property. They would also be licensed to manage such property.

Those licensed to act in such matters would be expected to have passed a new qualification prior to obtaining a license to carry out this type of business.

You may ask in this case, would anyone else be allowed to act on behalf of those wishing to buy or sell residential property?

The answer is no. Market forces will be harnessed to act both for sellers as well as buyers by using different and competing Registered House Agents, tasked with the work of obtaining for their clients, the best combined buy and sell prices in the market whenever moving house.

Competition would be achieved because the selling process would normally be done using a separate and competing RHA in every case.

Whereas selling residential property may only be carried out by Registered House Agents (RHAs), existing buying agents may continue to operate as normal by negotiating terms of sale as they do at present. The difference for them would be that they would be dealing with Registered House Agents rather than with estate agents.

This unique plan is designed to eliminate the exaggerated house prices which are being quoted and are seriously damaging our housing markets.

By stabilising prices in this way many more people would be able to transit between properties, as and when they may need to.

Your thoughts are welcomed on this new idea for smoothing rising house prices whilst helping to stabilise the capital values of privately owned residential property as part of this process.

For all the details about how to improve housing affordability and sales throughput swiftly and economically, please follow the link below:

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 in Britain?

Constructive comments are very much welcomed.

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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.

Those 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.

Equally important however is the house price crisis.

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.

For all the details about how to improve housing affordability and sales throughput swiftly and economically, please follow the link below:

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 in Britain?

Constructive comments are very much welcomed.

The Nature of Communities

As Her Majesty The Queen rightly says following the twentieth anniversary of 9/11, we should pay tribute to the resilience and determination of our communities.

As far as housing is concerned the important thing for government to consider is everything is going up, whilst at the same time the less well-off aren’t keeping up on a financial level.

The less well off should not be discriminated against in this way, surely?

IF we, as a capitalist society, are going to allow housing to be distributed depending simply on price, then clearly, houses left on the market will go to the most wealthy and hardly any will go to deserving people within each separate community.

This difficulty was purposefully addressed and managed leading up to and following the end of the last war by building council-owned properties available to be rented by those within society who could not afford to buy their own homes.

Unfortunately it now seem as if the less well off are being discriminated against, by the policies materialising during the more recent and longest stretch of post-war peace.

As a nation we should be turning away from this and instead move forward as an inclusive, modern and considerate society.  After all, we depend on large numbers of these people to keep the basic fabric of our society operating.

Supplying council-owned properties for rent actually worked quite well over the past 45 or so years and allowed the less well of to live alongside wealthier people in strategically located council estates. However, it did result in the creation of a two class society which had its problems.

All that changed of course, after Margaret Thatcher headed up the government when shortly afterwards, she brought in the sale of council houses to tenants at discounted prices. This was not a new idea. The “Right to Buy” idea was under consideration in the late 1940s, but did not win Conservative endorsement at that time.

Although Margaret Thatcher was able to activate this policy, unfortunately, she did not incorporate a way of dealing with the subsequent and increasing wealth differential between those who were becoming increasingly richer and those remaining with the least possible levels of wealth through their own individual circumstances. Nothing was put in place to help such people following dismantling the core of the council housing estates and importantly, neither were the proceeds from the sale of council houses allocated to replace any such housing.

Practically all that’s left to house those remaining unable to afford the price of owning one’s own home is the private landlord-financed, rental sector offering mainly assured shorthold or six month initial letting contracts.  That and today’s housing associations as corporate landlords but these have far too few properties to accommodate the extremely high current demand.

Falling back on private landlords to supply large scale housing in this way was never going to be the answer. It has since turned out to be every bit as bad as one might have expected it to be. It is a sort of mirror of the notorious earlier period of exploitation, which took place after the 1940-45 war when a demobbed Polish born soldier Perec Rachman (born 16 August 1919 – 29 November 1962), operated as a property speculator in London during the fifties and early sixties. His initial job was in estate agency, so we probably ought to have expected problems with lack of repairs, overcrowding, and excessive rents to return as a result of those needing so much short term housing, again involving having to rely upon private investors. That is the reason why the private rented sector still needs wholesale improvement today.

As explained there had already been severe problems with the private rented sector when Mrs Thatcher first came to occupy Number 10 in May 1979 and lasting until November 1990. Not to put in place a suitable alternative to council housing whilst effectively privatising it and whilst knowing about this recent history, appears, in retrospect, to have been a poor stance to have taken at this particular moment.

Whilst, at that time, there seemed to be no realistic alternative, nowadays there are several better options which are certainly possible and which are covered in the link to The Solution below.

Everyone can see that the private rental sector is not performing to an adequate standard, so the government should urgently be looking for an appropriate alternative.  The question is not merely whether they should but which alternative should they choose?

I am saying that the front runner is to modify the way that houses in general are marketed, making this more to do with community and less to do with the purchaser’s bank balance.

A combination of planning controls together with fairer house marketing principles would allow affordability to be maintained for those who should be able to buy where they live and work. It should provide for sufficient properties not to be swallowed up by the wealthiest in society working or living elsewhere. Such a change would not be difficult to bring about in today’s world and there would be no need to build massive new municipal housing estates to house the less wealthy either.

Instead, it would simply involve setting up a new and better way of distributing housing which would be both local and community-centred rather than purely capital value orientated. If we care for our communities, this is unquestionably to way to go.

The resilience and determination of our communities is what should be nurtured in today’s world, not allowing individuals to gain ever increasing profits from the bare necessities of life for others. We should still value community, society and inclusivity just as our monarch has reminded us concerning 9/11 on the twentieth anniversary recently.  Equality should be a rite of passage not a luxury.

I have set out the details of my strategy (or solution) for achieving this on this web site. The solution combines the effective use of planning controls with a more appropriate way of deciding who buys what. It is still primarily based on price of course but in a more locally resolved yet open way. A way which incorporates how we might like our communities to develop and thrive over time.

My solution would reduce the growing and progressive takeover of the more attractive parts of Britain by the wealthy and instead allow those contributing to each local community a better chance to buy a place of their own to live where they work.

The solution would favour those needing to live in certain locations over the wealthier incomer. Those who would simply like to buy a house where they work. Second homes, at concentration, would be strongly discouraged and may even be prevented when that is required.

To read about how this very special change could be put into effect, please follow the link below to the set of pages that explain this:

For all the details about how to improve housing affordability and sales throughput swiftly and economically, please follow the link below:

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 in Britain?

Constructive comments are very much welcomed.

Where are estate agents going wrong nowadays

Where are estate agents going wrong nowadays?

Well, first please fully understand that the vagaries of the housing market are complicated as most people will admit.

As a retired property professional I have watched how things have been going for several decades and a clear picture is at last emerging.

The estate agency sector, since the last war, has been increasingly failing to balance demand and supply in the housing market over the decades for reasons other than the imbalances in supply and demand!

The problem is that the estate agency sector itself is mistakenly working on the basis that the demand for housing is economically highly elastic whereas housing supply, they would frequently tell you, is highly IN-elastic. They say, that it is this mismatch which is causing price peaks and troughs in the housing market to occur. This argument is completely wrong for the reasons I will now set out.

Firstly, the supply of houses coming onto their books is not IN-elastic and neither is it dependent upon the total number of houses actually built.

Here are some other reasons why they are mistaken:
As just explained estate agents are actually only dealing with the number of houses currently on the market – or on their books, from a supply point of view. This is quite different from the total supply of all the houses currently built and in use in the whole country!

Once they ‘get this’, they can free themselves from such confusion and begin to help those wishing to instruct them when moving house. They ought to be able to do this for those hoping to buy their next house in any case.

Secondly, and on the fluctuating level of demand for houses from buyers, the agents generally assume this is highly elastic in nature but sadly this is again mistaken.

In fact, agents very much affect the level of demand from buyers directly, (by affecting the number of homes coming onto their books as mentioned above).

This is because buyer demand is greatly affected by the level of wealth of buyers wishing to buy houses at any one time.  Understanding this is very important for generating successful house completions, especially because buyer demand is not highly elastic at all.

Why is that? Because overstating the asking prices of houses going onto the market will put many buyers off, lessening demand. In addition, it also provides misleading information to sellers concerning apparently increasing prices, which can also put many sellers off; rather ironically.

I say this because if agents were to act for buyers instead of sellers, they would see the various opportunities available in the marketplace quadruple, bringing many more house hunters onto the marketplace and thus onto the agents’ books.

Once agents realise that they do in fact influence the number of houses coming onto the market (i.e. by influencing the total supply of houses becoming available for purchase), then business will increase for the agents because this depends on the way in which they interact very much with the buyers as well as with sellers.

This means they should realise that they can and should influence the number of houses sold from a buyer’s point of view, since that must depend on the levels of wealth currently being enjoyed by those in the market to buy themselves a house at any one time.

It should be stressed, acting as an agent in housing is completely different from agents who may be selling, for example, expensive cars and/or yachts, because house agents are dealing with capital assets, not depreciating assets or chattels. Capital assets require extra special skills, involving advising buyer-clients, rather than merely advising the seller, after having obtained a selling contract!

Please understand. No current asking prices indicate a house’s true market value. Neither should you think that whatever reduction you can negotiate will be the actual market value of the property. The asking price is just part of the marketing. Most sellers are optimistic, all selling agents are ambitious sales people and so most sales naturally complete for less than the initial asking price for that very reason.

Therefore and in conclusion for the reasons I have just provided, prudent agents should be acting for or serving buyers as their primary clients instead of sellers, in order to bring about the greatest number of sales in every specific market situation.

Prices should be dependent upon or determined by what different buyers might be willing to pay. Where estate agents almost invariably go wrong, is they confuse this with how much buyers can each individually be made to pay!

Doing the latter is incorrect and it is that which actually causes markets to begin a ripple, which then results in price peaks and troughs, inflating and then deflating again and again on a regular or cyclical basis, throughout the various housing markets, spread across the whole of the UK.

Please notice these peaks and troughs do not always coincide with periods of greater and lesser wealth.

This explanation supports my argument that agents should change their mode of operation to one of acting for buyers rather than for sellers. As well as that, it fully explains that the massively increasing price levels we see currently are not as a result of increasing net wealth but these are in fact more to do with buyer coercion. Such coercion must be taken right out of the agency-equation if prices are to stabilise at safe and supportable market price levels.

For all the details about how to improve housing affordability and sales throughput swiftly and economically, please follow the link below:

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 in Britain?

Constructive comments are very much welcomed.

Footnote:
This is not to say new houses should not be built to provide new accommodation, wherever this is strategically necessary within each local jurisdiction.

What do you think about this analysis of the present situation please?

Comments are moderated but constructive ones are always 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

For all the details about how to improve housing affordability and sales throughput swiftly and economically, please follow the link below:

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 in 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.

For all the details about how to improve housing affordability and sales throughput swiftly and economically, please follow the link below:

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 in 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.

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

When an estate agent sells a house currently, their client is not the person who is moving in!
This is what needs to be changed in the near future, if we are to correct the flaws within all housing markets across the UK.

What is needed instead is the situation, whenever a buyer moves into a newly acquired house it is HE or SHE who is paying the estate agent – the agent who found it for them, in gratitude for what that agent had done for them.
Then they will be happy with the service they obtained and of course, the property which they will have just purchased.

This treatise explains precisely how such an outcome could be swiftly and economically achieved.

Sweeping reforms are now sought from those in government if we are to achieve this.

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

The essence of what I am saying, by using The House Price Solution, is this:

It involves a complete and permanent change in the way estate agents deal with residential house sales.

As far as residential sales are concerned, to use this solution, only Registered House Agents (RHAs), would be licensed to deal with residential sales & purchases. The key difference is, this would involve a new type of agent which would always be acting for the purchaser rather than the vendor.

Existing Estate agents could continue to offer both sales and management services to all their existing clients except on residential or part residential property sales. In other words, sales of all types of property other than residential property may be dealt with in exactly the same way as before by existing estate agents.

Only Registered House Agents (RHAs), would be licensed to act in dealing with the sale and purchase of residential property. They would also be licensed to manage such property.

Those licensed to act in such matters would be expected to have passed a new qualification prior to obtaining a license to carry out this type of business.

You may ask in this case, would anyone else be allowed to act on behalf of those wishing to buy or sell residential property?

The answer is no. Market forces will be harnessed to act both for sellers as well as buyers by using different and competing Registered House Agents, tasked with the work of obtaining for their clients, the best combined buy and sell prices in the market whenever moving house.

Competition would be achieved because the selling process would normally be done using a separate and competing RHA in every case.

Whereas selling residential property may only be carried out by Registered House Agents (RHAs), the existing buying agents may continue to operate as normal by negotiating terms of purchase as they do at present. The difference for them would be that they would be negotiating with Registered House Agents dealing with the disposal of residential property, rather than with estate agents.

This unique plan is designed to eliminate the exaggerated house prices which are being quoted and are seriously damaging our housing markets.

By stabilising prices in this way many more people would be able to transit between properties, as and when they may need to.

Another reason for the present house price inflation situation is:

House price rises are currently being driven by lax bank lending restrictions following the relaxation under the bank and building society lending regulations of the mid 80’s. Later all markets suffered from the effects of QE following the financial crash of 2008. These two factors, when combined, are a main cause of all housing markets in the uk to overheat price-wise.

Just as importantly, the way in which properties are ‘traded’ on the market should be the subject of urgent improvement and reform by adding a new regulatory framework to agency.

Originally published: 5 December, 2013.
(Last updated by PH: 4th December, 2021).

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 Solution is the best way to finally resolve this failure.

As part of the required process of change, substantial amendment to The Building Societies Act 1986 as subsequently amended, is required because demonstrably, it is causing housing marketplaces across the country to overheat price-wise. The 1986 act is therefore no longer fit for purpose as it stands today and so needs substantial revision.

A main aspect of the financial deregulation as enacted by The Building Societies Act of 1986 was intended to widen access to homeownership by providing increased access to finance for house purchase. However, by doing this, more risk was introduced into the marketplace. The risk/choice balance was tilted more towards risk, arguably to try and correct the inefficiencies within the supply-side which was slow at housing construction. Unfortunately, the 1986 Act caused the benefits of deregulation to result in swiftly rising house and land prices – the very thing that should have been guarded against.

The new financial regulations set out within the 1986 Act also altered the relationship between the housing sector and the rest of the economy by making household equity more liquid, or more easily turned into cash by allowing increased borrowing. The pricing out of the dream of owner occupation for many people from less well of families which resulted is now plain for all to see.

It is this that the following proposal for improving the housing marketplace is aimed at rectifying.

As explained above, the economic importance attached to increasing total housing wealth was behind the drafting of much of the 1986 policy but so was the rush to increase homeownership. Sadly, these two aims run in direct conflict with each other and so, looking back, or in hindsight, this issue is what should now be fully addressed.

If you agree with this, having read what is outlined on these pages, please take the plea for change to your own MP to try and build support for bringing about wholesale change to make the housing market fully efficient going forward.

Here is the answer:

The House Price Solution – otherwise known as The Hendry Solution

In brief it is essentially about locating and entering into a contract with a highly motivated agent to ‘find’ your next house, negotiate the best terms AND sell your present house too! This is a simple but profoundly important proposal, though nobody else has tabled it to date.

By doing this, a much closer degree of relational parity between what you pay and what you get for your existing house could be maintained and, gazumping should be practically eliminated.

We must change the way we decide house prices from that of 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 but with profound consequences.

A fact: The definition of affordable homes is currently decided on ‘the supposed open market’ but sadly, the prices arrived at are not at all 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.
Unquestionably, 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 remedy this problem 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 not a simple supply problem. The shortage of housing supply is, in fact, secondary to the market economics issue described here. Aside from this there aren’t the skilled craftsmen currently available to build upwards of the 300,000 good quality new private and social houses suggested to be needed 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 has patently not done so and has 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 which is the preferable solution. As explained, we should re-organise how house prices themselves are arrived at. This would lower them in areas where local affordability would require this.

It can only be done by changing the way agents work when selling and letting houses that are currently on the market. It should involve referencing these properties to affordable prices in each local housing market. Now is the time to recalibrate local housing markets in this way and put in hand an economic solution which is of paramount importance and is described below.

As explained just now, new construction should only be a secondary remedy, to help to ensure that house prices never again spiral up to the unaffordable levels that we have currently been seeing everywhere in England, Wales and even in Scotland and Northern Ireland. The primary fix for this is to improve the way houses are bought & sold as well as rented & let.

Each individual local housing market requires this and the best way to accomplish it is to legislate for a complete new breed of estate agent (instead of attempting to build thousands of new houses in a vain attempt to satisfy a supposed national demand).

The fundamental problem with present day selling agents (or estate agents) is, that not only do they maximise house prices by leveraging buyers’ offers ever upwards; they also maximise mortgage loans by dealing in the procurement of ever increasing mortgage borrowing.  This further boosts house prices!

The House Price Solution deals with both these problems by facing them head on. It does not however interfere with the operation of the market economy itself and it completely avoids the use arbitrary and inefficient price and/or rent controls.

For the purposes of this paper let’s call these new agents, Registered House Agent(s) or RHAs”.

The following are full details of the proposals which comprise the House Price Solution.

The main job of these new agents would be not only to sell or indeed let owner’s houses but more importantly to find and secure the houses which their contracted client(s) are seeking for both themselves and their families – whether these clients are wishing to buy or to rent.

How could this be achieved?
RHA or Registered House Agent’s Moving Contracts (or MC agreements) should replace the traditional vendors’ selling contracts. These would effectively be buyers’ agency 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 in which residential property transactions occur at present.

The proposal is that we should now do away with old estate agents’ sole selling contracts altogether and bring in Registered House Agents’ ‘MC agreements’, where each RHA or Registered House Agent engaged would be contracted to work to facilitate a vendor’s complete move from one property to another. The aim of this would be 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.

MC agreements of RHAs would always include a mandatory clause stating that as part of offering their services, they undertake not to negotiate any mortgage deals on behalf of any prospective buyers at any time or in any way whatsoever.

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, the new version of Registered House Agents (RHAs), would be fully 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 (and this government’s one too), to increase the availability of mortgage finance, including to people becoming first house owners was and still clearly is 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, either 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 and land prices as more money in the form of long-term loans must have this affect on asking prices by definition.

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 another one of the catalysts for the general increase in house prices as well as dragging up rent levels.

The issue just described 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. These people 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 serious drawbacks.
With appropriate regulation, Registered House 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 – 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 them in jeopardy of their licensed (or newly 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 House 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 House Agent’s strategy including using the House Price Solution:

We need something considerably more effective than the current Neighbourhood Plan’s H1 The affordable homes provisions and H2 The full-time Principal Residence restrictions, to help bring local house prices down further towards levels affordable to the local workforce and 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 need for The House Price Solution (otherwise known as The Hendry Solution), is because price levels in basic housing stock everywhere are currently driven by and depend upon how much any individual buyer can afford, including the most that buyers might be able to borrow at the time!

To correct that as far as local buyers are concerned the new buyer-agents advocated here would be called Registered House 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. 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 free of charge (FOC) or non-fee producing activity only.

All free of charge (FOC) advertising would have to wait for another RHA (with a signed Moving Contract arrangement with the buyer) to bring a buyer forward and by doing so the introducing agent would earn their sole fee payable on completion.

However, and this is critical, 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 advertising free of charge (FOC) for an earlier client, then the introducing RHA would be negotiating the BUY price on that house, acting for the new buyer – not the seller. Whilst different RHAs may often be working simultaneously on various chains of purchases, they would always be working solely 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 House 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 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 exclusively for buyers instead. These agents would have to be legally registered or licensed to operate 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 for example, “Registered House Agents”. All house agents registered would be required to carry out business in accordance with the rules laid down by the new registration authority.

The first difference would be that each house being sold (owned by different sellers of course) would also have several different Registered House 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 House 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 House 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 House Agent one as being the main development of the solution I am proposing.

For a 2nd (or further) explanation of this unique proposal please click on the following link.

The House Price Solution 2nd (or further) explanation

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

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