Tag: Property

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OnTheMarket fails to impress with latest bid to win over agents

OnTheMarket fails to impress with latest bid to win over agents

OnTheMarket’s share price dropped again yesterday, ending down 2.4 per cent.
 
This was despite the portal announcing a share giveaway to encourage new agents to join; the volume of shares they would receive would be dependent on them leaving one or both of the main portals.
 
By contrast, Rightmove’s share price yesterday rose 1.2 per cent.
 
All property share prices have taken a beating since the start of the Coronavirus crisis but over the long term OnTheMarket’s has fared less well than others in the sector.
 
OTM reached its all-time high share price of 176p in June 2018 but its current share price is worth under a third of that peak.
 
Rightmove, by contrast, was on a high of 688p as recently as February this year and after yesterday’s gain stands at 470p – still well over two thirds of its peak.
 
Earlier this month OTM revealed it had rescheduled some arrangements with creditors, was furloughing 22 per cent of its workforce, cutting temporary and sub-contracted IT workers by almost two thirds, and implementing a 20 per cent pay cut for the rest of the workforce and board members.
 
OTM’s share offer yesterday – with the most generous deals available only to those signing up and agreeing to drop the Big Two portals, Rightmove and Zoopla – left critics unimpressed.
 
 
Cheshire agency owner Maurice Kilbride tweeted of the OnTheMarket share proposal: “Wow! I am sure that will have agents clambering to sign up. Drop the other two portals and we will give you more shares in OTM! Which are trading at half their original value!”
 
Andrew Goldthorpe, chief executive of rival portal Property Mutual, commented on Estate Agent Today: “Surely that is limiting the options of the agent to market where they see fit? How is the agent able to act in the best interests of their client and market where and how they see fit? Haven’t we been here before?”
 
Russell Quirk, now a Keller Williams franchise part-owner, tweeted: “OTM advancing the same ethos again and expecting a different outcome. Success as a portal is not about mandating that your customers restrict their choice of advertisers. It’s about proposition, value and, above all, not being taken advantage of. For OTM that boat has sailed.”
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Buckle up – Wave of law cases possible if off-plan buyers pull out

Buckle up - Wave of law cases possible if off-plan buyers pull out

There’s a warning today that the housing market could face a wave of legal disputes if buyers of off-plan new builds fail to complete because of falling prices.
 
Private wealth law firm Boodle Hatfield says the impact of the lockdown on residential property values may push the market values of some new build developments substantially below the prices purchasers paid.
 
If buyers decide they will not complete, they may lose the deposits they have paid.
 
However if the property values fall further than the cushion provided by the deposits, the developers of those properties might still pursue the purchasers who – under most contracts – would still be liable for further losses.
 
This problem was relatively widespread following the collapse of UK residential property values after the credit crunch in 2008-2009.
 
In some new build developments scores of investors had to be pursued to ensure they completed transactions they were legally committed to.
 
“The contracts of most residential new-build developments are fairly clear cut and deposits would be at risk. Many purchasers also forget that this might not be the end of it. You may be liable for any additional loss the developer makes from selling that property, on the market, for less than you originally agreed” says the law firm’s property disputes partner, Colin Young.
 
“Hopefully property prices don’t fall too far but there are certainly developers are now exploring their options over deals where the buyers seem to have gone cold. Once the lockdown is over we expect that buyers who should have already completed will start being asked to agree to a new timetable” he continues.
 
“What we are also hoping is that these problems can reach a negotiated settlement.”
 
 
Kellie Jones, a senior associate at the law firm, says the issue is most disruptive where high net worth individuals have committed to buy multiple properties at the same scheme, typically as an invest,ent.
 
“If that HNW is based overseas there is the extra expense of enforcing the judgment of a UK court in another jurisdiction. However, if a development has not been finished on time then a purchaser may take steps to serve a notice to complete so that it can rescind and reclaim the deposit if the seller is unable to comply” she adds.
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Agencies still getting leads and completing deals despite lockdown

Agencies still getting leads and completing deals despite lockdown

It may seem a long time since normal trading took place but many agencies are now finding they are picking up leads and some deals despite the lockdown.

Midlands agency Centrick says it’s seen positive results in recent weeks thanks to what it calls its ‘digital-first’.

Since the lockdown began on March 23 it has edited and uploaded over 140 virtual viewings. All the viewings were filmed before restrictions were put in place and the agency says that it has since had the time to edit and release them.

The agency has also devised a contactless handover so that tenants can sign contracts digitally and collect keys without having to meet face-to-face.

“Despite lockdown restrictions prohibiting people from moving home unless it’s absolutely essential, we are still seeing leads pour in thanks to the marketing campaigns we have in place. By providing services which allow consumers to engage with us while following social distancing rules – such as virtual viewings and instant online valuations – we have been able to find opportunities and keep the business ticking over” explains Andy Butts, Centrick’s group sales and lettings director.

The firm says its commitment to digital marketing has allowed it to continue generating leads, even though a large proportion of the market has been on hold for a number of weeks now.

For example, Centrick generated over 200 rental property leads over the Easter weekend alone. The agency has also continued to generate vendor and landlord leads through its ValPal instant online valuation tool. Many of these leads have come directly from Facebook ad campaigns, while it has also been promoting its hugely successful virtual viewings across social media platforms.

“Centrick is a model agency. It is adapting to a challenging market and still managing to interact with consumers while adhering to the government’s lockdown rules,” says Craig Vile, Director of The ValPal Network.

“The agency’s results show that the market is still active and demonstrate why committing to digital marketing during this tricky period can be hugely beneficial. Encouraging consumers to carry out instant online valuations of their properties can help agents to keep consumers engaged in the moving process now and fill their sales funnel so they can hit the ground running when the market becomes more active in the coming months” says Vile.The ValPal Network is a product of Angels Media, publisher of Estate Agent Today and other Today titles.

Meanwhile John Bray and Partners in Rock, north Cornwall, says it is still negotiating new sales and taking on new property.

“Last week we agreed a sale on a property with a guide price of £275,000. It was empty having recently been refurbished throughout … A local buyer viewed the particulars, and the video walk through, and entered into competitive bidding to secure the property above the guide price. Launch to agreed sale happened in just two days” explains John Bray partner Josephine Ashby.

“Another recent deal involved a brand-new property in North Cornwall. One of the buyers had seen the house, but the other hadn’t managed to visit prior to lockdown. They decided they were happy to proceed on the basis of a video walkthrough and the sale is progressing” she adds.

“Video walk-throughs are becoming common-place for vendors who aren’t happy to wait out the lockdown. Where property is vacant we are able to produce these videos safely, and serious buyers are often happy to buy without visiting the property in person.

“We are also using virtual staging for vacant properties to help buyers get an impression of what the property would look like furnished.”

Ashby says some vendors prefer to put their property on the market under the radar, appearing on the agency’s own website but not on the portals.

“Our web traffic is up 50 per cent since the lockdown, and 80 per cent of that figure is made up of new visitors. Telephone calls are dramatically reduced, but buyers and sellers who call are very serious. We have time to spend talking everything through in great detail.”

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Reapit’s PropTech deal aims to accelerate completions and cut fall-throughs

Reapit's PropTech deal aims to accelerate completions and cut fall-throughs

PropTech big names Reapit and ViewMyChain are joining up to try to accelerate transactions when the lockdown finally ends and the sales market returns.

They say that 55 per cent of all housing transactions in normal times are in chains, making it more essential than ever that agents know the status of each transaction.

This will be particularly crucial post-lockdown when agents have to rebuild pipelines and cashflow, especially if furloughing staff costs is no longer an option.

Reapit and View My Chain have therefore created a Chain View platform that provides “a dynamic, data-driven view of the entire chain status” against key milestones.

There are no upfront charges but agents pay when individual transactions complete – £25 at the point of each completion.

“The partnership of Reapit and View My Chain will help expedite transactions in the immediate post-COVID-19 market. With £125-billion worth of impending sales commission waiting for agents, linking the Chain View platform with Reapit’s agency software will ease the burden on resource-tight agencies to gently pull chains to completion” explains Gary Barker, chief executive officer of Reapit.

View My Chain’s chairman Ian Lancaster adds: ”This has been an incredibly difficult platform to create and many have failed before us in successfully aggregate both property chains and all the relevant milestones. The View My Chain platform done it now through strategic partnerships to become the single eco system that can finally transform the UK residential housing market.”

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2020 house sales to hit peak in September predicts leading agency

2020 house sales to hit peak in September predicts leading agency

The peak of the 2020 sales market is likely to be September instead of the usual early summer – but that depends on many of the lockdown measures being relaxed in time.
 
Knight Frank has calculated that sales transactions peaked in July last year before tailing off towards the end of the year, reflecting the typical seasonal pattern of activity.
 
Tenancies agreed followed a similar pattern, with a more marked decline in the second half of the year.
 
The agency now says that once lockdown measures are relaxed – which will be in May at the earliest, with the current period of restrictions expiring on May 7 – a spurt of sales activity could push this traditional July peak back to August, September or later.
 
“The traditional August exodus is going to disappear this year,” said James Clarke, Knight Frank’s head of London sales. “A lot of the completions that traditionally take place in the summer will be pushed back into the third quarter of 2020,” he adds.
 
For markets like London’s, which has a significant international buyer sector, the delay may be more pronounced if international travel restrictions stay in place even after some domestic lockdown measures end.
 
Meanwhile, outside the capital, where seasonal buying patterns are more entrenched, there is a similar belief that 2020 could prove to be an exception.
 
“If we’re up and trading by the summer then we will have a prolonged market,” says Edward Rook, head of Knight Frank’s Country Department. “However, if this re-opening only happens later in the year, sales are more likely to be deferred until 2021.”
 
Christopher Bailey, head of Knight Frank’s Waterfront department, believes sellers are pragmatic about the current restrictions and are not looking to take property off the market, which bodes well for a busy second half of 2020 as supply is able to match renewed demand.
 
“No one’s in a rush. Low interest rates have taken the pressure off sellers who remain positive about the market and there remains plenty of pent-up demand from buyers” he says.
 
The number of new prospective buyers increased by 14 per cent across the UK in the year to January 2020 compared to the previous 12 months.
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Demand for stamp duty holiday to reignite housing market

Demand for stamp duty holiday to reignite housing market

Rightmove and Knight Frank are today both calling for a series of government incentives to kick-start the market after the Coronavirus lockdown ends – and a stamp duty holiday is the number one suggestion from both companies.
 
In an unusual statement that stretches beyond its usual commentary on prices and demand, Rightmove says an obvious requirement in the immediate future is for the government support for businesses and individuals to remain in place for some time after the lockdown ends “in order to facilitate a quick recovery on many fronts.”
 
Specifically to help buyers and sellers it says a stamp duty holiday, an extension of Help To Buy, and some for of incentive to lenders to offer mortgages would be required. In addition, it says ;enders need to keep offering low deposit mortgages, which would help both the resale and new build sectors of the housing market.
 
“Owners need to be encouraged to move by reducing the costs of moving, and prospective buyers encouraged to buy by reducing the costs of funding their purchase. Given the government’s interventionist strategy to date that might include encouragement for lenders to resume business as usual with their full range of products” suggests Miles Shipside, Rightmove director and housing market analyst.
 
“We need to avoid a repeat of the post-credit-crunch mortgage famine which took from 2008 until the 2013 launch of Help to Buy to bring the mass market back into play with low-deposit mortgages” he adds.
 
Rightmove says lender should also “show forbearance to those in arrears and do not rush to repossess, leading to forced sales.”
 
These would, it fears, lead to reduced property prices, depressed activity and ultimately negative equity for many.
 
The portal says much depends on employment rates, as most buyers need appropriate employment to get a mortgage or to keep up repayments on their existing mortgage. “These are all-important factors influencing market sentiment, and it’s currently hard to predict how that will fluctuate in the months ahead” it admits.
 
Rightmove also says agents have a part to play. “It’s very important that the property industry tries to keep some activity simmering on the back-burner during the lockdown. Then after the end of the full lockdown, it needs a plan to overcome potential buyers’ and sellers’ new-found caution, and to cope with the need to maintain social distancing during visits for marketing, viewing, valuing and surveying” it states.
 
On the PropTech front it says some properties that are for sale or rent have pre-recorded videos available for would-be buyers or tenants to view online.
 
The portal admits it would be highly unusual to buy a property without a physical viewing, but virtual tours help them to work out which ones are worth viewing in person when stay-at-home restrictions are relaxed. Some sellers, guided by their estate agents who are unable to visit, are using mobile phones with their high-quality cameras to record their own videos.
 
To help with this creative approach, it says, the portal has released a new ‘online viewing’ label for agents to highlight properties for sale or to rent that have video tours.
 
“Some innovative agents with good knowledge of the local area are also using live stream video to offer virtual valuations to prospective sellers, in preparation for future marketing” it adds.
 
The portal says that with so few transactions its usual monthly asking price index is effectively redundant but for the record, it reports that the average asking price of the dwindling number of properties coming to market from March 8 to April 11 fell 0.2 per cent to £311,950, with the annual rate of increase from last April being 2.1 per cent.
 
Visits to Rightmove fell by around 40 per cent at the time of the lockdown announcement “but has now started to recover slowly across the last week.”
 
The buoyant start to the year before the lockdown saw the number of sales agreed in the year to March 23 up 11 per cent compared to the same period last year, which was the best start to a year since 2016.
 
It states that most sellers already on the market, and those with a sale already agreed, appear to be continuing with their plans to move once it has been deemed safe enough to do so.
 
Available stock for sale is down only marginally, by 2.6 per cent, “and since the lockdown the level of fall throughs is similar to what we would expect to see in a normal three week period” says Rightmove.
 
Meanwhile Knight Frank makes a similar set of demands on the government.
 
It forecasts that there will be 526,000 fewer home sales in 2020, 350,000 fewer mortgage approvals and overall some £4.4 billion lost in stamp duty accompanied by a loss of at least £1.6 billion in VAT for property-related expenditure not happening during the lockdown.
 
This fall in transaction volumes represents a reduction of 38 per cent on 2019 and is based on the assumption that the current lockdown will remain in place through April and May, with a gradual lifting through June.
 
This fall in activity will be multiplied across the economy. Knight Frank’s estimate is a loss of £7.9 billion in DIY and renovation spend and £395m on removals companies.
 
There will be a wider economic impact, including the loss of employment and general mobility.
 
“Moving house has a clear multiplier effect for the economy” says the agency’s head of London residential research, Tom Bill.
 
“Different-sized businesses in all areas of the economy feel these benefits, which is something the government will take into account when drawing up its post-lockdown stimulus plan.”
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Agency using ‘Covid Clauses’ to keep transactions on course

Agency using ‘Covid Clauses’ to keep transactions on course

Agency using ‘Covid Clauses’ to keep transactions on course
 
An estate agency says it’s using so-called Covid Clauses in contracts to keep transactions on course.
 
Knight Frank says it’s writing ‘Coronavirus Event’ clauses into some contracts to protect buyers and sellers from claims that may arise due to delays during the virus outbreak.
 
Such clauses typically cover delays triggered by parties in the buying process having to self-isolate, disruption to Land Registry searches and removals, as well as the ability to transfer money or sign documents.
 
It says completion dates are typically left flexible and can be reviewed on a rolling basis; the use of relatively distant completion dates means that after an agreed point in the future either side can walk away without penalty.
 
A statement from the firm says: “A number of simultaneous exchanges and completions are also taking place, which minimise the risk of anything untoward taking place between these two stages, which are usually several weeks apart. Furthermore, some buyers are paying reduced exchange deposits of five to seven per cent compared to the usual 10 per cent to minimise the financial risk.”
 
The agency says that in terms of its London activities, one in five property sales underway in London when the pandemic struck have fallen through “meaning the vast majority of buyers and sellers have held their nerve.”
 
“You’d be surprised by how much activity there still is. Buyers and sellers can see what is going on in the world and are most are prepared to wait it out. Some sales are falling through but you’d expect that in a normal market” explains James Clarke, head of London sales at Knight Frank.
 
The agency warns that of course the number of new deals starting from scratch is now small, but the pipeline that existed a month ago was buoyed by the new year ‘release’ of pent up
 
The agency says that although some buyers are requesting price reductions to reflect the added uncertainty created by the pandemic, it is happening in an ad hoc manner.
 
“One buyer asked for a reduction to cover their rent between now and whenever the completion date will be” says James Gubbins from Knight Frank’s Mayfair office. “We worked out the buyers’ daily rent and suggested that instead of the reduction the vendor would cover their rent, showing they were prepared to do everything they could to get the deal completed as soon as possible.”
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Love it or loathe it? Help To Buy to be beefed up after lockdown

Love it or loathe it? Help To Buy to be beefed up after lockdown

The controversial Help To Buy scheme looks likely to be expanded in breadth and extended in duration to help kick-start the housebuilding industry after the lockdown.
 
Currently the scheme helps buyers of new build homes with an equity loan worth 20 per cent of the value of a property; it is due to be phased out between spring 2021 and 2023.
 
It’s been widely reported that the housebuilding industry and its trade bodies have told the government they fear a long-term slowdown will impact on new build volumes; Savills estimates that work has stopped on sites which could accommodate some 200,000 new homes.
 
Meanwhile the former head of the civil service and permanent secretary at the Ministry of Housing Communities and Local Government is also urging Whitehall to beef up Help to Buy.
 
Lord Kerslake told the Housing Today magazine: “I think the challenge is going to be to restore confidence after what has been a big health and economic shock. The sort of things you’ll be looking for is where the government can give confidence to the market, particularly on build for sale, with things like Help to Buy… I think they should at least be putting it on the list of things to be talking about.”
 
Help To Buy has had a mixed reception in the months leading up to the virus outbreak, with critics suggesting that many of its buyers did not need the financial assistance it gave, and that the single biggest effect of the scheme was to inflate the stock market value and profits of many of the country’s largest housebuilders.
 
Supporters say it has helped large numbers of purchasers – the majority of them first time buyers – on to the ladder in better quality homes than they would have bought without the intervention.
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How will the economy survive the current crisis?

There is no doubt that the current crisis, is one of the greatest tests our economy has faced in decades. There are without doubt, many small to medium sized businesses that will suffer greatly, despite the drastic steps taken by the chancellor to lessen the blow. Personally, I feel that rents, rates & interest should have been suspended during this period, to minimise the damage of this terrible situation.

However, moving forward, the question we may all be asking ourselves is, how will the economy cope with this? What will happen to the property market when it is brought out of deep-freeze? Despite the alarming figures suggested by many media sources, this is not the same as the banking crisis of 2008. The banks are in good shape, borrowers are not in negative equity and there is a very large number of businesses that have been able to continue operating though this crisis, albeit at a skeleton level.  The manner in which the nation exits from lockdown may have serious implications on what happens within the first few weeks, which is of paramount importance.

There are also factors at a greater level that once again, may save this island nation of ours. Whichever side of the fence any of you may have been during the charade that was Brexit, I would hazard a guess that even the most ardent of remainers must now be doing their sums and breathing sighs of relief (quietly of course) that the prospect of our economy being shackled to the chains of a financial abyss that may well be Europe after this, will be safely independent.

After the financial crisis of 2008, money poured in to the London market from countries outside of the EU because were WERE NOT part of the Euro, indeed, we were a safe haven. Most rising property markets are ‘bottom-up’ markets, that is, property at the bottom rises and pushes prices up throughout the market. The ripples that begin at the bottom in London, work their way upwards and outwards, not only throughout London, but gradually throughout the whole country. However in 2008, this was not the case, it was a ‘top-down’ rising market, investment from the top, raised the prices at the top end of the market in London, which for the first time , worked their way downwards pulling prices upwards. This is without doubt testament to our wonderful currency, the faith in our first class national credit rating.

It is without doubt, that if the forthcoming weeks and months are handled correctly, which I am very confident of, not because of party politics, but due to faith in the fiscal policy of those in charge, that our economy will not just bounce back, it will actually REBOUND.

Therefore, the issue we currently face is to get through the current crisis safely and to use this time to re-connect with our families, to re-connect with that which is most important and also to prepare to re-start our nation and recover, socially, commercially and financially.

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First ‘virus’ survey shows sellers expecting a five-month delay

First 'virus' survey shows sellers expecting a five-month delay

What is thought to be the first survey of sellers since the start of the Coronavirus outbreak suggests that they anticipate a five-month delay to their plans.
 
This means that the usual spring market surge may take place in late summer, assuming restrictions allow something like normal business to resume.
 
A survey conducted for online mortgage firm Trussle by polling organisation Censuswide shows that 49 per cent of those planning to buy decided to stop looking for a new home as a result of the lockdown.
 
However, fewer sellers pulled the plug with just 20 per cent deciding to halt proceedings on the sale of their home.
 
Overall, both would-be buyers and would-be sellers expect to defer their property plans for an average of just over five months.
 
“With the government’s latest plea discouraging buyers from moving house, It’s entirely understandable that people are putting off their housing plans” says Trussle chief executive Ian Larkin.
 
“At a time of financial uncertainty, it’s a good time to think about your personal outgoings. We know that people could save an average of £4,100 per year just by switching their mortgage to a better deal.
 
“During these uncertain times, people are taking steps to protect themselves financially. Reducing mortgage payments, the biggest monthly outgoing most homeowners will face, is a priority for many.”