The Autumn Statement November 2015

So today the chancellor George Osborne released the Autumn Statement - everyone was braced for impact since the last couple of times he opened his mouth the entire of the property industry was given a swift and hefty kick in the pants - and today appeared to bear more of the same.

The biggest gasps can be heard quite clearly from Landlords who have just learned that in order to buy a property after April 2016 they will be relieved of an additional 3% of Stamp Duty Land Tax on their purchase price, save for properties below the £40,000 mark (I can tell you there are slim pickings for even a damp studio apartment anywhere south of Luton in that price bracket).

Add to this the removal of the current 45% mortgage rate relief for Buy To Let Landlords and you can bet your bottom quid that rents will be set to rise, and some Landlords will be inclined to say sod this for a game of soldiers and start binning their stock.

The opinions on this sway wildly from the satisfied cackle of the 35 year old first time buyer who can't afford to move out from under Mum & Dad, to the dismayed and angry jeers from Landlords who stand to lose a great deal, in some cases a whole lifestyle built around generating a healthy income stream to support relative financial freedom.

The other aspects to consider in this budget statement are the promises to build more homes (*yawn* - heard it!), the changes to social housing, benefits, universal credit, the U-turn on tax credit cuts (but the potential rises in Council Tax swoop in to save the day - or not). The 'middle class' stand to be better off with a rise in the 40% tax rate threshold, a rise in the personal tax allowance, and changes to inheritance tax thresholds, which all paint quite a refreshingly sunny outlook if you're generally doing OK in life, but woe betide you if you're struggling or at the bottom of the stack - it's going to get even more ugly, and there's 4 more years of cuts to come.

Allow me to explain.

When compared to the rest of the UK, the percentage of citizens in Hertfordshire who are priced out of buying AND renting is comparatively very low, with many gainfully employed and approximately 80% of the housing stock is owned or mortgaged, with around 10-12% privately rented, but it would be a very grave mistake indeed to settle into any sense of smug satisfaction that this won't transpose itself into problems on your doorstep.

The government is boasting in this statement (through the masterful and sensuous massage of figures and facts) that they have really reined in spending and that's put us in a position where we've got a few quid to slosh about on some new starter homes and begrudgingly build on old government land, a bit of money for sports and recreation, a little bit of cash to plug a few holes here and there - all sounds dandy.

The issue though is that when you take measures which strip the most disadvantaged and vulnerable in society of the little funding they have, those people have to sink or swim - so where they cannot buy, they must rent, where they cannot rent, they must approach the local authority to house them, and when that is not possible they must either become homeless or relocate - the issue here is that the problem doesn't just go away, we as a society still have to pay for it.

Now you're going to team up this watershed of effectively cutting loose the poor and letting them drift with a gentle plumping up of the 'middle mixers' of the country, but at the same time snatching away some of their vital income in the form of second homes and Buy To Let. Now this is interesting - and for more than one reason.  Many in my industry are saying George Osborne and the OBR (Office of Budget Responsibility) are buffoons, it's a bad idea - no, wait - a TERRIBLE idea, he doesn't know what he's doing, he's a clown, a nincompoop the whole thing is a sham purely designed to rip out the throat of the Buy To Let industry in an unceremoniously bloody fait accompli.

I can understand the rage - who wouldn't be appalled at losing an income stream that supports a certain lifestyle? Isn't this why people are so enamoured with Buy To Let? Landlords in the Private Sector quite rightly voice the opinion that they provide housing that Housing Associations do not or cannot provide for many people who cannot afford to buy their own home.  Again we return to the matter of affordability. There are some who argue that Landlords owning and continuing to buy all of the small housing stock creates a natural vacuum where there would otherwise be first time buyers - this is hotly rebuffed by the Private Rented Sector tycoons of course.

Part of the reality here is that in order to buy a property, people need to drastically change their lifestyle, and that is a big upheaval - you have to sacrifice a great deal to own a property and sometimes people are simply not prepared to do it, but does that mean they forfeit the right to be appalled by soaring house prices later? I'll throw that one to the floor to decide!

And tycoons of any variety haven't managed to escape the all-seeing-eye of George 'Lord Sauron' Osborne, as he's taken a neat little slice from dividend payments over £5000, restricted Non Dom status, increased insurance premium tax and tapered away the tax free allowances on pensions for those earning over £150,000 - the pinch may be more of a gentle squidge at this level as one can't upset all of ones old Eton chums by taxing them too much, but it's still there. Bless him for trying.

But when it comes to property, we're at the mercy of the common all garden Landlord. Private sector Landlords are faced with a choice over the next 12 months before the 3% Stamp Duty surcharge starts to pinch, swiftly followed by tax changes and possible interest rate rises - they can either go on a buying rampage and boost their stock with an aim of running a larger portfolio either privately or through a limited company setup, which will see a soaring demand for smaller properties, followed by an inevitable price boom, or they can start to shed stock and cash in on their asset, potentially consolidating bricks and mortar into their own home or a more modest portfolio of high performing stock - this could have the opposite effect of flooding the market with property which could make for a market correction unless handled very deftly.

This is where the battle will be fought, and if Landlords do not play their cards extremely carefully over the coming months, they could easily become the national scapegoat for a second housing crisis. A boom or tumble in small housing stock prices will have a knock-on effect over time on the equity of larger homes, and the meagre promise of 400,000 starter homes by 2020 really isn't going to make a dent in the problem - we haven't got enough property for those who need it, and the stock we do have is too expensive because wages haven't risen and we've had a six year lull in house building - that's what it really boils down to.

The most sensible course of action for any Landlord would be to conduct a rent review at the earliest available opportunity and maximise the profitability of their properties, serving rent increase notices where appropriate (only of course if ethical to do so) - an independent service that we can provide at Hawk & Chadwick. Landlords may also wish to consider quiet sales of 'fringe' properties to first time buyers before the rush really begins - when it happens it's going to be the Black Friday of the property industry, and there are bound to be casualties. Please don't be among them.

Hertfordshire Property Remains Strong

We're often asked to speculate on where the market is going and amongst the professionals we work with on a regular basis, as well as the public, we hear the same statement-and-question combo;

"House prices are still rising - how long can it go on for?!" with the subtle but unspoken implication that we're all on a runaway train headed for an outage in the tracks over a huge canyon - and here be beasties.

Let's examine the facts - worldwide population is growing by 2.5 new little people per second.  Just let that sink in for a moment and count 2.5 births per second. That's huge. Yes, the statistics of those who get to house-buying age and financial security will be a massively decreasing funnel, but that doesn't mean we can ignore it.

Couple this with the undeniable fact that London is one of the most desired domiciles in the world. I know it's sounds sensationally Clarkson-esque to say "in the world" (now you're imagining Clarkson doing it aren't you?) but the reality is, whether red or blue, left or right, rich or poor, the United Kingdom has created a financial, social, economical and cultural beacon which gains admiration in some small way like no other City on the planet - personally, I don't really care for the place, but that doesn't mean I can make a wholesale denial of the fact that everyone else bloody loves it.

So naturally, people from all locations, denominations, faiths, races, backgrounds and intentions want to be here, wether to experience it, profit from it, or whatever the motivation, people are coming here and we have to put them somewhere.

Now what happens when you have a rising population (let's ignore where that's coming from because that's not really the point) they all need somewhere to live. When you've got a certain amount of buildings that people can live in legally and for a set price, you create scarcity, and scarcity is one of the economic ingredients that drives prices.

Right now, it's quite simple - we do not have enough available housing to meet the huge demand, and especially in areas close to the jewel in the crown of the globe (according to so many people) where everyone wants to be - so what we have here is a situation where the price will continue to grow as long as there is a supply imbalance and a soaring demand.  Your faithful dear government have actually done a masterful job of controlling this by keeping a firm hand on the throttle by tweaking mortgage approvals, changing stamp duty, making tax changes - they're very clever people and there are a lot of them who have a heavily vested interest in making sure the housing market doesn't cause the rest of the economy to go belly-up.

So, sadly (if you're a first time buyer) or thankfully (if you're the top of the chain and retiring to Spain) the prices are steadily marching upwards.  In Hertfordshire detached properties have risen from £602,498 in May to £631,167 in September. Flats have shifted up a gear from £187,493 to £196,415 in the same timeframe - when you look at stock levels, these are rising too after an uncertain year which has seen an increase in the number of service providers and a concerning drop in stock levels creating a fraught environment in the property sector locally.

The chart below is interactive (neat huh?) you can click on the legend at the bottom to remove different types, so for example you can compare flats to the overall average house price for Hertfordshire by 'switching off' the other columns.  Isn't technology awesome?!

So, come on then - the juicy bit - what does the Crystal Ball say about what's going to happen in the next year?

The situation remains stable - the prices are rising, but with impending tax changes for Landlords and murmurs of interest rate rises, we're already seeing some investors take the view that they will jettison some of their lower performing stock in the next 24 months. This could send a small ripple through the lower end of the market and unless handled carefully, the perfect storm could precipitate a tumble in prices.

This isn't going to be overnight though, and my feeling is that we're still on the upward curve. Just this week we've agreed an asking price deal on a property in deepest darkest Harpenden, which goes to show that while demand remains strong, the buyers are out there and it's worth holding your nerve just for now, but if you're thinking of taking the leap, I wouldn't wait until next Christmas to make the decision. I'll be keeping a close tab on market performance, so check back here for regular updates.

If you're interested in hearing more about the new tax rules for Landlords, or you're interested in learning about how rising population numbers is something we all need to be concerned about, you might be interested in attending St Albans Property Network which is held on the third Wednesday of every month at St Michael's Manor Hotel. The next event is on Wednesday the 20th of January and we have some fantastic speakers lined up for the new year, including Stephen Bown from the charity 'Population Matters' and Kevin Griffiths of Keycrest Accounting.

Schools and House Prices

It cannot be denied that there is a seemingly permanent bond between House Prices and Schools. The massive effect that a good school can have on property values in a given area is astonishing and creates an eye watering scenario for all parents who, naturally, want nothing but the very best educational environment and academic accolades for their children.

As most of you know however, locating a property in the right area and at the right price to get a school place can be compared to some form of medieval torture and is usually accompanied by much wailing and gnashing of teeth. The demand for school places is so high on top of the cultural and social benefits of living in an area as highly regarded as Harpenden that usually the only thing that will guarantee you some security for the future of your child's education is the size of your wallet. But let's not blame the rich denizens of the town, after all, if we had the means we would all surely do the same.

To make matters worse, the problem is set to worsen with an article in the Independent published back in September citing figures that show a projected increase of 12% in the number of secondary school pupils by 2023 - this claim is backed by the official government projections release in July 2015 which actually cites a greater 20% growth by 2024. Many local authorities are straining under the demand for school places, with many frantically urging already oversubscribed schools to take on more students.

To help those in the local area, and those moving in, we undertook a little independent research to try and figure out where the best buys are to get the best possible chance of school places. From our research we have tried to identify a handful of well regarded schools in the district so that we can find out how this affected house prices. Note that this does not mean these are the very best, as school rankings are incredibly complicated and we are not experts so please conduct your own independent research if you would like more information. We have left out a number of local schools as well as Private schools for the simplicity of illustrating a point about property prices.

The best regarded nursery schools;

1. Crabtree Infant & Junior School, 2. The Grove Infants School, 3. The Lea Primary School and Nursery

The best regarded primary schools;

1. St Dominic's Catholic Primary, 2. Roundwood Primary, 3. Crabtree Primary

The top three secondary schools;

1. St George's School, 2. Roundwood Park, 3. Sir John Lawes


Now onto the really interesting bit. The maps!

In order, the two maps below show the Zoopla 'heat map' of prices (for the uninitiated, the 'warmer' the colour, i.e. more red, indicates a 'hotter' or higher price) and the second map is the overlay of the locations of the schools with the Zoopla Property Price heatmap on top.

This gives us an interesting indication of prices around the various schools.

The schools are colour coded - the red pins are secondary schools, the yellow pins are the primary schools and the green pins are nursery schools.

The immediate thing that strikes out from this experiment in drawing correlative conclusions is that where one would have thought the highest value area in the town would be is not necessarily the case - it's clear that the big ticket properties in terms of price are almost exclusively located in the Avenues and the area to the north of Rothamsted (average price paid - £1.92m), and areas such as West Common, East Common and the 'ridge' of the hill upon which Harpenden lies (Dalkeith Road, Sauncey Avenue, Clarendon Road) which I'm sure allows residents an arguably deserved self-satisfaction. However, the concentration of outstanding education can be found and easily reached by purchasing property in the areas just off Station Road, namely, Dalkeith Road (£999,999), Langdale Avenue (£675,000) and Carisbrooke Road (£1.01m).

The downhill stroll to the station, the relative calm and safety of the tight-knit neighbourhood and easy access to the southern end of the town certainly makes this a high priority target for buyers looking in the area - and also adds a good selling point for homes;

"We're within striking distance of no less than seven of the towns best schools, darling!" - Now there's something to boast about over morning coffee at the tennis club.

So what about buying to get into a good school without annihilating your life savings? Well, let's be realistic for a start - this is Harpenden, so for most the experience could be eye-watering in terms of price, bearing in mind the National Average House Price as released by the Land Registry is now £196,000 compared to Harpendens £712,831 - over 263.68% higher than most of the UK (sources: Rightmove and Land Registry). Add to that the fierce competition from London money and you might want to be prepared to kiss a few frogs when looking for a deal. The other aspect to consider is that it's not just as simple as buying a house near the school and Bob's your uncle - there is a huge amount of statistical calculation that goes into which school place is offered to whom and when, and you're not guaranteed a place just by postcode, so don't be fooled into buying nearby and thinking you can secure a place as easily as that. There is way more to this, but we're interested in house prices for this article.

The roads where you're most likely to find a good family home and stand a good chance of getting into a local school are likely to be those in the 'cooler' areas on the heatmap, but still within that golden oval on the eastern side of the railway, up Station Road. Often the best deals can be found by understanding that there are roads that are on average, for one reason or another, valued lower than others. Residential streets such as Overstone Road (£547,250) and Cowper Road (£639,000) provide opportunities for you to get your family where it needs to be geographically while avoiding bankruptcy.

Space tends to be limited in the centre of town, so if the station isn't a deal breaker, my hot areas to watch in the town are Southdown, with it's cooler pricing and great access to schools, or North Harpenden and out towards Kinsbourne Green. You might have a greater battle in terms of distance from the schools, but you'll be compromising by having a larger garden and more breathing space.

Of course this isn't an exhaustive list of the top roads, and since your eventual home is such a personal thing it would be impossible and churlish of me to suggest that Dalkeith Road trumps Tuffnells Way or vice versa. Many agents in the town seem to forget one fundamental yet vital aspect of this business, and that is while one deal may certainly look like any other, it is the people involved with their myriad nuances of personal taste that make the entire thing so delightfully interesting.

If you've enjoyed this article, please share it on Twitter and Facebook. If you would like to find out where your next best buy will be, why not give me a call. Alternatively if you're interested in knowing whether your home is going to be a honeypot for the buying bees, you can reach me on 01582 346 111 to discuss your next move.

IMPORTANT NOTES - PLEASE READ:

The data listed and used in researching this article is based purely on government information sourced from the Department for Education school performance reports and data tables. We took into account overall school results to pick the nine schools highlighted above. Your individual biases, experiences and opinions may differ. We have no affiliation, preference or fondness for any particular school in the local area. These schools are not listed in any particular order and this is not a league table or a suggestion of preference, ranking, prowess, ability, cost or any other pitch of favour.

Please also note that in this article we have not examined other local schools such as Batford and Wood End which are also highly regarded educational establishments. It is necessary that you consider all schools in the area before making a choice. You can find a full list on the Department for Education website.

For detailed school information please contact the schools directly or contact your local council.

House Price Index Report - October 2015

Today the Land Registry released its latest report on the House Price Index, that hallowed knowledge of all things property - the dread that fills the faces of clients when we start to mention it is palpable - the colour drains from their faces, but fear not! We bring good tidings.

The initial views of the report show that property has risen in value by an average of 5.3% bringing the national average house price in England and Wales up to £186,553. The South East saw prices rise by 0.7% since August, and prices have risen by an average of 8.5% since the same time last year.

Throughout Hertfordshire the average price is now £311,247 with Greater London showing an average of £499,997.

The data goes on to show that Sales volumes are significantly lower this year than at the same point in 2014 and even 2013, however still appear to be buoyant when compared to figures for 2011 and 2012.

The number of sales over £1million decreased by 9% from July to September. The bulk of sales took place in the £300,000 to £400,000 price range.

The home counties are leading the way in terms of house price growth according to the latest figures. The report also shows that repossessions are following a downward trend, showing that mortgagors are keeping on top of things.

The data seems to support the gruff and surly chorus of agreement in the press that the Stamp Duty changes have started to pinch at the heels of £1m+ market, with fewer would-be buyers willing to take a bite out of the sixty grand tax sandwich that will be fed to them if they go through with it.

It seems that while it is of course still possible to make deals happen at a higher level, the nomansland between the sub £935,000 properties and the £1m+ properties is set to widen with the latter becoming more cash heavy and thinning the herd.  This is however great news if you're looking at going on the market for under £900,000 as you're suddenly going to have a lot of hungry buyers, and a larger proportion will be free of finance constraints, if lugging along a lengthy chain, but we can't all have our cake and eat it too.

The data also suggests a noticeable dip in stock levels, which I know has been felt by colleagues throughout the industry and has even forced some redundancies in local firms who are tightening their belts - the first thing to go is the staff. We keep getting CV's from highly experienced and qualified negotiators who are knocking at every door looking for a job.

Leading into the winter months with the family focus turning from School places and late summer breaks to Pumpkins, winter clothing and the panic buying of Christmas presents before the family comes to stay, the market is set to bed in for what could be a tough winter for Estate Agents (don't all laugh at once), yet still the prices are creeping slowly up which could mean a boon for anyone wily enough to take advantage of the huge demand and a marketplace with less and less competition.

Selling in Winter isn't something that only the brave can do, it's just a case of getting the presentation right. Think about what makes indoor and outdoor spaces appealing during winter - evergreens, red berries, a roasting fire, homely smells and a warm welcome. If you're stuck for inspiration and you need to get moving, drop me a line - 01582 346 111.

And remember, since we've got the Land Rover, when we get all that snow we can still bring people up for a viewing!  You'll just have to put the duvet back upstairs and change out of your pyjamas.

Universal Credit, or Universal Nightmare?

The NLA Meeting at Three Rivers District Council in Rickmansworth was where we heard about the latest updates to the Deregulation Bill, the changes to Council stances on their 'Easy Let' program which operated as a council run Lettings Agent to house low income and vulnerable families and individuals, and an introduction to the Benefits system changeover from the current DWP cocktail to the all-encompassing Universal Credit.

         

The crowd is a good mix - even including NLA Chairman and experienced Landlord Carolyn Uphill (pictured) who offered a brief but enlightening introduction to the waiting Landlords on how Landlords are vilified by society as money-grabbing heartless mercenaries, painted by the media to seem stingy, ungrateful and cruel. She goes on to say that the media reports of awful Landlords are a thin minority who give the bulk of those earning a crust in the Private Rented Sector a bad name - and judging by the clientele I'd say she was right.  Most were over 40, well dressed and came forth with a good degree of technical knowledge and questions for the panel of speakers for the evening - in some cases serving them a positive roasting.

The first of the panel to offer their view was a gentleman named Alan who represented Three Rivers and informed Landlords of the Housing Services Departments ability to locate tenants and place them in properties at no cost to the Landlord (excepting the fact that the quality of tenant and the amount of guaranteed rent is potentially a third of that which could be achieved through a qualified and experienced Letting Agent, but this wasn't mentioned) - it seems like a great deal on paper.

Backing this up however was the following dissemination of new practices as set out by the DWP when it comes to welfare reform. And this is where it all gets really interesting;

The new 'Universal Credit' is being rolled out piecemeal over several years and in specific distinct stages. The current phase of implementation is for single adults with no dependents. Once on Universal Credit, the individuals will receive 'benefit' by way of a monthly payment, and all of the former aspects of Housing Benefit, Income Based JSA, Income Support, Tax Credits and Child Benefit will all be rolled into one. The idea being that claimants will enjoy a 'simulation' of work until they can find sustainable employment - the support and methods sound almost utopian on paper, but there was one part which heavily rocked the boat with Landlords.

The matter of direct payment to a Landlord when a claimant encounters difficulty will be altered, and not in the Landlord's favour. Currently Landlords and tenants can elect for payment to be made directly into the Landlord's bank account, assuming the tenant has offered consent for the Landlord to be made aware, and therefore Landlords are notified immediately if there is a problem with payments.



Under the new Universal Credit, payments are automatically made to the individual claimant and the claimant must give express permission to send direct payment to the Landlord. Furthermore, the DWP will only pay arrears to a level of UP TO 20% of the outstanding monthly amount, each month, until the arrears are paid off.

The deadly combination of these two could mean that Landlords who previously accepted Housing Benefit Tenants and built their businesses around the existing DWP rules could find themselves losing up to three month's rent before they find that a tenant is experiencing difficulties. This hands a great deal of power to tenants who might be wise to the system.

The further problem here is that it introduces a higher barrier and more stringent checks for those in most desperate need of housing - tenants in arrears will be scrutinised more heavily, and if it weren't bad enough already, more Letting Agents will dumb down the idea of even considering Universal Credit applicants, and Landlords may begin to reject applicants from Councils, leaving both the public sector and the populace they are seeking to help in a dire situation - facing homelessness.

The feedback from the event seemed to be coloured by the notion that many in the room felt that the reforms were poorly thought out and the impacts had not been fully addressed.  I'm inclined to agree.

The final (and in my humble opinion most enlightening) element of the evening was Debenhams Ottway's Howard Kent speaking on the finer points of the Deregulation Bill.  I'll be releasing a video on this soon which you can see in due course on my company YouTube channel.

Howard really dug down into the effects of incorrect service of paperwork, and how the HHSRS contained within the Housing Act 2004 really starts to bite when tenants make reports concerning health and safety issues in properties and improvement orders are served. The legislation, amongst a myriad other tweaks, now prevents a Landlord from serving a Section 21 where such a notice is in force, or even where such a complaint has been made.

Landlords will now need to be even more vigilant about record keeping and understand the nitty gritty details of the law if they are to protect their financial interests - it might be time to consider speaking to a highly experienced, qualified letting agent who's already implemented this framework..........now if only there was somebody you could call..........

01582 346 111

(for those of you who haven't caught up yet, that's my number)

Rope Ladders, Balconies and The Art Of Balance

Recently released figures from Halifax show that house prices nationally have dropped by an average of 0.9% between August and September 2015. The market is still suffering from a stark imbalance of short supply and upwardly spiralling demand, only restrained by the relative increase in difficulty associated with obtaining finance to purchase property in the form of mortgages.

Mortgage rates remain low, which fuels the demand further.

The typical price of a home however remains 8.6% higher than the same time in 2014. Halifax feel that at this time the market will remain strong with prices continuing to hold steady and rise over the coming months.

So, in light of this news, what could topple the house of cards? Something that everyone seems to continually avoid discussing - so in my typical style, I've decided to roll up my sleeves and plunge both hands into the sticky gooey mess. Lovely!

Interest rates (i.e. the cost of borrowing, or conversely the risk of lending - depending on which end of the seesaw you're sitting on) are, in my opinion, the elephant in the room - nobody seems to want to discuss rising interest rates in case by some force of magic they skip up to the horrifying levels of 12-14% that we saw in the early 1990's. A rise in interest rates would slam the door shut for many who are currently able to afford mortgage finance, assuming they can tick all of the boxes during the inevitable interrogation from the banks.

It's unlikely that the government will overlook areas that would cause uncontrollable rises in interest rates, since the nature of these changes is always symbiotic and higher interest rates usually herald reduced consumer confidence, less disposable income, a focus on saving rather than spending and a consequence of a slowly shrinking economy, effectively undoing any hard work that has gone into achieving growth in recent years.

The MMR (Mortgage Market Review) rules which were introduced last year have previously come under harsh criticism for making borrowing more difficult to achieve for those struggling to purchase their first property and those looking to move up to a larger home, but being too relaxed on lending can have catastrophic results as we all know. Suspending our knowledge for now of the fact that most of the funds we are living on is supported by little more than our belief in it's intrinsic value (i.e. it's Fiat, there's no Gold backing our national currency), to open the sluices and allow a flood of uncontrolled lending would sweep away our foundations and repeat the harsh lessons we learned in 2007. This time around however the public are likely to be much less forgiving of government and banking irresponsibility.

Indeed, last time this happened we bailed out the banks purely because if we hadn't there would have been what can only be described as anarchy - the banks effectively held the government to ransom so they had no choice but to prop the whole thing up to avoid civil unrest and all the fun of the fair that comes with it. The comedy of this is that the public end up getting clobbered no matter what happened, but that's another story - we digress.

The government is therefore currently throttling demand by restricting borrowing - and by throttling I mean controlling the flow of demand in the housing market, rather than suffocating it - the restrained growth we're experiencing very much feels like we're paying out the main sheet oh-so-carefully in a strong gust to prevent us from capsizing the whole yacht.

The other side of the coin is that more housing is required - any fool can see that this is an undeniable truth. This too comes at a price. Diluting the stock too quickly will ruin the gravy - if you build too much, too soon, then demand for 'second hand' property (i.e. houses that we are trying to sell today) will see a fall in demand. However slight this may be, it will have a knock on effect. When nobody wants to buy something you have two choices - stop selling it or make the price more attractive. The net result?  Prices fall, equity is lost and the potential for a 'domino effect' of price drops and loss of confidence spreads like wildfire.

This also takes a tributary feed from the Buy To Let market; squeeze Landlords too much and they'll stop playing, pick up their ball and go home. There is absolutely no good reason for investors to put their money in an asset which doesn't generate significant capital gains or adequate cash flow. Some may criticize this, but in fairness it would be madness to let funds languish in investments that are no longer producing income. That door will shut and many Landlords may sell up, whether through necessity or choice, simultaneously generating a very welcome flood of stock for first time buyers, but utterly hammering the market position of anyone on the next rung up.

So we're playing a very careful balancing act - we can't lend too much, we can't build too much, we can't pinch too much with legislation and all the while prices are rising which is steadily making it harder and harder for people to buy and progress.  Think of an M.C. Escher style scene where a man on a balcony is pulling a rope ladder further out of reach of the person below him - this is rising house prices in action.  Now imagine a further balcony above, with another figure who is also pulling up their rope ladder - that's the widening gap between where he is and where he wants to go.  Rising house prices are relative, and that explains why - the only way around a rope ladder that is out of reach is to compromise and aim for a different balcony.

The problem with this situation is that rising prices are great if you've got a string of balconies and ladders beneath you, but they're awful if you're standing on the ground desperately leaping for the bottom rung and you need to buy some stilts from the bank to do it (who incidentally also own all of the rope ladders and the penthouse balcony, but forgive me for being cynical).

So will everything blow up in our faces? It's unlikely when the government is quite deftly playing puppet master to keep the strings and pulleys in motion while this all plays out, and while the show must go on, the curtain will fall eventually and one of these levees will break - will it be interest rates? Population growth? Economic growth? Too far one way and it all grinds to a halt - everyone will be at stalemate, and too far the other way and we'll face a runaway train with one final destination.

To wipe away the ash from this gloomy prediction - and I will always admit that I could be very wrong, after all I'm just saying what I see, I'm not a soothsayer, clairvoyant or a mystic - the key thing for any of us to do is assess the risk as it presents itself to our personal circumstances. Will buying or moving create a level of risk that you could not handle if things were to change? If the risk is something you can't bear, then stay put and wait unless pushed. But if you're smart and you can see a way through the jungle, then take the leap and swing from vine to vine (or climb from balcony to balcony) - remember that nobody ever got anywhere by standing still.

What impact will the St Albans Sink Hole have on Property Values?

What impact will the St Albans Sink Hole have on Property Values?

Everyone will have heard about the huge sink hole which opened at 1.30am this morning on Fontmell Close in St Albans. The huge hole has led the evacuation of many residents with approximately 40 homes without electric, gas and water, and a rapid response from authorities to assess the damage and fill the hole to restore the foundations of the street.

The big question on everyone’s lips though is how this will affect the residents in the road. Obviously besides the impact to their daily lives and a ‘how long is a piece of string’ answer to any deadline for fixing the hole, the spectre of having potentially lost acres of equity in their home has the capacity to leave some owners sick to the stomach with worry.

Several sink holes have carved gaping holes in the ground across the country in recent years, leaving many scratching their heads and asking questions about why houses were built on such sites in the first place. The geological history of this part of St Albans shows that many areas in and around St Albans were extensively used to mine sand, gravel and clay – this area notably being used for many years as a brickworks where the brickmakers dug huge ‘bowls’ to mine the clay for bricks from the soil. This mining activity (which was later filled in) and bedrock instability due to acidic groundwater eroding the limestone bedrock could be a contributing factor to the potential for more sinkholes across the Bernards Heath area including Seymour Road, Beech Road, Marshall Avenue, Watson Road and the land underneath local amenities such as The Pioneer Skate Park and two local schools.

Pretty much every other article you can find on the sink hole will tell you where it is, how big it is, how it formed, what caused it and the science behind sink holes. Though I may know a little about sink holes, I won’t tout myself as an expert on that front – best to ask a geologist.

The main focus of this piece is the impact on pricing.  So, is it going to affect house prices?  Well, if I told you that a house right next door to a sink hole will be worth the same today as it was yesterday before it appeared, would you call me a liar?  Probably.

And would you buy it? Probably not.

That’s addressed the question of perceived value, so yes – arguably there will be less buyers interested than there were before, which means that values may potentially drop on that road. The other factor to take into account however is the repair methods employed in rectifying the damage caused by a sink hole.  Many are fixed using foamed concrete to allow water to pass through into the limestone bedrock whilst reinstating a solid foundation for construction of buildings, roads and infrastructure on top. This is the method that was used in Hemel Hempstead last year.

The problem, as far as I can see, is that nobody really knows where the eroded caves in the bedrock actually are, and therefore we have no current method of predicting where the next sinkhole will appear.

This sounds like scaremongering – and while I’m not a statistician (I can barely even say statistician without a lie down afterwards) – and although there HAVE been incidents where properties in the area have suffered from subsidence, and indeed one sinkhole opened up behind the Pioneer Club which has been monitored by the council for some time, I should imagine that the probability of another sink hole opening up right underneath your house or your child’s school is low. Many of these buildings have been here for quite some time without any major incident, so I shouldn’t be too concerned.

The best and most recent case study of how this geological nightmare can impact on housing is with the sinkhole which appeared in February 2014 underneath Oatridge Close in Hemel Hempstead. In March, a local agent was selling a 4 bed property on that road just feet from the hole for £420,000 which is in line with asking prices at the time, if a little under the norm, but many of the properties on that road belong to Hightown Praetorian and Churches Housing Association, with many of the flats being shared ownership. What is really encouraging is that sales haven’t slowed down by a huge amount, and the prices seem to have retained a somewhat positive trend, which contrasts the expectation that suddenly all prices on that road would plummet into the hole as well.

Some properties on the site did require demolition and have been replaced by town houses on newly replaced foundations. Many mains connected services called for extensive works to be put in place to support any future building work, but this to me just highlights the need for an extremely robust buildings insurance policy which covers residents in the area for such eventualities, particularly if you know about the possibility of sinkholes or geological activity.

All of this does raise the question of whether issues that have a geological or structural impact, whether a present factor or a calculated risk, have as much of an impact as social problems such as poor schools, high crime rates and lack of community – it seems that the latter drag prices down at a much higher rate than the former.

I any event the ultimate price the owners and residents of Fontmell Close will pay will be determined by the buyers who look to own homes on the road in the future. The biggest factor to bear is ensuring that any remedial works and geological surveys are carried out and the paperwork is retained by the owners to pass on to buyers in the interests of transparency and cementing trust.

Under the new Consumer Protection Regulations the concealment of a sinkhole nearby could give rise to a lawsuit from the buyers (assuming they somehow manage to not hear about it on the news, which would be a miracle in itself) if it was later proved that the agent and the owner had omitted this information from the sales particulars – the principle of caveat emptor (buyer beware) is not as much of a solid foundation as it once was, if you’ll excuse the pun.

Roundly speaking, homes directly on the rim of the crater may experience some depreciation, but on the whole the impact will be minor due to the huge demand for St Albans property and the massive national demand for housing. I advise that owners ensure that buyers are confident in the steps taken to rectify the problem, and that some assurance can be given to them on ensuring the property is not at risk. The best way to do this is through producing paperwork from the council and specialist contractors concerning the work undertaken to plug the hole.

Undoubtedly, some buyers will run a mile, but in a market where demand outstrips supply to such a degree that open days can attract tens of buyers, an upfront approach and a realistic but keen price will see vendors walking away without too much of a limp.

UPDATE EDIT: 01/10/15 19:28 GMT. Credit to Andy Kilvington for offering extensive local knowledge on previous issues with the area which was not reported in the press.

The Great British Property Drought

Every time I'm speaking at an event or invited to network with investors and the movers and shakers in the property world, people tend to ask me for my expert opinion on the market. The big theme at the moment amongst investors and buyers is the shocking lack of available stock - there is no shortage of ready willing and able buyers and tenants who are all queuing up (or scrambling over each other in some cases) to secure a bite of the cherry when properties come to the market. Most of my inner circle of investors are coming to me and saying "Alasdair, I just can't get a look in - by the time I've made an appointment to view it they've already sold it! What can I do?"

Sadly, it's the way agents work - but I think they're acting rashly. It makes more sense to let everyone view and then go to best and final bids - surely that'll win your client a higher offer, possibly in excess of the asking price when all is said and done?

The issue is a complex one which can be tracked through various milestones going back over the past year or two - the stamp duty changes late in 2014, the Mortgage Market Review, jaw droppingly low interest rates, all against the backdrop of massive unrestrained foreign investment into the London property market forcing would-be buyers out to the provinces and thus raising the bar on prices and restricting entry to the market for first time buyers in their home towns. Interviewing local people in Harpenden and St Albans we found that many buyers feel they are being forced out due to a lack of available affordable housing stock and prices being driven by wealthy families fleeing London for a home in leafy Hertfordshire dormitory towns - and when we speak of 'affordable' housing, we don't mean the oft stigmatised term of council accommodation, but simply properties that your average local citizen can afford to purchase on their salary. Yes, more properties are being built but it's nowhere near enough to satiate demand as can clearly be seen by running your eye over the official government figures.

Can Londoners be blamed for leaving the capital? The average price of a 3 or 4 bed family home in London is approximately between £1.2m - £1.5m which would clearly require a robust household income. Contrasting this to Harpenden and St Albans where similar comparable properties would sit at around £800,000 it's making sense for families to shorten their path to home ownership by making a compromise and moving out of London while keeping their jobs and commuting into the City.

The latest data from Lloyds and Halifax show a 3% quarterly rise in national house price growth, a 2.7% month-on-month increase from July to August, and a significant rise in mortgage approvals - this is relevant because we already know that prices are rising, we know that mortgages are getting approved, and we also know that there is little stock available which simply creates the perfect storm for soaring prices.

The words on everyone's lips are "How long can this go on for? When will it end?" and the sentiment is understandable - household income adjusted for inflation has actually left many families with less overall to spend on a day-to-day basis which goes further to exacerbate the obstacles to home ownership in the local area. The fact remains that the lucky few who are able to overcome the challenges faces by those entering the housing market are either working hard to pull in a handsome salary or have liquid assets which can create purchasing leverage - banks are working harder to make lending on home purchases a greater possibility, but those under 35 are split with the looming spectre of rising interest rates a real possibility in the future.

For Landlords, the recent proposed changes in taxation along with tightening of restrictions on property standards and procedures will pile on additional costs in terms of administration and compliance which in turn is likely to push the cost of renting to a higher level which could increase pressure on local authorities to house the poor and vulnerable in society. Council departments are already stretched to breaking point due to government cuts which saw many staff attending the job centre rather than the civic centre.

Greater pressure is now upon all of us purely in terms of the shortages of available housing as figures show net migration to the UK in the year ending March 2015 to be 330,000 - the highest it's ever been. Irrespective of the political landscape or any personal views on the issue, the fact remains that the pressure on the affordable housing market will increase, and with land at a premium, will house builders be in a position to sniff out deals with enough margin in order for building more homes to be worth their while?  

Certainly at the moment many new developments are sold off plan before they are even finished and house builders are making hay while the sun shines, however the grim reality for local people is that Harpenden may soon become just the place where they grew up, and towns such as Dunstable, Leighton Buzzard, Milton Keynes and Northampton will benefit and suffer in equal measure from an influx of Hertfordshire born and bred families with a bright future in a more affordable district.

September property market update

Headlines

 • Average Greater London house prices rose by £60,000 (12.8%) over the last 12 months
 • Supply of property for sale falls to record low for August (down 59% since Aug 2007)
 • Prices move up 0.4% overall in England and Wales during the last month
 • The South East remains the UK’s fastest-moving regional market and prices outshine Greater London with a 6-month rise of 6.1%
 • The average annual home price appreciation for England and Wales rises to 6.5%
 • Asking prices rose in all English regions, Scotland and Wales this month.

The biggest rises were observed in the East of England and the South East (0.9% and 1.0% respectively).

Average London House Price up £60,000 

Summary Source: Home.co.uk

Despite economic shockwaves emanating from China, overall the UK property market remains in rude health. Buyer demand and short supply in London and the southern regions continues to drive the national average higher, but at a lesser rate than last year. The supply crisis is worsening and August recorded the lowest number of properties entering the market for that month since the onset of the financial crisis. Of course, the key driver for demand is the availability of mortgage finance, which remains abundant. Talk of interest rate rises at the Bank of England has not dented buyers’ appetite. Competition between investors remains fierce in London and surrounding regions where the lack of supply is felt most keenly. In London and the East of England, the volumes of properties entering the market are down 15% and 18% respectively year-on-year and down 75% and 73% vs. August 2008. These and other southern regions are clearly sellers’ markets and prices remain firmly on an upward trajectory. Marketing times in the South East region have been the lowest in the country since February. Across much of the nation, marketing times are currently around the lowest we have witnessed since 2008; in the North, however, marketing times are considerably higher than in the South and prices are not rising appreciably. Overall, the current mix-adjusted average asking price for England and Wales is 6.5% higher than it was in September 2014, and we expect further upward pressure on prices over the coming months.

Credit for article: Doug Shephard, Home.co.uk

Why is PAT Testing important?

Here's a great article written by Mick Jackson of MJ PAT Testing in St Albans as to why PAT testing of appliances is relevant and important for Landlords.

"I know it’s not the sexiest of subjects and eyes tend to glaze over at the mere mention of Portable Appliance Testing (PAT), but read on, you may save yourself some money and maybe more!

Firstly let me put things straight, PAT is NOT a legal requirement for anyone. It never has been nor is it likely to be.  Secondly its does not have to be carried out every year, both of these things have been put out by the more unscrupulous companies out there touting for your business.

So what is the point in having PAT carried out in the first place? 

There are many rules and regulations that say you are required to maintain electrical appliances under your control to ensure a safe environment. None of the regulations give you guidance as to how you manage this. This is where PAT comes in. It is a standard of inspection and testing of appliances that meets all the requirements of these regulations and allows you to know that, at the time of testing, you are complying with the law. You, as the ‘duty holder’, are responsible for the maintenance of electrical appliances.

The National Landlords Association recommends that PAT testing is carried each time a tenancy changes OR every two to three years. Houses of Multiple Occupation are slightly different and the Local Authority will probably request that you have PAT testing carried out every year in common areas.

The latest H&S guidance note (107) relating to PAT is available on the Health and Safety website. 

Alternatively please visit the faq’s section of my website www.mjpat.co.uk  for more information or call me on 07795185619 for free no obligation advice."

Another record price for Harpenden

Talking of property currently on the market, we've just seen the most expensive house in St Albans be overtaken by a new listing on Marshal's Drive, and now Harpenden has been put firmly on the map with a £7million property at Annables Lane. 7 bedrooms, 8 reception rooms, a conservatory, a swimming pool and four of the bedrooms appear to have en-suite facilities.

You could sleep in a different room every night (just so you don't get bored), then go for a morning swim and enjoy your orange juice in the conservatory before taking a turn around the impressive and spacious grounds. A perfect lifestyle choice!

The property is currently listed with Hamptons International in St Albans, and John Curtis (in association with Hamptons Intl) in Harpenden.

Interestingly, a Hamptons International branch has recently been involved in a massive landmark case involving The Property Ombudsman, The Advertising Standards Authority and The Competition Markets Authority for being instrumental in a price fixing cartel along with two other agents and a newspaper, restricting competition and distorting consumer choice. The senior management deny knowledge of the price fixing strategy as you can see from the article, however all firms have been heavily fined as a result and the incident has triggered a wider investigation into estate agency as a whole. I suppose there is some solace in the approx. £105,000 client fee (and approx. £21,000 client VAT bill) from selling Annables Lane which will go some way to cover the £775,000 fine.

It's also interesting to note that new portal On The Market has been rumoured to be a target for the CMA under this investigation since it acts in a cartel-like fashion in the view of many agents. The reasoning behind this is that On The Market is an 'agent owned' portal rather than an independent third party company. When joining, agents were forced to part ways with either Rightmove or Zoopla since On The Market insisted on agents only using one other portal as a condition of membership. Some have viewed this and other behaviours as anti-competitive, however the CMA have made no comment on whether this is to be investigated. Speculation on this is high and it will be interesting to see where it goes.

But back to the point, this property is absolutely lovely and will make a beautiful home for somebody who has done very well for themselves - and why not enjoy that wealth by buying a beautiful home nestled in the British countryside. Contact our friends at John Curtis in Harpenden or the team at Hamptons International in St Albans to arrange a viewing.

Are Harpenden Hotels a thing of the past?

In recent years Harpenden has changed. We've seen progress in the form of newer upgrades to schools, supermarkets and the town centre, the opening of new businesses serving a more discerning customer base and the influx of money from London with people abandoning the capital for life in a more quiet place that is better suited to raising families than cocktail parties and the buzz of city life.

With this change has come a greater demand for housing which most notably saw the closing of the Glen Eagle Hotel to the north of the high street which has now been rebuilt by Jarvis as luxury apartments selling for roughly £1.5m each. Then we saw the closing of the Harpenden House Hotel on Walkers Road at the South end of town. It slowly dawned on the local population that we actually didn't have any hotels, unless we wanted to part with £2145 for a weekend stay in the Mansion Suites at Luton Hoo Hotel.

What options, therefore, are the discerning travellers and families of local people to do when they wish to stay in Harpenden and experience the local area face-to-face?

Enter the serviced apartment - a recent boom in serviced apartments offered by local entrepreneurs such as Harpenden House Serviced Apartments and H-STAR are proving extremely popular.

Local estate agents Hawk & Chadwick have turned their hand to securing bookings for the apartment owners;

"With no hotels in Harpenden, serviced apartments are the only option for people travelling for business or leisure purposes from further afield" says Leia Pearce, co-owner and Marketing Director for the company. "The rates are often better than those on offer from local B&B's and they give guests the autonomy to come and go as they please, but they retain the full laundry and towel service provided at a hotel - it really is the best of both worlds"

Could we see more serviced apartments cropping up in the town over the coming months? There's certainly a market for it and Harpenden House show no signs of slowing down to wait for others to enter the market, with a selection of three apartments already available and one more currently being refurbished as we speak.

"The apartments work better for us due to the flexibility" says Tony, the owner of Harpenden House "we provide a high quality luxury service that local people need at a very reasonable price - we find that we're undercutting local B&B's by a good margin".

Sarah and John, the owners of H-STAR Serviced Apartments are trying a different approach, with just one apartment available to let in a brand new block, they've found that it's offering them a better deal on their investment than offering a six month or twelve month tenancy. All landlords want to see a healthy bottom line, and letting their property as a serviced apartment offers them a great return as well as a huge degree of flexibility if they did later decide to take on a long term tenant.

To make a booking for H-STAR or any of the apartments discussed in this article, visit the Hawk & Chadwick Serviced Apartments page.

Best Buy at £2m+ in Harpenden

It's been a little while since I posted - I've been pretty busy!  But never mind, here's something to get us going again.  I had a browse through some local listings and I saw this excellent property. If you're looking to buy in the £2m - £3m bracket then I would say this is the pick of the bunch available at the moment.

It's on at £2.5m and comes with a huge array of outbuildings, plus in my humble opinion it's the most attractive house on the market at that price.

Internally the decor is opulent and comfortable with plenty of space for the whole family.  If you like land, this one is also a winner as it comes with stables and paddocks in addition to the beautiful gardens.  Just 5 minutes from Harpenden and 10 minutes from St Albans by car, you could much worse!

Get in touch with our friends over at Strutt & Parker to arrange a viewing - Sandra Knapman is the lead agent on this property.

http://www.rightmove.co.uk/property-for-sale/property-51545465.html?premiumA=true

Will the new Conservative plans really tackle the Housing Crisis?

An interesting article, well worth investigating whether the new Conservative government, after regaining power on May 8th for another 5 year term of government imposed austerity, will really have the desired impact on the matter of housing for millions of vulnerable people.

The matter must be handled very carefully indeed, that much is for certain.

http://www.politics.co.uk/comment-analysis/2015/05/13/comment-tory-housing-plans-will-not-tackle-the-housing-crisi

Top 10 Most Expensive UK Sales in 2014

So everyone by now has seen my local round up of the top ten most expensive roads in Harpenden, but what were the most pricey Sales nationally in 2014? From the Yahoo Finance article;

"Estate agents were counting the profits last year after a record-breaking 13,400 properties sold for more than £1 million. 

A £50 million penthouse topped the list of biggest sales. The luxury apartment on Princes Gate, in London's swanky Knightsbridge was sold in July of last year - netting the Treasury £3.5 million in stamp duty fees in the process.

A strengthening economy saw house prices in London shoot up by 16.3 per cent, which helped boost the number of million pound-plus deals by a fifth. As a result, the capital made up 96 of the top 100 sales."

You can read more here in the Yahoo Finance article.

Where do people move the most in Harpenden?

Continuing the theme of interesting local data, take a look at this list of the top 5 roads where people move most often in Harpenden.  It's quite revealing to see that on these roads people tend to make a quick stop before moving on, and very few residents remain for long periods.

The prices are the average current values at the time of writing and sourcing the data, and the last column are the number of Sales that have taken place on that road since 1995 according to Land Registry data.

Clearly, some of the roads mentioned here are rather long and some are main or arterial routes into the town and so it's hardly surprising that people will move fairly often, but still the figures are interesting.

On Station Road for example, there have been just under 19 house sales every year, on average, since 1995. That's over £8million worth of housing stock (at todays valuation prices, of course) and well over £80,000 in Harpenden estate agents fees - not forgetting the VAT on those, as well as the stamp duty. You'll be pleased to know that those fees average out to £211 per house sale (unfair comparison I know, inflation and all that, but still - fun numbers to play with!)

Without further ado - please see below the TOP 5 high turnover roads in Harpenden.

1Station Road£422,206379

2Luton Road£533,977313

3Milton Road£396,903276

4Roundwood Lane£394,547240

5Cravells Road£443,861237

Data sourced from Mouseprice.co.uk

Want to know if any of the properties on the market in these roads really is a good investment for you?  Well, look no further. I can help you crunch the numbers and work out what's going to work best for you. Come and have a chat at my Hawk & Chadwick offices in Harpenden or call me on 01727 226 253 or 01582 346 111.

The lowest priced streets in Harpenden

Due to the overwhelming popularity of our post yesterday regarding the highest priced properties in Harpenden, we thought we'd take a balanced view and look at the other end of the scale and see which are the lowest priced streets in the town.

Interestingly, while a fair proportion of these homes seem to fall in the Westfield and Batford area, there are some surprisingly good value properties in areas such as Reed Place, Loire Mews and Croft Court. Needless to say, many of these properties will be flats and apartments and on the smaller side, but the figures show that you don't need to be a millionaire to own a home in one of Hertfordshire's most affluent towns.

Another good statistic to note is that currently, flats and apartments make up just over 19% of the available housing stock in Harpenden, and of the total available stock 80% is owner occupied so if you're looking to buy in the area, you may need some patience and the ability to move quickly, but if you're happy to play the waiting game you might just be able to snap up a reasonably priced property in a great area.

In other welcome news, your stamp duty tax bill for buying one of these would be between £850 and £2037, which is quite a bit more palatable than the clobbering you'd be getting for buying on Park Avenue South!

The Top 10 lowest priced roads in Harpenden are listed below;

1Beeching Close£167,491

2Reed Place£180,247

3Barley Rise£188,092

4Robin Court£195,747

5Loire Mews£196,737

6Highmoor£210,856

7Hill Close£210,953

8Tallents Crescent£220,377

9St James Court£221,341

10Croft Court£226,864

Data sourced from Mouseprice.co.uk

Image courtesy of Ashtons, Harpenden