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.

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.

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.

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.

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.

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.

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.

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.

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

This is a brief, potted, history lesson explaining why house prices have risen so much in the past 10 – 15 years.

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 or fiscal policy.

More than 10 years have passed 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 sufficiently bad 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.

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 too.  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 of course 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 well 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 have to adversely affect those with savings to the extent that the interest earned on all such savings would no longer keep pace with the rate of erosion of the value of their savings both by the risk of inflation as well as the severely reduced interest rates likely 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.  The last government did this with a determination that suggested their very skins depended upon it!

The unavoidable difficulty would naturally be that more substantial mortgages, available to those who could afford to borrow, would cause house prices themselves to increase very substantially.  In some places house prices have in fact 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 going to find 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 has been and is a tragedy for all of them and it 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 experiencing a similar fate to the 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, for a large number of future home-makers or home owners.  There seems to be no easy alternative – now that we have been led down this particular road for such a long distance and, to a large extent, in our 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 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 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. It was conceived by Peter Hendry, a surveyor with years of experience working in the front line of providing reliable property advice to intending purchasers by inspecting the houses they planned to purchase and reporting as to the condition of these directly to the buyer involved.

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

I would therefore earnestly suggest that this proposal should receive full scrutiny and I would also encourage healthy debate in regard to it by all those with genuine knowledge in the housing sector.

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.

Supplementary reading:

My second article titled:
Further justification for changing the way houses are marketed within the U.K.

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 with price reliability 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 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:

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

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 – final or 3rd explanation

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The following is repetition from the previous page giving the explanation of the logistics of the process, whilst looking forwards going up the sales or lettings chain.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Some Earlier Quotes:
housing-minister-role-is-relegated-to-a-junior
Richard Lambert, chief executive officer of the National Landlords Association, said among other things:“It is extremely disappointing to see The Coalition reduce the significance of housing within Government. Given the significant challenges facing households throughout the country, it is essential that housing takes centre stage in the political debate.” We agree.

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

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

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

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

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

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

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

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

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

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

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

Back to initial explanation


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

Defining a modern-day estate agent

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

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

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

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

An analogy intended to help highlights these defects:
If you were to eat or drink more than your body can comfortably handle the result would be, to start putting your own body in peril.

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

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

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

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

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

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.