Home Reports: An update

I have been asked a few times over the last couple of weeks about when Home Reports in Scotland are being abolished.  As you may be aware the Coalition Government have now abolished HIPs in England and Wales.   This does not affect Scotland. My information is that the Scottish Government is still very much committed to the Home Reports and that there will be no change.  Given that it was a Labour/Liberal Coalition Government that brought them in and that the SNP are very supportive, I cannot even see the Scottish Elections in 2011 making any difference. 

The points I would like to stress, however, are as follows:-

  1. Costs do vary – cheapest is not always best!  Name and reputation of the firm of surveyors that are instructed might have an impact on the saleability and sale price achieved for your property.  Always speak to your property adviser about this.
  2. There are a number of deferred payment options available, the most common being to only pay when your property sells or after 9 months of your property going on the market, whichever is earlier.  There are, however, new insurance policies and no sale – no fee options. 
  3. Blackadders is currently running a special offer for properties in the Angus area with nothing to pay for the first 3 months.
  4. We run a number of offers throughout the year and you should ask your property adviser for more details.

I hope that this clarifies matters and should you have any queries please do not hesitate to contact me, either through this blog, via email (lindsay.darroch@blackadders.co.uk) or on the telephone (01382 229222).  I shall keep you updated should there be any change in the Home Report situation.

First time buyer pain

Readers will know that a theme of previous blogs has been the problems faced by first time buyers.  I was very interested to read the annual Shelter Affordability Index which shows that despite the impact of the recession on house prices and historically low interest rates, becoming a home owner in Scotland is 75% harder than it was 15 years ago.  Whilst I don’t agree with some of the proposals by Shelter in respect of home ownership, which I believe is fundamentally important to our society, I do think that now is the time to implement policies that promote and assist first time buyers in getting onto the housing ladder.

Recent lenders who have put deals out to the market place for first time buyers have been astounded by how quickly these deals have been snapped up.  This shows the demand and the necessity for the Government to act now.

If we cannot get first time buyers onto the ladder then the Scottish property market will become unsustainable, with knock-on effects to the wider economy.

Emergency Budget 2010: A lost opportunity?

My initial feeling on the Chancellor’s Emergency Budget of 2010 was one of a lost opportunity.  I think the news management by the Government over the last couple of weeks was very successful and my personal feeling was that the pain was not as much as I had anticipated.  I was sure that Capital Gains Tax would increase, I thought that there might have been some developments with Stamp Duty and I thought that VAT may have gone to the 24% mark.  However, in terms of the property market, I think that this has been a wasted opportunity.  Where were the initiatives to help the first time buyers?  Where was the initiative to increase investment into refurbishment of existing housing stock?  Where was the assistance for the developers and builders to enable them to start building again?

I was filled with dismay at the levy imposed upon banks as whilst this certainly played to the popular press the banks will recoup this money leading to more expensive charges for mortgages, and other bank products.

Leading on from the banks, I was also disappointed to listen to the Chancellor’s mansion house speech the day before.  As I have mentioned in previous blogs the way of controlling an overheating housing market is to be more innovative in your use of Capital Gains Tax.  It is not to limit mortgages.  Limiting mortgages will simply limit competition amongst lenders making borrowing more expensive, stifling the housing market and curtailing economic growth.  In relation to the housing market the Budget of June 2010 was a wasted opportunity.

Conflicting messages for housing market

Two reports today show conflicting messages about the housing market.  The Department for Communities and Local Government said prices in April were 10.1% higher than a year ago.  This ties in with the increased demand that is starting to filter through in terms of transactions.  However, separate figures from the Council of Mortgage Lenders show that mortgage lending this year has been modest.  The number of loans granted to homebuyers fell by 9% in April to 40,000.  However, lending was still 15% higher than a year ago.  The big problem shown by the CML report is that first time buyers are still finding it very difficult to get higher loan to value mortgages.  First time buyers traditionally have lower deposits.  With question marks over what the Chancellor will do on 22 June in respect of Capital Gains Tax I still expect more mixed messages as far as the property market is concerned. My view is that we are still moving in the right direction with a few bumps on the road to be crossed. 

Final Pleas…

Chancellor – please do something to help the first time buyers in particular and the housing market in general on 22 June. 

Scottish Government – please abolish the Home Report.

Property Market Booms

I apologise for the delay in getting this blog to you, but this is probably the best example of the increase in activity in the property market that has been seen by me since the beginning of April.

At the start of the year I had been predicting growth in terms of the number of properties coming on the market anticipating a 10% increase from last year with sales following a similar pattern of increase.  Currently with 4 months in (1st February to end May) this figure is currently holding at more than 40% of an increase.  This is very positive and a figure that I will continue to monitor.  My view is that as people are still prepared to put their houses on the market then you can see that there is pent-up activity and there are people who are wanting to move house for whatever reason.  Readers of previous blogs will know my views on the Home Report but at least with the upfront cost we can guarantee that the people who are putting their houses on the market are genuine sellers. 

The recent prediction from the Halifax which shows prices dropping because of increased volume ties in with the figures that I am seeing for the East of Scotland.  My feeling is that because of the differences in the Scottish system and the underlying shortage of property, we will not see the drop in prices predicted by the Halifax but we should see a levelling off in price growth as numbers of properties coming on the market increase giving people more choice.  I will keep you up to date with the statistics as I get them.

HIPs: The end of the road?

Now that the new Coalition Government has settled in, I was interested to note that one of the first steps that has been proposed is to repeal the Home Information Packs.  The details are still a bit unclear and it may be that the HIP is being repealed down south with the Energy Performance Certificate being retained.  This proposal is a welcome step and this shows that the Government can change policy and we have to hope that the Scottish Government sees sense and takes steps to repeal the Scottish version.

As a market overview, there has been a recent article in the Daily Express indicating big rises in house prices.  Whilst there is definitely an increase in activity, the numbers of properties changing hands are still well below 2007 levels meaning that there is huge scope for distortion of the figures.  My feeling is that the housing market is moving along the road to recovery and that the fundamentals for the UK house market are still good, that is, stable property market, increasing demands and lack of supply.  Although there is still a problem with bank lending especially to first time buyers.  The housing market still requires to be encouraged by the UK and Scottish Governments and it would be a big benefit if the Sellers’ Survey was abolished in Scotland.

House price inflation hits 10.5%

The recent Nationwide house price survey indicates that house price inflation has hit 10.5%.  Regular readers of this blog will know of my disdain and concern for house price surveys given their tendency to paint a misleading picture and also not to accurately show the basis on which they are benchmarking their headline.  However, it was interesting to see that the Nationwide did post a note of caution in its report advising that the past 12 month surge would tail off later this year with sellers starting to outnumber buyers.

There was a reduction in the number of purchasers in the Dundee and Angus areas in the last 18 months, however, this was balanced with the number of properties coming on the market effectively reducing by half and then half again since the peak of 2007, keeping prices level and in some cases growing. We are now noting a huge increase in the number of properties coming on to the market, not back yet to 2007 levels, but moving in the right direction.

My concern is that with the lack of first time buyers and also the number of sellers who are non-movers, i.e. executry sales or people who are wishing to move out with the area, I think this will cause house prices to level off in the 2nd half of the year.

I am pleased to note that the property market is however gaining a momentum and one advantage (the only advantage!?) of the dreaded Home Report is that because of the high upfront cost at least you have to assume that every seller is a committed seller given the amount of money that is now involved in the process.  I am sure that there will be more blogs over the next 12 months confirming the trend in prices and I will continue to update you.