Caveat Emptor

In these days of consumer protection it is wise to remember that no amount of HIP’s, Property Misdescriptions Acts, Estate Agents Acts or Seller’s Property Information Forms can protect the country house buyer from a property seller’s blatant misrepresentation.

One of our more frequent experiences is the owner who never bothered to get Listed Building Consent for their “small” alterations - and who, when faced with the question on the Sellers Property Information Form “Have any (building works/change of use/conversion, etc.) taken place to the whole or any part of the property (including the garden)” followed by “was planning permission, building regulation permission or listed building consent obtained” will answer “no” and “not necessary” -instead of telling the truth.

Understandably, in the case of the latter, there is confusion on the part of some owners – who do not realise that it is the whole of a property that is covered by a Listing, not just the building itself or those elements described in the Registry entry. 

However, as we research the entire planning history of any property we purchase for our clients as a matter of course, the truth will inevitably ‘out’ (although there are occasional cases that we only spot through looking at old copies of sale brochures held on our files).

What is disturbing is that, in the case of Listed buildings (even those of Grade II), few people realise that undertaking works without gaining the necessary listed building consent is a criminal offence – and that the breach passes with the property (i.e. it does not “lapse” once it changes hands). True, few Listed Buildings Officers are in a position of ‘proving’ many small breaches – but, in one recent case, suspicions were sufficiently aroused for our clients to commission independent listed building consultants to undertake a comprehensive check - resulting in the vendor having to apply for retrospective listed building consent covering an extensive number of breaches (although the majority passed muster, parts of the building had to be restructured or demolished).

In the case of properties that are not Listed, it is easier to overcome such economies with the truth – as many works which were undertaken more than four years ago simply need a Certificate of Lawfulness. However, this does not obviate the need to gain retrospective building regulation consent, where this is necessary!

Whether seeking a CLUED or retrospective consents, the delay and uncertainty can test the patience of even the most committed buyer.  This is a particular niggle, in the case of Building Regulations applications that were never ‘signed off’ by the Council at completion – as most Councils react somewhat lethargically to the usual panic requests for immediate attendance! 

The moral for the diligent owner should be to obtain the necessary consent the moment the decision to sell is taken, in the event that it was ‘forgotten’ at the appropriate time! 
 

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Colin Mackenzie
11th November, 2008

Classic country houses on the market

Serious country property buyers are prepared to defy the market downturn in order to secure the house of their dreams.

Even if the UK housing market generally is crumbling around our ears, how many genuine country-house buyers would pass up the once-in-a-lifetime chance to purchase the house of their dreams? Very few, I suspect, even in these difficult times. As Freddie Dryden of Strutt & Parker in Lewes, points out, 'when someone is buying a house to live in for the next 20 years or more, they're less likely to worry about paying a few thousand pounds over the odds'.

It was a gamble that worked for the vendors of the early Victorian, Grade II* Listed Old Rectory at Rodmell, near Lewes described by Pevsner as the 'the prettiest house' in  this picturesque downland village. Having launched it on the market in late September with a guide price of £1.3 million, Strutt & Parker had a sale agreed in less than three weeks. Mr Dryden is hoping for a repeat performance with the classic, Grade II Listed Old Vicarage at Chiddingly, 10 miles from Lewes, which comes fresh to the market with a guide price of £1.25m.
 

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Penny Churchill, Country Life
 6th November, 2008

Hush-hush report finds consumers rate HIPs as poor value

Labour ministers have been accused of trying to bury bad news about Home Information Packs after damning research was quietly published just before the weekend last Friday afternoon.

The report, published by Communities and Local Government, includes the key findings that both buyers and sellers say the cost of a HIP is not balanced out by its benefits, and that HIPs have made buying and selling more complicated.

The media was not alerted to the report, snappily called ‘Home Information Packs, Consumer Focus Group: Qualitative Research Summary Findings’. No press release was issued.

While the research by Ipsos MORI has been conducted independently for CLG, the department appears to be distancing itself from the findings.

CLG makes it clear: “The findings in this report are those of the authors and do not necessarily represent the views of the Department for Communities and Local Government.” CLG also stresses that qualitative research “should not be interpreted as definitive or statistically representative” and says it does not provide “robust evidence”.

CLG has been given the opportunity to say why the press was not alerted to the report, and Estate Agent Today will update this story if we get a response.

The report is based on 12 focus groups – two each in Stockport, Nottingham, Cardiff, Maidenhead, Birmingham and London – consisting of a total of 102 people. These included buyers – among them first-time buyers – and sellers.
 

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Estate Agents today
5th November, 2008

Market Comment - November 2008

The correction in the housing market continues to unfold with unprecedented speed. This month has seen co-ordinated government measures to inject capital into the banking sector and provide long-term liquidity to the financial system. This should hopefully stabilise an extremely fragile situation, but is not expected to prevent a period of falling economic growth.  The construction sector is already in recession having suffered falling output in two consecutive quarters. GDP fell 0.5% in Q3 and we expect a similar fall in Q4 to confirm that the economy is officially in recession.

Inflation was the barrier that had been preventing the MPC from cutting interest rates to support the economy. But with the economic outlook having deteriorated dramatically and inflation more certain to fall as a result, interest rates were cut by 0.5% in October. Further cuts are expected from the Bank of England before the end of the year and rates are rumoured to fall as far as 2%, possibly even lower in 2009.

Lower interest rates should eventually provide some support to the housing market but only when lenders start to offer more attractive terms on mortgages. The Government’s rescue package should also mean lenders are more able to ease their lending criteria and so increase the supply of mortgages.

However, given widespread expectations that the correction has further to run, many potential buyers are biding their time before entering the market. Transaction levels stood at 746,000 as at the end of September – this is 41% lower than the first 9 months of 2007. In September transactions were 54% lower than a year earlier.

Nobody can know how long this is all going to take to turn around and we should be highly speculative of anyone who claims to be able to do so. At Garrington, our best guess is that prices have another 10% - 15% to fall, but that the market should have stabilised towards the end of 2009. Consequently many people will find themselves in a ‘negative equity’ situation and should attempt to recognise that whilst it might not ‘feel very nice’ if a home is worth less than was paid for it, or worse, less than the money owed on it – so long as the monthly repayments remain affordable and owners are not forced into selling – negative equity doesn’t actually come home to roost.

Having said this, a rise in unemployment is certain during the months ahead. Given that falling house prices will have either reduced, or removed, equity cushions that many people had in their homes – a rise in the numbers of unemployed homeowners, will surely bring with it a rise in forced selling and repossession across all price brackets. It will be a difficult time.

On the positive side, the mortgage market will be improving and interest rates will be dropping. I suspect prices will start to stabilise during Q3 2009, but that concern over the economy and the hangover of reduced lending from the banks will keep a lid on activity levels until 2010. Considering how the total numbers of transactions have practically halved over the last two years, it is not unreasonable to conclude there are already upwards of 1 million people living in homes they ideally would have liked to have moved out of. From which I assume that once the market returns, these buyers will immediately plan to move home. As soon as liquidity, as well as confidence, both turn positive, then there is a chance that we could see a significant bounce.
 

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Garington
November 2008

How low can interest rates go?

Economists are predicting that interest rates will tumble to a record low in the next year. The Bank of England cut the base rate by one and half percentage points to 3 per cent on Thursday, but the expectation is that it will fall even further as the UK economy plunges into recession.

One in three people expects the base rate to drop to 2 per cent, or less according to a survey by Fool.co.uk, the financial website - a view echoed by City experts. HSBC expects it to be at 2 per cent by the middle of next year. Jonathan Loynes, chief European economist at Capital Economics, the research consultancy, is plumping for 1 per cent. Some recon that even zero per cent is a possibility.

Such lows would be uncharted territory for the UK. The base rate has not been near such levels since 1951, when it stood at 2 per cent. The most recent low point was a cut to 3.5 per cent in 2003.

Here we explain what such a dramatic drop in interest rates will mean for your finances.

 
 

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Times Online
6th November, 2008