Restricting second homes and holiday lets will not restore the affordability of houses in local communities

Restricting the numbers of second homes and holiday lets will not restore the availability or the affordability of reasonably priced houses for people living and working in local communities – why?

This is the published opinion of a senior contributor and property surveyor of 30 years working experience and author of the ‘improvethehousingmarket’ web site.

It is published in a bid to start restoring the viability of ‘community’, in all regions of our country and to protect us from excessive second home and holiday property ownership, especially in more attractive localities.

Sadly these ideas may not be on the radar of any political party within Westminster at this particular moment in time. Why, we cannot say!

One thing is certain however, there are problems with any proposals to tax those who wish to own second homes or run holiday letting businesses, not least because doing so will not somehow make such properties suddenly become more affordable to those living and working in the particular communities concerned.

Rather than try to tax (or to fine) those who, for example, use houses as second homes or for holiday letting, or just leave them empty, I propose a fundamental upgrade to the workings of the whole British housing market, because to actually track down and fine the different classes of owners would not just be difficult, it would be impossible to administer in practice.

Some of the main elements of these proposals and their key effects are discussed below. The proposals which I advocate here are urgently in need of being brought in.

House Prices v General Affordability:
We are able to offer consultancy services to government on this and other property-related matters.

The way to resolve the house price crisis, would involve using the unique expertise which I have gained as a professional property valuer with over 30 years working experience in advising clients specifically on house prices.

Without appropriate change, things cannot start to get better for everyone, with regard to house price levels and their broad range-affordability.

“The changes I am advocating here would bring house prices back to within reach of those best suited to the houses currently being sold on the market or becoming available locally.”

Here are the effects of the proposals I am putting forward:

  • Firstly, local buyers would have a better chance to purchase such houses as well as rent one of them if this remained their wish.
  • House prices would more closely reflect earnings in the various areas of Britain and hence remain within reasonable affordability for those ready to offer a service within their community.
  • Finally, with more stable house prices, there would be certainty for builders endeavouring to build the extra properties needed to satisfy increasing local demand. In other words their costs would be able to be estimated more accurately.

Implementing this strategy would however require our government to challenge those entrepreneurs driving house prices higher, (whilst taking profits for themselves in the process).

This would necessarily also have to include fresh discussions with the large scale housing developers, land owners, banks and even some charitable housing associations.

A ministerial team of politicians would have to be assigned to carry this venture forward in order for it to be accomplished swiftly enough to resolve the present crisis.

This proposed alternative solution to the house price crisis involves two aspects:

FIRSTLY:
Instead of allowing the price of houses to depend on sales being arranged by sellers in conjunction with their appointed estate agents (as happens at present), house prices should actually be based on true buyer competition, using offers made for each property, coming with the added knowledge of where each specific buyer currently lives and where they will work.

This way, all ‘local’ offers could be listed alongside all non-local ones and the house seller would then be allowed the opportunity of considering choosing a local buyer over a non-local one.

This is the primary change necessary to bring about fairer house purchases for all houses across the whole of the UK. To achieve this, would simply need the change from seller appointed estate agents to buyer’s agents instead. There’s more on this later but you should know that most people buying something valuable prefer to have an expert representing them and most prefer not to have the selling agent trying to help them when doing this!

Using this procedure, especially where sellers are moving within their own local area, there would be far less need to entertain buyers from richer areas hoping to out-bid those living in poorer ones especially where attractions such as sought-after rural and coastal locations are concerned.

SECONDLY – in addition to the first:
This should involve strengthening the planning system instead of relying on it completely. It should be in addition to the first essential change explained above.

In peacetime (i.e. whilst our country is not at war with another), residential planning consents should be delegated to all local town or parish councils for them to determine, depending upon local housing need.

This way, genuinely democratic decisions may be arrived at using local decision-makers whom are best able to understand what the current needs of the community are at any particular time.

As a retired residential property valuer I remain convinced that if democratically elected local councillors were to be granted full authority to decide local residential planning applications, the effect of this could resolve the whole housing crisis.

Decisions made by such elected representatives would not be based upon NIMBYism ‘Not In My Back Yard’; quite the contrary!

Instead it would be a question of ‘IN My Back Yard’, as these councillors would be representing the wishes and needs of the local community – not simply trying to resist necessary change!

There could be no finer outcome than this, especially where residential property is concerned, because with this solution these councillors could work to actually resolve the housing crisis which we are now all being affected by, particularly owing to its increasing severity.

I am saying towns and their associated hinterlands should zone all existing and future housing within their administration into the following six (or more) specific categories:

Owner occupation: (by those working locally or retired)

Affordable to buy: (for those starting off in life and by those working locally)

Private rental: (by those working locally)

Social housing lettings: (by those working locally or retired)

Second homes: (for those not working locally)

Holiday lettings:

If considered advantageous planning-wise, a mix of different ‘user designations’ could be made specific to  individual houses and different ‘user designations’ may even be allowed in the same street or location, if deemed appropriate.

This would impose new restrictions on residential uses by using planning criteria contained within democratically agreed neighbourhood plans and registers similar to the system currently being proposed in Wales. Such policies could become a blueprint for reducing inflation and to encourage businesses to invest.

This would also help to limit the purchase of scarce housing and so would assist those with local requirements who could then compete with one another to buy the available houses, without being continually beaten to the post by those with more capital coming from outside. It should be stressed adding more planning rules cannot achieve the desired result on its own however.

As just explained, our assertion is that the only way to bring house prices back to levels in line with local buyers’ levels of affordability is to change the present rules for selling such houses by using both of these methods combined – namely both a wholesale upgrade to the workings of the British housing market across the board and the imposition of restrictions on residential uses – using planning criteria as contained within democratically agreed neighbourhood plans and registers.

The author of this post also says: “This new combination would be more inclusive, it would be more local market and it would be able to include local buyers, rather than largely to exclude them, as happens at present.”

If setting up the planning side of these market improvements should prove difficult to do or if it may involve a lengthy time delay, the best thing to do would be to implement stage one and change the marketing policy on its own to begin with. That should have a significant effect on the way the present and imperfect housing market operates and would make a massive difference all on its own.

The full explanation of how exactly to resolve accelerating house prices begins in an earlier article on this web site. To find out all about these fresh new proposals please go to the following link:

The House Price Solution

How to Improve all local housing markets in England and Wales

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

Are estate agents taking us for fools?

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

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

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

The House Price Solution

How to Improve all local housing markets in England and Wales

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

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

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

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

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

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

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

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

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

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

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

Constructive comments are very much welcomed.

Intro to: The House Price Solution – the key to fairer house prices

The Independent newspaper recently published in its online version with the headline:
More than 8 million people in England are living in unaffordable, insecure or unsuitable homes, the report says.
If accurate, this predicament is unacceptable and in urgent need of remedying with the help of our government.

There have been many claims of similar housing crises over past decades in the media. These claims suggest that all is very far from well in the housing sector. as the old adage goes; there’s no smoke without fire!

This is why over decades past and as I’m now a retired valuation surveyor, I have views on the reasons for these failings, particularly as they adversely affect poorer communities.

Because of this I’ve devised a new and better way to deal with the currently unaffordable level of house prices and associated housing issues because purchase prices currently being claimed as being ‘affordable’ are very clearly not really affordable at all.

Once you take a look into this, it should become crystal clear that it is the poorer buyers whom are actually propping up the house prices for the rest of the home owners!

Why is this so? Because it is they who must borrow astronomical sums of money (to them), by mortgaging the very properties which they need to live in, so that the present very high prices prevailing in a so-called open marketplace may be maintained. One has to ask, who gains most from them doing this?

Firstly, it is those fortunate enough to already have substantial property assets and who enjoy a healthy and almost guaranteed rise in the capital values of their relatively extensive holdings. Secondly, it is the banks and financial organisations that gain from earning interest on the substantial loans which they can thus arrange. Profits derived from these activities depend on the ability of those on this side of the equation to be able to liquidate these large financial rewards each time they sell these assets, without having to do much to earn the extremely large profits involved.

Borrowers today by comparison, have increasing job insecurity issues, especially borrowers on the lower rungs of the property ladder who have to commit to high mortgages by taking on burdensome and increasingly risky and long-term borrowings. These families and individuals are the ones who need relief, by way of a lessening of their large and onerous borrowing commitments they are being forced into making.

It is time the whole rigged house-selling regime, which is being played out using the historic role of estate agency, is re-balanced, such that those wishing to make money from owning property are seen as causing excessive un-affordability issues being experienced by an increasing number of poorer, aspiring to become, home owners in this country.
Is there a political party in the land that might contemplate such a re-think? Let’s hope so.

Those requiring housing should rightly expect to depend upon an efficient and fully functional housing marketplace in order to move house and should expect be able to reasonably afford to buy, or alternatively rent, their next housing accommodation.

Judging by the recent dramatic slowdown of sales transactions as shown in the current sales completion statistics, efficient agency services are simply not available at present.

For anyone interested in the best and only way to correct this unacceptable shortcoming, please read, mark and digest the proposals within: The House Price Solution starting at the following link.

The House Price Solution (otherwise known as The Hendry Solution)

How to Improve the Housing Markets in England and Wales.
The background of this, leading to the logically deduced conclusion arrived at, starts at the following link:

Home Page – improvethehousingmarket.co.uk

As author I would be happy to engage in online discussions about the technicalities and/or the new strategies necessary in order to reach perfection in the operation of all local housing markets in England and Wales. This web site sets out how these housing markets may be improved for the benefit of owner-occupiers, private tenants and in fact, everyone using all forms of housing everywhere in our country.

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

Constructive comments are very much welcomed.

How can the housing market be made more efficient in Britain?

On face value one might be forgiven for thinking that if you want to sell a property, you might simply advertise it for sale or employ an agent to do just that.
But have you ever thought; Can the housing market be made more efficient in Britain?

To help answer this, if you were selling any other item such as a car or a boat for example, advertising it or using an agent to do so would be a reasonable thing to do but not with houses as I will explain.

With houses things are different because houses are capital assets, rather than depreciating ones. In other words, they are not mere chattels to be chalked up at a notional price and simply sold.

How is this so?

It’s because the amount of work and expertise required to build a house is sufficiently great to cause its value in the market place to adjust, upwards or downwards, depending on buyer’s demand and their ability to pay to purchase the property.
Secondly, houses are expected to last for around a century, which is different to most other things that are sold or let.

Thirdly, the availability of finance or mortgage borrowing is another primary factor which affects the prices of houses in the marketplaces wherever they are situated.

Question:
Why can’t a selling agent just deal with all of that?

Because the important aspect when selling is to know and understand how many buyers are out there and what might they each be prepared to offer (or bid) once they have everything in place to make a final decision. Buyers also need to arrange things they require like a survey, a confirmed mortgage offer, completed legal searches etc…

The best people to deal with all these matters would unquestionably be an agent acting specifically for the buyer in question.

Only they could best represent each buyer and in fact therefore could also serve vendors to best advantage too.

Why would this be an improvement?

It would be an improvement because selling agents do not, in fact, act for any of the buyers whereas buying agents would be able to do so all the time.

Selling agents can only act for those selling their houses. This is half of the marketplace of course; and that’s exactly where the problem lies.

Registered House Buying Agents, [RHBs] on the other hand, would be acting for multiple buyers simultaneously so they would be fully in touch with these buyers as well as knowing what houses are currently available for sale on the market. They would know all of this because their other buyers will be among those selling too.

The difference between the two types of agents is that with selling agents, once they sell a property on behalf of their vendor-client, they aren’t interested in who else is buying. They’re only interested in who else may be selling!

Working in that way is, as I say, only dealing with one half of the housing marketplace at any one time. It is this which is causing the housing marketplace to malfunction or to perform badly. It is this which is causing wild price swings upwards and downwards, depending upon the availability of purchasing power (or buyer demand) at the time.

For as long as the existing estate agents are isolating themselves from being responsible for dealing with the buying side of the housing marketplace, price anomalies will continue.

The result must be more of what we see today, buyer frustration at what might have been, as regards home ownership.

In full response to the ‘lack of supply’ pontificators, whom are rather prevalent currently, the whole rationale or philosophy behind my carefully considered solution for restoring the housing markets around Britain to good health, embraces the wisdoms of bygone days. How so? There was a time when latin was in general parlance and the words: “Caveat Emptor” were in frequent use. The meaning of this should never have been forgotten.

This used to be an express warning which was applied especially where property or real estate was concerned. The words of the warning mean: ‘Let the buyer beware – unless they are covered by the seller’s warranty in terms of quality and worth’. The meaning of this simple latin saying amply describes why the current failures are occurring, manifesting within all housing markets up and down our still great country. 

We should remember this because in actual fact it is the one thing which is required, in order to restore and correct the damaging anomalies surrounding today’s accelerating house prices. As explained, these anomalies arise from our having departed from and forgotten what were previously well-known and established wisdoms, to be relied upon whenever undertaking commercial transactions such as those involving the buying of houses for family use.

The problem of unaffordable house prices today simply isn’t a supply-side matter at all. It is a price-side problem not a supply-side one. A-level students studying economics ought to know this! Once this is understood, the requisite changes to the way in which our housing markets operate across the whole country may be realised so that they may, once again become normality. Central government necessarily would need to take a lead in resolving this current-day house price crisis of course.

In the local area where I live for example, there are clearly more than a sufficient number of houses that certainly could be used to satisfy both present and future demand for residential housing but they are not coming onto the market. Instead they are being used for non-residential uses. It is this that needs addressing most urgently, not the headlong rush to build more houses to satisfy a purely notional lack of supply when in fact, there is a more than adequate supply of suitable property both in our locality and in plenty of other locations all over the place!

Please consider what is being explained here and raise any relevant questions on this for public scrutiny and discussion. A campaign ought to be mounted to bring this matter to the attention of our government should those interested in this wish that to happen.

Using this logic (as well as other arguments), I emphatically suggest that the existing vendor-centric estate agent model is no longer fit for purpose, is out of date and is way too inefficient.

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

Constructive comments are very much welcomed.

Extra reading:
Article in The Property Industry Eye dated 9th May 2019 giving the current market downturn information:
Estate agents are reporting a drop in property instructions
New instructions sink to a three-year low – and worse is expected.