MONTHLY UK HOUSING MARKET REPORT FROM THE NAEA

HOUSEBUYERS AND FIRST TIME BUYER SALES BUCK SEASONAL TRENDS IN BUSY DECEMBER

• Number of prospective buyers registered per branch last month was the highest in 13 years for the month of December.
• Record December sales to first time buyers (FTBs) since 2001
• Number of houses available to buy increased marginally
• Despite heightened interest from potential buyers, the number of sales agreed dropped by a quarter from November

DEMAND FOR PROPERTIES

• Last month, the number of house hunters rose to the highest level seen since 2003 for the month of December [see figure 1]
• The average number of prospective buyers registered per branch last month was 386, a 12 per cent rise from November when estate agents registered 344 on average.

Dec-16	386
Dec-15	374
Dec-14	360
Dec-13	334
Dec-12	282
Dec-11	294
Dec-10	227
Dec-09	251
Dec-08	200
Dec-07	248
Dec-06	351
Dec-05	302
Dec-04	360
Dec-03	451

 Figure 1: Demand for properties in December since 2003

SALES TO FTBS

• In December, a third (32 per cent) of sales were made to FTBs – the highest number for the month of December since 2001 when it was also 32 per cent [see figure 2]
• This is also a ten per cent increase from November when 29 per cent of sales were made to the group.

Dec-01	32%
Dec-02	17%
Dec-03	16%
Dec -04	16%
Dec-05	7%
Dec-06	10%
Dec-07	13%
Dec-08	11%
Dec-09	19%
Dec-10	25%
Dec-11	21%
Dec-12	21%
Dec-13	26%
Dec-14	26%
Dec-15	24%
Dec-16	32%

Figure 2: Sales made to FTBs in December since 2001

SUPPLY OF PROPERTIES AND SALES AGREED

• The number of properties available to buy on estate agents’ books in December was 41– this is a marginal increase from November when there were 39
• Despite an increase in supply and demand, the number of sales agreed dropped by a quarter (25 per cent) last month from eight in November to six in December.

Mark Hayward, Managing Director, National Association of Estate Agents (NAEA) comments on the findings: “In November we saw a seasonal slowdown; typically it’s uncommon for people to buy and move close to Christmas. Yet, our December findings have completely bucked this seasonal trend. With demand at an all-time December high and sales to FTBs at their highest on record, 2016 closed on a positive note following several months of uncertainty. However, despite an encouraging December, there remains a clear shortage of homes. We await the government’s housing white paper to see how it intends to tackle this and hope the market continues to improve for both buyers and sellers.”

Selling your home? Visit OnTheMarket.com to research sold prices in your area

Using Land Registry data to research a realistic price for your home is simple and free at OnTheMarket.com

If you are looking to sell your home it’s a good idea to research sold prices based on Land Registry data to get an idea of asking prices in your area, and to understand what you can afford to buy.

This can be done by searching at OnTheMarket.com and selecting ‘Prices‘ on the main navigation. This simple and free way to check property prices paid will help you to estimate house values throughout the UK.

However, the most important factor is to consult with local estate agents who can offer their experience to help you conclude a realistic asking price from their valuation. To find an agent in your area who can carry this out, visit the homepage and select the blue banner underneath the search box.

There is no substitute for a traditional agent’s experience and they may have a list of ready-to-go applicants who are interested in buying your home.

Choosing an agent who is a member of OnTheMarket.com means that when your property is marketed, it will not be mixed in with homes being marketed by remotely located, part service ‘internet-only’ operators or directly by private sellers or landlords.

If you are buying or renting a property, every property you see at OnTheMarket.com is on the market with full-service, office-based estate or letting agents who are experts in their local area.

What’s more, thousands of estate and letting agents have moved their properties from other websites to advertise at OnTheMarket.com and many are choosing to launch their new-to-market properties exclusively here first: 24 hours or more before any other portal*.

So if you’re looking to buy or rent, give yourself a head start and set up a property alert today.

We hope you’ll find that when you search at OnTheMarket.com, you’ll enjoy our cleaner, fresher, more focused approach. No irritating ads, no unnecessary information, no spam mail and no nonsense. Just hundreds of thousands of beautifully presented homes for sale or for rent at all price points across the UK.

So, whether you’re looking to buy or let or rent or sell, we’re here to improve the way you search.

Top tips to find trusted tradespeople

Spotting cowboy builders or plumbers can be tricky. Most of us have come across them, even suffered at their hands. But how many of us have failed to spot the warning signs?

If you follow our 10 top tips, you should be able to invite tradespeople into your home without living to regret it.

1. A personal recommendation is always preferable to a written reference. If you want a new loft extension and one of your neighbours has had a similar extension built, and to their satisfaction, that is the best possible start. A friendly neighbour might be so proud of their loft extension that they will show you around their home to let you take a closer inspection of the work.

2. It is just common sense to get three different estimates/quotes for all but the most basic building or plumbing works. The estimates should be for a job which you have specified in detail, not in vague or ambiguous terms. But you should not necessarily choose the lowest estimate, particularly if you entertain doubts about the competence of the company. And if none of the estimates inspire you with confidence, be prepared to widen your search. Always trust your instincts.

3. Make sure that estimates are submitted in writing from bona fide companies with a proper business address. Some cowboys like to hide their traces, whereas reputable tradespeople are open and above board.

4. In the case of large-scale building work, you should put a premium on experience when choosing your contractor. A company that has been trading for 15 years trumps an enthusiastic newcomer. You should also double-check that they have the relevant safety qualifications to install gas and electricity etc.

5. Depending on the complexity of the building work you want done, you need to satisfy yourself that the company you are employing has done work on homes similar to yours. For instance, if relevant, do they have experience with period properties, listed buildings or working in a Conservation Area? Find out before you give them the go ahead.

6. This is not a hard-and-fast rule, but local tradespeople are generally preferable to ones who live miles away. If building companies are having to factor in travel time, it may inflate their estimates.

7. Be very wary of tradespeople offering a discount if you pay in cash. They may take short-cuts with guarantees and insurance clauses.

8. It is critical, particularly with large-scale building works, that the contract you sign with your builders includes not just a full description of the work, but a start and finish date. Unforeseen delays can lead to particularly acrimonious disputes. Penalty clauses for late completion of the job are sometimes advisable, but may be difficult or expensive to enforce. It is also worth agreeing in writing that the property will be left in mint condition, and that you will not be expected to clear up after the builders.

9. Contractual clarity about how payments for the work should be staged is also essential. You may be asked to pay a deposit, but you should never, for obvious reasons, make final payment until the job has been completed. Hold some of the money back until the work is carried out to your satisfaction. It is worth going around your home with the tradesperson, snagging the job and agreeing the areas that need improving. Then put this in writing on an email.

10. The best way to avoid sleepless nights is to insure yourself against things going wrong. You should not only check your own insurance policy before starting major building works, but ask for proof that the company you are using has its own insurance against unforeseen problems in the course of the work.

House prices: What’s in store for 2017?

OnTheMarket.com reveals expert predictions for the UK housing market in 2017

The picture is not all doom and gloom. Far from it. That seems to be the consensus among the agents and industry experts who have been looking into their crystal balls, and trying to define what will happen to house prices in 2017.

Most observers have been pleasantly surprised by how well the UK property market held up after the vote to leave the European Union in June, though the uncertainty of Brexit has certainly contributed to a reduction in the volume of sales transactions as many buyers and sellers ‘wait and see’.

Prices in Greater London were up by seven per cent in the course of the year, the East of England (8 per cent) and the South East (7.5 per cent). This is according to recent figures from Knight Frank. But similar rises are not expected in 2017. In fact, Knight Frank is predicting that prices in the capital may fall slightly, by one per cent, in the course of the year. They also suggest that prices in the UK as a whole will rise by the same modest amount.

One of the factors underlying the predictions is the discrepancy between Greater London and Prime Central London, where prices fell by around seven per cent in 2016. This was partly as a result of the uncertainty around Brexit and partly as a result of the steep rises in stamp duty on high-end properties.

“Looking into 2017, we believe that the slowdown in prices which has been evident in central London will spread to the wider region,” says Liam Bailey, Head of Global Research at Knight Frank. “But we should not ignore the positives, particularly the resilience of the property market after the referendum result. On most measures, the mainstream UK market continues to perform strongly.”

Stephanie McMahon, Head of Research at Strutt & Parker, also believes what happens in Prime Central London is key. “We have seen more and more sellers prepared to drop their prices and accept reasonable offers and that could lead to an increase in transaction levels. But we are predicting flat-growth in Prime Central London in 2017 as a best-case scenario. Over the next five years, we believe that price growth in Greater London will be 16.5 per cent, the highest figure in the country. But things are far more difficult to predict than usual because of the high number of upcoming global events, including elections in the Netherlands, France and Germany.”

According to the regular Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS), the number of prospective buyers has increased for the third month in succession. And a net balance of 40 per cent of those surveyed are expecting prices across the UK to rise during 2017. But there is concern at supply shortages leading to only a modest growth in sales activity.

Simon Rubinsohn, RICS Chief Economist, says, “The lack of existing inventory in the market is impacting the ability of households to move and will contribute toward transaction activity over the whole of 2017 being a little lower than in 2016.”

Experts are more cautious than usual. But there does seem to be an emerging consensus that the property market has outperformed the admittedly low expectation since the shock referendum result, and has entered the New Year in much better shape than it might have done.

A recent Reuters poll of property market analysts predicts that UK property prices will rise by 2 per cent this year. That is down on the pre-referendum predictions by the same group of experts of a 4 per cent rise. But looking further ahead, the experts’ estimated price growth for 2018 has been upgraded from 2.4 per cent to 2.7 per cent.

The boom years may have passed, but the property market looks still to be set on a gentle upward trajectory.

10 tips for choosing your letting agent

This top tip guide from OnTheMarket.com tells you what to look for in finding a professional letting agent that will enable you to rent out your property securely to an appropriate tenant and for the best possible return

How to Choose a Letting Agent

The market for renting out residential property has dramatically expanded in recent years with the very strong growth of buy-to-let and the increasing popularity of rental property as a long term investment. According to the Office of National Statistics, 36% of households in England and Wales were rented rather than owner-occupied in 2013.

Most landlords will appoint an agent to handle the rental and the choice is extensive. There are considerable numbers of letting agents and the majority of estate agencies operate letting divisions. Given that the agent will be responsible for important long-term financial and legal matters, it is absolutely vital to choose the right one as letting agents are unregulated and there is no statutory standard for service or for fees.

1. Letting agent location

It makes sense to use a letting agent that is located in the same area as the rental property. Most towns have a number of firms who are letting specialists and many estate agencies have letting divisions. Some landlords prefer to use agents who are members of a trade or professional body such as ARLA (The Association of Residential Letting Agents) or NALS (National Approved Letting Scheme) because they should be following codes of professional conduct and have proper guarantees in place to protect landlord and tenant monies.

2. Choose the service level

Most letting agents offer three levels of service. Tenant-find only means that the landlord will be undertaking the day-to-day management of the letting. Tenant find + rent collection means the agent will find the tenant and collect the rent but all other matters will be dealt with by the landlord. Full Management means the agent takes care of everything to do with the letting from start to finish and will only involve the landlord if something out of the ordinary needs their decision. For new or less experienced landlords, full management is often the service level of choice for peace of mind.

3. Paperwork

A competent and professional letting agency will handle all the paperwork involved in a letting. They will take up references on new tenants, carry out credit-checks, confirm the tenant’s employment details and check that the tenant has the right to reside in the UK. The agent will draw up the tenancy agreement and collate the required gas and electrical safety certificates. Agents can also obtain an Energy Performance Certificate (EPC) for the property. This must be given to any prospective tenant.

4. Marketing, advertising and rent

A property without a tenant will cost you money, so make sure the letting agent will be very pro-active in finding a good tenant as soon as possible after they are instructed. Ask the agent which local papers they advertise in. Check that they are listing properties on a main internet portal such as OnTheMarket.com. Find out if they already have tenants on their books who will be interested in the property. To get you the best return, letting agents will advise on what level of rent can be expected for a property and will be able to show you details of similar properties that have let for a similar figure.

5. Client Money Protection

Letting agents handle deposits, rents and maintenance monies. Landlords and tenants need to be certain that the money is safe and that no-one can run off with it. A reputable and professional letting agency will be able to demonstrate that it belongs to a Client Money Protection scheme. In the extremely rare event of a fraud, the landlord and tenant will be reimbursed for any loss. All landlord and tenant money should be held in a Client Account, separate from the letting agent’s general bank account. Ask for confirmation that this exists.

6. Complying with deposit law

If you choose the tenant find + rent collection or the full management service from an agent, they should be able to deal with matters concerning the security deposit that is paid by the tenant at the start of the tenancy. This money, which is usually equivalent to 6 or 8 weeks’ rent, is held by the agent on behalf of the landlord as a safeguard against the tenant causing damage to the property. By law, such deposits must be registered with a government approved tenancy deposit scheme. Ask the agent for details of the scheme they use and for confirmation that the deposit has been registered.

7. Safety legislation

There are a number of pieces of legislation in place to protect the safety of tenants. Ask the letting agent to ensure that the property is in compliance with the rules. In particular, a property with a gas supply must have an annual maintenance check and a Gas Safety Certificate must be provided by a qualified gas engineer. Most agents can make the arrangements. If electrical items are provided by the landlord, they must be safety tested by an electrical engineer. Again, the letting agent should be able to deal with the matter. Any soft furnishings at the property must comply with Fire Safety regulations. Professional letting agents will advise on compliance. Whilst good letting agents will handle these matters, the legal responsibility remains with the landlord.

8. Repairs and maintenance

Every property needs looking after. Ask the letting agent if they carry out regular inspections to ensure the tenant is keeping the place in good order and to check if there are any maintenance issues. Letting agents usually have a panel of trades people who can be called upon to make repairs, maintain gardens and carry out annual tasks such as clearing gutters.

9. Maintenance float

If a letting agent is managing the property during a tenancy, it is usual for them to have the authority to carry out necessary repairs up to a certain value without reference to the landlord. This will be for such things as a leaking tap or a slipped tile on a roof. The landlord will keep a sum of money with the agent as a “float” and the agent will account for the money as it is spent.

10. Accounting to the landlord

Check with the letting agent the arrangements that they have for accounting to you for the rent received, costs, and charges and how often they will transfer balances to your account.

Earlier this month Chancellor Philip Hammond announced a ban on letting agent fees and a raft of measures to build new homes as part of this year’s Autumn Statement. See our blog on ‘A guide to the Autumn statement‘ for more information.

Note that in Scotland letting agents may not charge fees to tenants, so a landlord is likely to carry the costs of tenant referencing and credit checks.

PROPERTY MARKET PREVIEW 2017

Nick Churton of our London Mayfair Global Network gazes into the property market crystal ball for 2017.

The national press is fond of repeating what some estate agency firms have to say about the luxury market – especially in central London. This seems to suggest that it is an important part of the property market. Well it isn’t. It is the other end of the market which is important. The lower end drives everything. So if we want to understand about the health of the property market as we move into 2017 we need to look at how first time buyers might fare not at the relatively small market of houses for the super rich.

But predicting anything at the moment seems pretty futile, whether it is the economy, politics, the global order, Europe, the USA or property. Yet one thing we do know: first time buyers now have a better chance of getting on the property ladder than for many years. Interest rates remain low, mortgage lenders are keen to lend and investors with cash have been rather quiet - thanks to George Osborne, who increased stamp duty for buy-to-let purchasers and stripped the mortgage tax relief advantage from the same group.

This has opened the door of opportunity a little wider for first time buyers. Yes there are areas where buying will remain a challenge – those areas of the country where prices are historically high such as in or around major cities. These are places where first time buyers may find it even harder to raise sufficient deposits despite larger than average earnings. But for other areas in the country things are a little easier, especially in those places where sellers are being persuaded that the values of their homes are not necessarily what they wish them to be but are what buyers can actually afford.

So who knows what 2017 will bring. If 2016 is anything to go by there will be lots of surprises. But one thing never changes - people will still want roofs over their heads. Young adults will want their independence; many will move to different parts of the country for work reasons. Inevitably there will be new relationships and young families. When these things happen a home is required. The nation is built on this cycle of life and ambition, which is why the entry level of the property market is always more important than how a relatively few very wealthy people choose to spend their money.

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