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

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

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

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

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

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

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

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

House Prices v General Affordability:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

I am saying towns and their associated hinterlands should zone all existing and future housing within their administrative areas into the following specific categories and document these within the current Neighbourhood Development Plans (NDPs). These criteria should all be enshrined within new and upgraded Neighbourhood Development Plans lasting at least for five years at a time.

Demand and supply could easily be brought to balance within each individual town and village concerned by introducing an adopting Enhanced Neighbourhood Development Plans (ENDP). See ‘The house price affordability crisis’ on the web site for more information.

Balanced demand and supply locally could be achieved for each individual town and village by having an Enhanced Neighbourhood Development Plans (ENDP) fully adopted as being the document to refer to when making planning decisions throughout the validity of the ENDP.

Owner occupation: (by those working locally or retired)

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

Private rental: (by those working locally)

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

Second homes: (for those not working locally)

Holiday lettings:
(If considered advantageous planning-wise, a mix of these user designations, which should be specific to each individual house, might be allowed in the same street or location.)

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

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

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

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

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

So, here on this web site is the full reasoning explaining what is needed to finally improve all the housing markets across the whole of Britain? If you follow the link below you will find yourself on that very page. Please enjoy this offering and by all means comment if you have thoughts of your own about this.

This site proposes changes to the whole way in which houses are marketed by agents as well as bringing in far more effective planning controls. 

For more information on the necessary house marketing changes, go to:

The House Price Solution

“Introducing The House Price Solution”

Posted by: Peter Hendry, Consulting Valuation Surveyor
Author of:– The House Price Solution

Please also note. Unless things change significantly along the lines explained, countless people will continue to experience considerable financial anxiety or pain so, please sign our petition.
The link below opens this is in a new tab for you to look at.

The cost-effective way to stabilise housing affordability across the whole of Britain

Your action in asking our government to debate this could help bring about all of these much needed changes.

Are estate agents taking us for fools?

The continuing rise in house prices which have occurred both prior to and following COVID clearly show that the proposals set out on these pages for re-shaping house-marketing are both fully justified and long overdue.

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

The argument being put forward about estate agency today is that the service provided no longer supplies an arms length advisory service to either buyers or sellers. To explain this the market definitions below are the current definitions of what ought to be expected by all housing agents’ clients.

Market Value advice is defined as:
The estimated amount for which an asset should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.

Market rent advice is defined as: 
The estimated amount for which an interest in real estate property should be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.

Market Approach advice:
The approach that provides an indication of value by comparing the subject asset with identical or similar assets for which price information is available and about which price adjustments can duly be made.

So, here on this web site is the full reasoning explaining what is needed to finally improve all the housing markets across the whole of Britain? If you follow the link below you will find yourself on that very page. Please enjoy this offering and by all means comment if you have thoughts of your own about this.

This site proposes changes to the whole way in which houses are marketed by agents as well as bringing in far more effective planning controls. 

For more information on the necessary house marketing changes, go to:

The House Price Solution

“Introducing The House Price Solution”

Posted by: Peter Hendry, Consulting Valuation Surveyor
Author of:– The House Price Solution

Please also note. Unless things change significantly along the lines explained, countless people will continue to experience considerable financial anxiety or pain so, please sign our petition.
The link below opens this is in a new tab for you to look at.

The cost-effective way to stabilise housing affordability across the whole of Britain

Your action in asking our government to debate this could help bring about all of these much needed changes.

Why are house prices still rising despite the downturn?

On the thorny subject of house prices, what we have right now are house prices still rising despite the economic downturn which has followed the Covid 19 pandemic.

Why is this?
The reasons are actually straightforward but the current upward trajectory is not good news for those who need financial help to become home-owners in the future.

For one thing nowadays, many mortgagors (home owners) will still be paying their mortgages off after they have retired and are drawing their pensions!

Research from Savills released earlier, in March 2021, estimates that the UK’s housing stock became worth £7.56 trillion – more than four times the value of the FTSE 100 index on the London Stock Exchange. These are seriously head-turning economic statistics!

What is particularly interesting, are the recent stats which explain that the value of mortgaged owner-occupied homes currently is only about £2.5 trillion, whereas there is £5.0 trillion worth of UK property which is owned completely mortgage-free. In other words this is twice as much as the value of today’s homes being purchased with a mortgage.

This would suggest that the main driver of the present government’s policy, is to continue to encourage capital growth in the housing sector. Such capital value increases obviously favour those who already have substantial property assets however, of course, the converse must therefore be true. These same policies can thus only hinder first-time buyers’ ability to become owners, as their purchasing ability is dependent upon and geared to earnings not capital values.

Polly Neate, the CEO of Shelter, is reported to be saying there is a “desperate shortage” of actually affordable homes for people on low incomes.

It’s simply no good simply putting up with the status quo, or just continuing in exactly the same way as before.
We have to change for the better in these circumstances. We should do this by treating first time buyers just the way we would like to be treated ourselves, even if we ourselves own houses outright. Houses are roofs over peoples’ heads rather than capital assets expected to appreciate in value before all else!

The House Price Solution has come up with the best possible new policy for the whole of the housing sector and for stabilising house prices within it.

In a nutshell the new policy is this:
Firstly, Neighbourhood Development Plans (or NDPs), which are readily available planning tools, should be adopted across the whole country and they ought to include similar purchasing restrictions to those which have more recently been enshrined in the St Ives, Cornwall Area NDP, the H2 policies.

These are to allow local earners a better chance to become local owners and to buy (rather than continue to rent) their principal residences.
As long as there are numbers of local earners who are not becoming mortgagor/owners, these people ought to be considered in preference to those simply having greater wealth and wishing to move to a new location of their choice.

The effect of this policy would be to help retain local communities functionally intact.
The alternative, which we have seen all too much of recently, is allowing whole areas to become ghost towns, owned by richer buyers from further afield. Allowing this destroys local communities of course.

One may easily understand that the present property-owning statistics demonstrate that a new policy is needed if we are to protect local individuality and preserve communities from societal desecration i.e. suffer the same fate that has befallen high streets up and down the country having become clones of one another lacking individuality over time. Specifically, I mean that we should save the character and cohesion of localities, from outside influences such as from those simply hoping to buy into a location just to gain an additional property investment for themselves.

BUT, something more than this is required if we are to stabilise the accelerating rise in house-prices and instead make way for a fairer and more inclusive house-price environment.
What is also required is a much better way to determine house prices themselves and it is this idea which I now put forward, naming it The House Price Solution.

In essence it is all about how to market houses in a way that can balance-out the different offers from competing buyers fairly and more equitably, resulting in a better marketplace for all those wishing to buy their next homes to live in.
It involves changing the way in which houses have traditionally been sold using vendor-led estate agency, to having new buyer-orientated agencies instead. Many of those who are employed in vendor-led estate agency practices currently could fairly easily get re-trained and become registered as buyer-advising agents.

These agents would handle incoming offers in a very different way by acting for and liaising with the different buyers. Sellers would be less able to influence the prices that are achieved because offers would be received directly from the buyers competing with one another, to the relevant buyers’ agents. These offers would be passed to the appropriate vendors by their own buying agents and this would allow house prices themselves to stabilise across the various different regions of the country. The mechanism by which this could happen would be by all offers becoming primarily dependent upon local buyers’ offer-price levels.

Only houses which are exempt from the H2 residence restrictions would be available for purchase by wealthier buyers from the rest of the country, these being outside the scope of these policies.

The above would help by improving the success rate of individual housing transactions themselves, causing a general improvement in the number of house sales able to be made.

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

Demand and supply could easily be brought to balance within each individual town and village concerned by introducing an adopting Enhanced Neighbourhood Development Plans (ENDP). See ‘The house price affordability crisis’ on the web site for more information.

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

The different local housing markets could be brought to balance and price levels better able to reflect local demand for housing, more appropriately.

The other necessary change would involve making housing markets operate more efficiently than currently happens, by requiring estate agents to work for buyers rather than being able to work for both buyers and sellers as happens currently.

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

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

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

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

As explained, the goal of preserving local communities by providing sufficient and affordable homes up and down the country, whilst still allowing a smaller number of the wealthier buyers to integrate, could be achieved. Better price stability within all UK housing markets also would be the clear result.

This site proposes changes to the whole way in which houses are marketed as well as bringing in more effective planning controls.

The house price affordability crisis

“Solving the affordability crisis”

Posted by: Peter Hendry, Consulting Valuation Surveyor
Author of:– The House Price Solution

Your comments on this subject would be appreciated.

Please also note. Unless things change significantly along the lines explained here, countless people will experience considerable financial trauma, so please sign our petition.
The link below opens this is in a new tab.

The cost-effective way to stabilise housing affordability across the whole of Britain

Footnote:
Doing this would help bring about these much needed changes.
Further reading and resource links:
Savills:

https://www.twindig.com/market-views/houselungo-210321#slice

Shelter’s impact and activities:

https://england.shelter.org.uk/what_we_do/our_impact

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

Part 3 of The House Price Solution:

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?
Historical extracts in the news following the 2008 financial crash:

Seen 14 Oct 13
In EstateAgentToday:
“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’.

Also seen 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!

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

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

It is unreasonable to expect those making decisions about local housing quotas centrally, to be able to understand what is best for each town or parish when it comes to deciding residential land use and development. A change in this particular regard should therefore be considered for debate at government level.

The different local housing markets could be brought to balance and price levels better able to reflect local demand for housing, more appropriately.

The other necessary change would involve making housing markets operate more efficiently than currently happens, by requiring estate agents to work for buyers rather than being able to work for both buyers and sellers as happens currently.

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

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

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

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

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:
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 reading this detailed proposal. Please send in any comment or suggestions you may have for moderation and publication.

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

Back to initial explanation:

The House Price Solution

How to Improve all local housing markets across England and Wales

Posted by: Peter Hendry, Consulting Valuation Surveyor
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 potentially across the whole of Britain?

Constructive comments are very much welcomed.

This House Price Solution is devised to resolve the current housing crisis and is a cost-effective way to stabilise housing affordability across the whole of Britain

Part 2 of The House Price Solution:

Below is a further or 2nd explanation of the new ‘RHA’ or Registered House Agent’s strategy using the House Price Solution.

This House Price Solution is devised to resolve the current housing crisis and is a cost-effective way to stabilise housing affordability across the whole of Britain.

The following is a technical section of this blogpost. It sets out the methodology of the proposed new Residential Housing Agents, as compared with the workings of the present estate agency model.
It is presented for further discussion and consideration on the cost-effective ways to stabilise housing affordability across the whole of Britain

Anyone wishing to contribute their own ideas is welcome to but they should include a resume of their real estate qualifications and experience, if they wish their suggestions to be included in this online policy development formulation. Their contact information is also required, so that any necessary clarification of the meaning and effect of their proposals may be obtained. Such contact information is not intended to be published as part of their ideas without formal permission for that first having been obtained from them. Constructive comments based on this are, of course, very much welcomed.

In order to become more even-handed in their dealings, and so be of better service to all of their clients, estate agents must start acting primarily for buyers rather than sellers, instead of only for sellers or vendors.

This means traditional estate agents would need to become involved primarily in searching for and introducing the present seller to their next property (as buyer), as well as assisting in the sale of their existing house (if any).

To do this the forward purchaser’s agent would become the agent that negotiates both the terms of purchase of the next property and the terms of sale of the house to be sold as part of the move. We’re calling these ‘RHAs or Registered House Agents’. They would, in fact, be advising the buyer as their client on both finding and selling houses in this explanation.

In order for this to happen, estate agents must stop using sole selling contracts and begin offering agency ‘Moving Contracts’ or ‘MC agreements’ for their clients instead.

This would mean that the primary work of the estate agent (as RHA) would become to locate and then introduce acceptable houses for each buying client, whilst at the same time, retain responsibility for negotiating the sale of the client’s existing property – the one to be disposed of as part of the proposed move but only by acting for a new buyer. One thing this solution can do is to massively reduce the rate of sales chain failures.

To explain how this would work in practice, let’s use the term ‘the subject property’ to mean the house being sold, and the term ‘the object property’ to mean the house to be purchased.

Two new documents would be involved with this new process :
An ‘MC agreement’ entered into by buyers initially just with one agent, or a series of ‘MC agreements’ with different Registered House Agents (instead of just having a ‘sole agency selling contract’ with one specific estate agent as generally happens now).

A pre-contract ‘lock-out or reservation agreement’ with a set time duration, during which the vendor of the property concerned could not accept other offers until the specified lapse-time occurs without incurring defined penalties. These would primarily be aimed at the vendor if they should default without just cause, but some form of recompense, payable to the vendor, ought also to be reserved in the event that the buyer was the party that decided to withdraw prior to actual exchange of contracts.

Clearly, all buyers would be advised to ensure that property surveys will first have been carried out and are satisfactory, regarding the object properties being bought, before signing their lock-out or reservation agreements. Having a professional survey is normally advised for most types of residential property being purchased anyway.

Once the whole scenario is fully understood and implemented, these new methods would prove to be self explanatory and perfectly straightforward to follow.

The following is an explanation of the logistics of the process, whilst looking forwards, by going up the sales or lettings chain.

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

As explained, each separate vendor signs two lock-out or reservation agreements, each one involving buyers of different properties.
The primary lock-out or reservation agreement is with the vendor of the property they have agreed terms to purchase.
The second lock-out or reservation agreement is with the purchaser of the property they currently own and wish to sell.

NB. Under the revised arrangements, no selling agent fees are involved anymore in either case of course. The buyer’s solicitor will arrange payment of the buyer’s RHA fees, on satisfactory completion of the actual sale and purchase – where previously the vendor’s solicitor paid the vendor’s estate agent.

To reiterate, it should be noted, the ‘RHA or Registered House Agent’ is always paid on completion by the buyer (instead of by the seller as happens now).

Each agent that was working on the ‘sale’ of each property, would simply be informed, generally by the specific vendor or through their solicitors, when to stop marketing at the appropriate time. That is, after a lock-out or reservation agreement has been signed by them. This is broadly what happens currently, after terms are provisionally agreed by each vendor.

(If deemed important in the particular situation at hand, relevant ‘RHAs or Registered House Agents’ could, of course, be asked to endorse the specific lock-out or reservation agreement concerned, for added clarification.)

To explain again, this would mean there will be a need for two lock-out or reservation agreements to be signed by each vendor.

The first with the purchaser of the property that they are in the process of buying.
The second, between themselves and purchaser of the property which they are simultaneously selling.

It should be emphasised however, that each buyer should always sign the lock-out or reservation agreement relating to the house they wish to buy first.
They should sign the lock-out or reservation agreement for the house they are selling second. Both would, of course, generally be signed at the solicitors office, one immediately after the other.

Doing this should not be any more complicated than owners signing the various legally binding pre-contract papers which they currently need to sign.

This process must involve each vendor hearing from and responding to the two different solicitor’s firms involved. It would of course be feasible for their own solicitors to deal with this much as at present.

Part 3 of The House Price Solution:
For a 3rd (or final) explanation of this unique proposal please click on the following link.

The House Price Solution 3rd (or final) explanation

Posted by: Peter Hendry, Consulting Valuation Surveyor
Author of:– The House Price Solution

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