The current market - lethargy or opportunity (drought in every sense?)

With hosepipe bans already in place, spring certainly seems to have arrived early this year – but not, as yet, to the pace of the country house market. Despite the 2% increase in SDLT on £2m+ purchases  and the removal of VAT relief on alterations/extensions to Listed Buildings (as well as steadily inflating costs of ownership) demand across the south east remains buoyant – and  the drought of good houses coming openly to the market looks set to continue.

Demand for top-end houses inevitably remains fed principally from London (where overseas interest remains strong, encouraged by the prospect of a safe haven, as well as a weak pound) – but the shortage of quality houses at all levels in the market is also evidenced by the increase of enquiries we have received from owners of highly desirable country houses who can’t find an attractive smaller property to which they can trade down. 

This scarcity of tempting alternatives, combined with apparently ever increasing asking prices (and in the costs of moving) may be the reason behind the 10% drop in valuation enquires (year on year) being reported by many selling agencies;  it is certainly sponsoring a very cautious approach on the part of several vendors, who only want their property to be offered on a selective ‘off market’ basis.

It is probably logical that many of the better known national selling agencies are beginning to voice the importance of adopting a realistic approach to pricing!  – but we wait to see whether, in the bun fight for spring and summer instructions, this aspiration will be heeded. 

Set against the spectre of increasing mortgage rates we are sure that many will look back on the first half of 2012 as having been a good time to sell……..  But, then, we would say that, wouldn’t we?!

Our market forecast for the coming year?  For £1m+ houses in areas of focused demand (i.e. with good prep schools and a <50 minute commute), we expect sale values to hold up well for the first half year, then possibly fall back gradually by 5% - 10% by the year end (by when we predict more choice).  For desirable houses away from the main commuter areas, values have already slipped back by 5% - 10% and we can see further softening in store. 

The only price increases we can predict are those of larger country houses, estates and – especially – traditional farms with a good principal house, where value might well drift up by 5% - 10%, reflecting the shift in wealth ownership and a determination to enjoy it…
 

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The new National Planning Policy Framework - what does it mean?

The publication of the National Planning Policy Framework on 27^th March followed months of indignation from the custodians of the English countryside.  Inevitably, a key concern for our clients when buying a house is the potential threat from intrusive development.  We always investigate and advise our clients on relevant planning policies affecting the property and its surroundings; we also research the planning history of the property and its neighbours.

We usually find the local authority has adapted its historic Local Plan to form a new Local Development Framework (LDF) - in essence, replacing a policy that was cast in stone with a continually evolving system. 

The new National Framework is the coalition’s attempt to simplify planning rules and, most significantly, delegate implementation to local authorities. The Framework sets out a responsibility on every local authority to set out its Local Plan, with clear rules as to how this is to be achieved.  With a transitional period of only one year in which to complete this, we expect existing LDFs to be bent into shape and presented for approval.

Part of the process places a responsibility on local planning authorities to quantify housing need over the period of the plan (Strategic Housing Market Assessment) and identify appropriate sites (Strategic Housing Land Availability Assessment or SHLAA) Most authorities in our area have already undertaken this process, although we anticipate that they will face a deluge of new site submissions, seeking inclusion in the final SHLAA.

With a focus on development of brownfield sites, simultaneously protecting the green belt and conserving/enhancing natural and historic environments (including National Parks and Areas of Outstanding Natural Beauty), the National Framework leaves each local authority as master of its own destiny.

Probably the greatest unknown in the new regime is the ability of ‘Parishes and neighbourhood forums’ to use ‘neighbourhood planning’ to ‘set planning policies’, ‘to determine decisions on planning applications’ and ‘grant planning permission through Neighbourhood Development Orders and Community Right to Build Orders for specific development which complies with the order’. 

The presumption is in favour of ‘sustainable development’ going ahead without delay (although the Framework’s attempt to define sustainable development leaves ample room for confusion) – with an assumption that an application will be approved unless the Local or Neighbourhood Plans give sound reasons why it should not.

What does this mean for our clients?  Unfortunately, until the new Local Plans are adopted and any Neighbourhood Plans are published (probably in twelve months or so), we face an interim period of policy assumption, rather than certainty – particularly for properties in, or on the edge of, towns and villages (as well as in protected countryside where clients are looking to extend or replace an existing house).

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A buyer's perspective - or what is currently in favour

The last 12 months have seen a noticeable increase in the number of enquiries from prospective clients seeking a site on which to build their dream house. Do these “Grand Designers” see this as a route to finding perfection, a yen to be green, or simply a wish to leave their mark on the landscape?

The general presumption against creating new dwellings in the countryside – and the designation of most of the south east either as Green Belt, Areas of Outstanding Natural Beauty or as the South Downs National Park – points to having to create such opportunities from properties where an existing house can be demolished and replaced.

Frequently, this entails risk as, no matter what ‘uplift’ might be insinuated by the policy of the relevant Planning Authority, planning terms such as ‘form’ or ‘bulk’ suddenly take on a wholly subjective connotation, where certainty goes out of the window (and most buyers like to be certain before signing a contract!).

Interestingly, these Grand Designers rarely seem deterred when we have to draw their attention to the likelihood that the costs of acquiring such a site plus the build costs (potentially £200 per square foot for an eco house) invariably total more than the immediate value of the finished project – despite VAT exemption.

One can only wonder at the blank canvas facing the Victorians, when the railway came through; just find the perfect place, buy the land, and start digging footings…..  Mind you, they did plant trees that only our generation can now appreciate!
 

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Caveat Emptor - or a peek at the value of a little due diligence....

As well as researching the planning history of their chosen property and its neighbours, one of the major aspects of the due diligence we undertake for our clients (post agreement and pre-contract) is to walk the boundaries and compare them to the title plan.

To say that they frequently differ is an understatement, but to discover that the Land Registry itself has made an error is highly unusual.  To unearth two such mistakes on the Land Registry’s part in as many months must therefore be unique! 

Impossible as it may sound, we discovered through cross checking a neighbouring title that a small piece of land forming part of the property we were acquiring in West Sussex last September had also been registered to the neighbour.  Fortunately, the property we were buying had been the first to register - so ‘our’ title held sway. 

To say the least, we were gobsmacked to detect that exactly the same mistake had affected a property in Kent we were purchasing only a couple of months later!

Most surprisingly, both cases involved the titles of properties that had both once been owned by the property we were purchasing; surely the same draftsman would have spotted their own error when the other had been ‘sold away’?

It looks to be more important than one might think to inspect not just the title plan of the property being purchased, but also those of its neighbours.