Property Experts Demand Change on Stamp Duty
Led by NAEA and ARLA, and supported by a number of other leading bodies, the 1808 Coalition received superb coverage during the first week of its launch. The press release is set out below. We have followed this press release up with letters to the Treasury and will shortly be launching Phase 2 of the Campaign. I would encourage members to get behind this by signing up via the link below and by asking their clients and friends to do likewise.

The recent success in the USA of the Realtors Campaign to extend their First Time Buyer Tax Credit shows the potential power of members, so please join in.

PRESS RELEASE 
Industry heavyweights have added their support to the 1808 Coalition, set up by the National Association of Estate Agents (NAEA) and the Association of Residential Lettings Agents (ARLA) to campaign for the Government to modernise Stamp Duty.

1808 Coalition partners are:

• Association of Mortgage Intermediaries (AMI)

• Association of Residential Lettings Agents (ARLA)

• Building Societies Association (BSA)

• Council of Mortgage Lenders (CML)

• Home Builders Federation (HBF)

• National Association of Estate Agents (NAEA)

• National Landlords Association (NLA)

Peter Bolton-King, Chief Executive of the NAEA, said: “The Coalition believes that Stamp Duty is an anachronistic tax which, in its current form, is preventing a recovery in the housing sector – it limits market flexibility, creates regional inequality and its slab structure unfairly distorts the housing market. With the Pre Budget Report due soon, now is the time for the Government to take action.”

The current Stamp Duty “holiday” for properties lower than £175.000 is due to expire at the start of 2010 but in a recent survey by the NAEA, 91 per cent of estate agents surveyed felt that it should be extended. 86 per cent of those surveyed felt that the tax is unfair.

Ian Potter, Operations Manager of ARLA said: “Not only does Stamp Duty prevent those aspiring to own a home from doing so, it also impacts the whole property chain. For ARLA members, this means having to pay Stamp Duty on the bulk price of a portfolio, when individual buy-to-let investors pay a lower rate on the single unit price.”

Robert Sinclair, Director of the AMI, said: “It is rare that the breadth of our industry comes together with such consensus on an issue. But the current Stamp Duty regime is distorting the market to such an extent that we feel compelled to speak out. The Association of Mortgage Intermediaries is fully committed to supporting this industry campaign to reform the regime. We implore the Government to not only listen but, to act in support of our request for change to this damaging tax.”

John Stewart, HBF’s Director of Economic Affairs, said: “It is imperative that the first signs of market stabilisation that have emerged in recent months, and which have allowed home builders to begin tentatively opening new sites and expanding output and employment, are nurtured. The Government’s stimulus measures for housing, including the raised stamp duty threshold, have played a significant part in this stabilisation and it is vital that they are not removed at this still fragile stage, either in total or in part.”

Adrian Coles, Director General, BSA, said: “The current Stamp Duty system in the UK is archaic and in desperate need of reform and modernisation. A fairer and transparent system is needed that doesn’t discriminate against young and first time home buyers, and promotes an effective housing market.”

Michael Coogan, Director General, CML, said: “We urge the government to announce a comprehensive and long-overdue review of Stamp Duty. Reform is needed of a tax that distorts the housing market.”

David Salusbury, Chairman, NLA, said: “Stamp Duty Land Tax is a pernicious tax which has failed to keep pace with house price appreciation. It creates an unbalanced housing market and discourages investment in housing. Reform is needed now.”

Anyone wishing to register comments on the campaign, or on Stamp Duty, should visit: www.naea.co.uk/1808 or www.arla.co.uk/1808 or  http://www.nfopp.co.uk/1808

 Agents get HIPs ‘hidden’ payments

Channel 4 News has seen evidence that up to £100 could be being added to the price of a Home Information Pack because of secret payments to estate agents. Bridgid Nzekwu reports.

HIPs were introduced in England and Wales in 2007 and since April this year it has been illegal in England and Wales to put a house on the market without having a HIP in place first.

The average pack costs £300 to £400 and includes various documents, including a description of the property, an energy performance certificate, searches and a property information questionnaire completed by the seller.

The government has always insisted that HIPs improve the home buying and selling process, yet they have been consistently criticised as a waste of time by estate agents, surveyors and solicitors.

Channel 4 News has obtained documents which show an agreement between a HIP company and an estate agent to add an undisclosed commission to HIPs.

In one, the HIP provider suggests a deal in which the company will supply HIPs at a cost of £220 + VAT “on the basis of being your sole HIP supplier” and suggests that the agent can add any margin onto the pack “which is totally hidden from the vendor”. The HIP company states that this undisclosed fee “will be paid to the estate agent on the last working day of the following month from order”.

A second document, a leaflet given to the seller by the same estate agent, recommends the same HIP provider and states that the price of the pack will be £350 + VAT. So the price paid by the seller is almost £150 more than the price originally stated by the HIP provider.

Peter Ambrose of The Partnership says he is approached regularly by estate agents requesting secret payments in exchange for recommending his company to sellers.

He told Channel 4 News: “We think the idea that someone is paying an estate agent without telling the consumer is almost tantamount to bribery in some ways, in that saying to the agent use us and we’ll pay you for doing this and they’re paying them anything in the region from 50 to 150, 200 pounds. We’ve even had situations where people are paying £50 of M&S vouchers… it may not be illegal what people are doing, but it’s definitely unethical.”

Approximately 80 per cent of HIP companies belong to the voluntary trade association AHIPP. The body accepts that undisclosed commissions are commonplace and has told Channel 4 News it sees nothing wrong with the practice which it believes to be “the nature of commerce”.

In a statement AHIPP said: “In collecting the agent’s mark-up as part of the retail price of the HIP, the HIP providers is not in the same position as a solicitor who pays a referral fee in return for receiving work. The fundamental difference here is that the HIP provider acts as an agent for the estate agent in the preparation of the HIP. It is the estate agent who determines the retail price of the HIP.”

However the President of the Law Society in England and Wales, Paul Marsh, insists that secret commissions are “quite wrong” and that solicitors around the country are complaining to the Law Society about it.

He is urging the Government to take urgent action: “We always made it very clear when we were speaking to Yvette Cooper [former Housing Minister] and the ministers at the time when HIPs were introduced that they were introducing a business which was going to be worth half a billion pounds a year and that business needed to be properly regulated.

“We believe the Government should put in place effective regulation to make sure there is transparency throughout the system so the public know what they’re paying for, who’s getting what and that they are getting value for money.”

The Chief Executive of the National Association of Estate Agents, Peter Bolton-King, has condemned practice of adding commissions to HIPs without the seller being informed. Any estate agent that receives such a commission without informing a client selling their home is breaking the Association’s Rules of Conduct.

Mr Bolton-King warned that the NAEA would fine or expel any member found taking undisclosed commissions. He told Channel 4 News: “We can take somebody in front of a disciplinary panel. If they’re found guilty then we fine them up to £1,000 per breach. If it’s very serious we chuck them out.”

Such is the concern at the widespread anecdotal evidence about secret commissions between HIP companies and estate agents that the Royal Institution of Chartered Surveyors is now investigating the issue as part of a wider review of commissions across the entire property industry. It is inviting anyone with evidence to come forward by July. A report and possible recommendations will follow later this year.

Source: http://www.channel4.com/news/articles/business_money/agents+get+hips+aposhiddenapos+payments/3153672

That’s how much the Stamp Duty threshold would rise to if the Government reacted as they did in the last major UK recession…

THE National Association of Estate Agents has highlighted research from a leading ‘think tank’ as evidence of the Government’s flawed stance on Stamp Duty.

The Centre for Policy Studies compared Government responses to the last major UK recession in 1991 to how Westminster has reacted to the current downturn.

In the early 1990s, the CPS points out, Stamp Duty thresholds were increased eightfold, which meant that 99 per cent of the country was exempt from the tax. A comparable rise today would see the threshold raised to £1 million. In comparison, the current, temporary extension of the Stamp Duty threshold to £175,000 was found by the CPS to have been ineffective.

The NAEA has long argued that Stamp Duty should be completely suspended and revised and the Association’s chief executive Peter Bolton King said: “These figures reveal Stamp Duty in 2009 for what it is – a tax on first time buyers and ambitious home owners with no other purpose than to give the Government as much cash from as many people as they can get away with. The CPS report confirms that the current policy on Stamp Duty is not helping anyone – and that a substantial revision of the tax, as introduced during the last recession, would.It also suggests that the Government could not afford to get rid of Stamp Duty or to raise the threshold to a comparative level to that set during the last recession.

“The NAEA believes that a confident and recovering housing market would deliver more benefit to the country’s economy than any short-term measures hatched at the Treasury.”

Source: http://www.estateagencynews.co.uk/news/news-0309a.asp

THE flurry of ‘accidental landlords’ who joined the lettings market in the summer as their homes failed to sell, are now giving up on ‘riding out the slump’ and are returning to the sales market with more realistic price expectations, the Cluttons agency have reported.

Thousands of vendors found they were unable to sell their property over the summer and opted to rent it out in the short term, in the hope that the market would recover in a few months and they would achieve close to the peak prices of 2007.

However, say Cluttons, reality has now sunk in and sellers are accepting that the market is not experiencing a short-term dip, but a longer-term house price correction, which has seen prices fall by approximately 25 per cent from their peak.

James Hyman, partner for residential sales at Cluttons, who have 11 offices in London and four others around the country, said: “Those people who need to sell their homes are realising it is not an option to sit tight and wait for prices to recover.

“This is good news for the sales market, which has been stalled in part by the reluctance of sellers to recognise that their homes are worth considerably less than they were a year ago.”

“Many sellers, who are not in a position to rent their property out in the long term, are now accepting that they are better off selling at current prices, as the market is unlikely to recover to previous heights for some considerable time.”

“There are plenty of buyers out there at the right price, especially in the mid-market, with large enough deposits to access finance, and there are deals to be done with reasonable sellers.”

 source: http://www.estateagencynews.co.uk/news/news-1208c.asp

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Life is now getting harder for landlords as rents start to fall A glut of unsold homes has flooded the rental market, driving down rents at the fastest rate on record. The Royal Institution of Chartered Surveyors (Rics) said new instructions to sell flats and houses had been at record levels in the past few months.   However, Rics said many people who cannot sell their homes have decided to let their properties, and this increase in supply has pushed rents down. The proportion of surveyors reporting lower rents was its highest since 2003. Quick change The past year has seen a dramatic turnaround in the UK property market because of the international banking crisis and the credit crunch. The latest quarterly Rics survey - for August, September and October - shows that the difficulties people have had in buying and selling homes have spilled over decisively into the rental market. With the supply of mortgages, sales and house prices all falling fast, many would-be vendors have decided to let their homes instead of selling them. “Frustrated vendors are placing their property on the market to let as they have been unable to agree sales due to a lack of demand in the housing market,” said Rics. The turnaround for potential landlords and tenants has been swift and the number of homes available to rent has boomed. The proportion of Rics members who, looking back over the previous three months, reported more instructions to sell properties then fewer instructions, was 68% for houses and 50% for flats. As a result, the number of surveyors who said rents were now falling outstripped by 12% those who said they were still rising, the first fall in rents since 2003. This was a big change from the previous Rics report in August which had shown that 31% more surveyors were reporting that rents were still rising. London and South East The region most affected by the sudden change in the rental market has been London and the South East. That part of the country is heavily dependent on the financial services industry and has seen a swift rise in unemployment. Unlike the rest of the country it has also seen a slump in demand from potential tenants. “Tenant demand growth in the South East came to a virtual halt, while in London, demand actually contracted outright,” said Rics. The effect was to drive down rental levels, with 53% more Rics members in London reporting a fall in rents for houses than a rise, and 33% more reporting a drop in rents for flats.

 

Article Source: http://news.bbc.co.uk/1/hi/business/7733245.stm

I found this interesting piece on whether it is a good time to buy and would be interested in your comments…..

Gary
Abbey Estates

Why it is Not A Good Time To Buy

House Prices falling. Even the most optimistic forecasters expect moderate house price falls in the next 12 months. If there is a median prediction of house prices to fall by 12% in the next 12 months, why not wait until house prices have bottomed out? There seems no rush to get on the property ladder when you could wait and save potentially thousands.

Difficulty of Getting Mortgage in Present Climate.

Unless you have a deposit of 25%, you are likely to face higher borrowing costs from banks. If you wait, mortgage deals may become more competitive when the worst of the credit crunch is over.

Negative equity

Falling House prices could lead to negative equity. This is a real problem for people with less than 95% LTV

Why It Could be A Good Time To buy.

• If you are Downsizing it makes sense to sell your high valued house and buy a cheaper house.
• Despite banks increasing their profit margins, interest rates are still low by historical standards. With a downturn in the economy predicted, there is little prospect of a sharp rise in interest rates. Hopefully, when oil prices stop rising, there may even be room for rate cuts.
• If you are buying to live, who cares about falling prices? If you live in a house, it doesn’t really matter if house prices fall, it doesn’t affect your monthly income. It is only a problem if you decide to sell and move into rented accommodation.
• Buying is preferable to renting. There are several advantages of buying a house rather than renting; the sooner you buy, the sooner you will have paid off your mortgage and you can live rent free. Buying is cheaper than renting.
• Maybe House prices won’t fall that much, in the long term prices could rise.

Would I buy A House in Present Climate?

If I was a first time buyer, I would look on the property market, I would be in no rush to buy, but, if a great value house came along, I would put in a competitive offer, well below the asking price. I would consider buying, even in the knowledge prices could continue to fall. However, if my rented accommodation was quite comfortable, I would probably wait for 12 months in the expectations prices will have fallen; in 12 months I would reassess the property market and probably get something significantly cheaper.

Article source:

http://www.mortgageguideuk.co.uk/blog/mortgages/is-this-really-the-best-time-to-buy-a-house/