Fears grow that new mortgage drought could hit house prices

Homeowners have been told to expect another slide in property prices after the
general election as fears grow that rising unemployment and a second wave of
mortgage shortages will suffocate the fragile recovery in the housing market.

House prices fell 1.5 per cent in February after seven months of uninterrupted
growth, according to the Halifax, the UK’s biggest mortgage lender. It says
that buyers were deterred from visiting estate agents by the severe cold
weather and changes to stamp duty.

However, Hetal Mehta, an economist from Ernst & Young, warns that a fall
in mortgage approvals in January backs up the view that “the market is
running out of steam”.

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Selling your home without an estate agent

Selling a home without an estate agent can save you thousands of pounds, but it takes time and knowledge. A new Tesco service, iSold, offers a compromise: a no-frills online agent’s package for £999, all-in.
The price is attractive. A recent study by the Office of Fair Trading (OFT) indicates that a third of sellers believe that estate agents’ fees offer poor value. But can the iSold service work?
Mark McLaren, of Which?, the consumer group, thinks so. He says: “We’re with the OFT in wanting to see innovation in the market that does not come at the cost of consumer protection. iSold would appear to provide this.”
The service is a joint venture from Tesco and Spicerhaart, the estate agent. It will be launched in Bristol within weeks, before being rolled out nationwide.

Its “essential” £999 deal covers an agent’s valuation, property description, floor-plan and photographs; a “for sale” board; and listings on the big property websites such as rightmove.co.uk. The seller conducts viewings, but iSold staff act as middlemen in any subsequent negotiations.
Under this deal, savings on a typical estate agent’s fees of 1.5 per cent would be £2,085 on a £175,000 sale; £6,051 on a £400,000 property.
Steve Shore, of iSold, says: “We do everything that you would expect from a high street agent, apart from taking viewings — and many agents no longer do that. Clients often tell us that they prefer to show people round themselves, as they know their house better than anyone.”
The iSold “premium” package, at £1,199, adds a 3-D tour for online ads, plus local newspaper (and other) advertising for an open house event. The “premium-plus” deal at £1,299 provides sales staff to host the day’s viewings.
Customers pay either £299, £499 or £599 up-front for the three packages.The final £700 is paid on completion.
The deals do not cover the non-agency costs of selling, such as solicitors’ services and the Home Information Pack (Hip) and Energy Performance Certificate (EPC). However, Mr Shore says that the company will offer all these at competitive rates.
Linda and Kevin James are one couple who plan to use the iSold premium-plus service. They put their four-bedroom house in Bradley Stoke, near Bristol, on the market in January for £280,000, but have had little serious interest.
Mrs James, 59, says: “We’ve had offers of £250,000 and £260,000, which isn’t even close. The agent is not getting us many viewings, so we have given them notice and hope to do better with iSold.”
She adds that the current agent charges a “good rate” of just under 1 per cent on completed sales. If the couple sell with iSold, they will save about £1,400.
The Little House Company offers online agent deals similar to iSold at thelittlehousecompany.co.uk. For example, sellers can get a valuation, floor plans and photographs, listings at the big property websites, a “for sale” board and use of negotiators for £425 (plus Vat), or £195, with an extra £495 on completion (also plus Vat).
However, Nick Marr, of The Little House Company, says that its cheaper “private sale” packages are far more popular. These provide listings on the company’s own website (£85) or, for £135, on its site and 500 others. The “all-in-one” package at £415 also includes a valuation, Hip, EPC and “for sale” board. However, none of these deals covers ads at rightmove.co.uk, globrix.com and other popular websites that do not permit private sale listings.
Private sellers at The Little House Company and similar sites, such as houseweb.co.uk, must decide a price and provide property details and photographs. These must comply with the law and not mislead prospective buyers. Sellers can get advice at the websites which.co.uk, oft.gov.uk and adviceguide.org.uk.
Mr McLaren, of Which?, says that sellers should be able to find their own buyer with relative ease, and points out that private sales (via small ads) were common until the 1980s.
Barry Thomas used one of The Little House Company’s private sale deals when he sold his mother’s house in Forest Gate, East London, this year. He says: “We had tried an estate agent, who wanted 1.9 per cent commission — and was unhelpful. Selling privately was easy. When viewers seemed serious, we gave them our solicitor’s contact details and said they should ask their solicitor to get in touch. It took nine months, but we got £250,000, which was what we wanted, in a difficult market. I was keen for my mother to keep as much of her money as possible. In the end, we spent less than £500 and saved more than £4,000 in fees.”
Mr Thomas says that a “for sale” board attracted about 60 per cent of the people who came to see the property, with the remainder prompted by the online ads. He has now listed his three-bedroom home, in Chadwell St Mary, Essex, on the website at £185,000.
Mr Marr says: “Our typical client is in his or her late forties to early fifties and selling a home for more than £400,000. These are people who have sold with agents before and know how the market works but have not received good value. Because their homes are worth good money, they stand to save £5,000-plus on fees.”
He says that many clients use his company’s private sale services alongside an estate agent — hoping to find their own buyer first. The law states that home owners who advertise privately alongside an agent are not liable to pay the agent commission under a sole agency agreement if they find their own buyer. It can be more complicated in reality, however, as some “private sale” sites may be classed as an agent.
To be safe, sellers should ask to add a clause to their agent’s contract confirming that no commission is due on a private sale, Mr Thomas says. They should also note that some agents will charge for marketing, even when they do not manage to secure a sale.
Private sellers have other options aside from the internet. Local sign-makers can provide a “for sale” board for about £50, which should drive significant passing interest, as should ads in local newspapers and shop windows. Word of mouth can also help.
Private sales not made on the open market (sales to friends, for example) have the advantage that they do not require a Hip.
How to use estate agents
• If you decide to use a traditional estate agent, be sure to shop around. You can search for members of the National Association of Estate Agents (NAEA) by postcode at NAEA.co.uk. Speak to several local agents and ask them to list all their services, plus fees and charges (and which of the latter are payable even if they can’t find a buyer).
• Check terms and conditions carefully. Under a sole, joint-sole or multi-agency agreement, you are entitled to search for a private buyer while your property is on the agent’s books — and should not be charged commission if you find one (see main text). However, you may not instruct another agent to act for you until your notice period is up. If you sell via a second agent during this period, you could be charged double commission. Under a sole selling agreement, you may be liable for commission on sales made either privately or via another agent.
• Which? has free template letters to use if you wish to withdraw an instruction, or you believe that you have been unfairly charged commission, at which.co.uk.
• TheAdvisory.co.uk covers all aspects of selling your home , with information on agent and private sales. The site concludes: “We feel that online estate agency services [such as those from iSold and The Little House Company] give sellers the best chance of successfully selling privately and saving many thousands of pounds. For the money, their service is unrivalled.”
• The Government also has useful advice at direct.gov.uk. This states, for example, that customers unsure about an estate agent’s contracts should get advice from a solicitor or their local Citizens Advice Bureau.
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Mortgage lending falls as buyers leave market

Homebuyers abandoned the housing market in January after the end of the
holiday on stamp duty.

The Council of Mortgage Lenders said that the number of all home loans issued
in January had fallen by 49 per cent to 32,000 mortgages. The total was, it
said, an emphatic demonstration of the temporary lift that the stamp duty
break had given the housing market.

The CML said that lending was expected to remain weak over the next few
months.

The number of loans to first-time buyers fell even more steeply, by 54 per
cent to 11,300.

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Interest rates on popular mortgage deals at 6-year low

Homeowners who are able to secure a new mortgage are benefitting from the
lowest interest rates in more than six years, Bank of England figures show.

The average cost of a two-year fixed-rate deal has fallen to 3.88 per cent
last month, down from 3.97 per cent in January and the lowest level since
July 2003.

There was also a fall in the average cost of a five-year fixed rate mortgages,
which dropped to 5.49 per cent from 5.56 per cent the month before.

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"Green loans" to make homes more energy efficient

Homeowners will be offered “green loans” to cover the cost of making
their properties more energy efficient, under plans unveiled by the
Government today.

The cash can be used to buy solar panels or other technology to generate
electricity, spreading the upfront cost over a number of years. Households
can also use the money to better insulate their property, cutting energy
bills.

Some six million homes will be insulated by 2011 under the Green Strategy
claimed Ed Miliband, the Energy Secretary. All lofts and cavity walls, where
it is practical to do so, will be insulated by 2015 and seven million
“eco-upgrades” will be offered to householders by 2020.

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Sterling tumbles amid growing fears of hung Parliament

Sterling plummeted to a nine-month low against the dollar today and could
tumble further, analysts warned, as fears mounted that the general election
could result in a hung parliament.

Sterling fell 2 per cent to $1.4943 at one point, its lowest since early May.
It also plunged against the euro, to €1.0991, its lowest since the end of
November.

Investors‘ concern was fuelled by weekend opinion polls indicating that a hung
parliament looked more likely. They fear that the lack of a clear majority
in the House of Commons could lead to political deadlock over a solution to
the country’s ballooning debt problems.

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House price slide could be start of longer downturn

The UK’s largest building society said a second downturn in house prices may
be on its way, after it recorded the first fall in average values for 10
months.

The average house price fell 1% to £161,320 in January, according to the
Nationwide building society house prices index published last week. This is
13% lower than the peak of £186,044 in October 2007, although values have
recovered 9% from the trough of £147,746 in February 2009.

Nationwide said it was “too early to say” if the fall was the start of a
trend, triggering yet more uncertainty for borrowers. Martin Gahbauer,
Nationwide’s chief economist, said: “There is evidence from a range of
indicators that the market may have lost momentum in early 2010 as the stamp
duty holiday ended and house hunters were obstructed by the icy weather.”

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House price dip may be good news in the end for economy

The first fall in house prices for ten months could be a “positive
development” that prevents the housing market from racing ahead of the
general economy, Britain’s biggest building society has said.

House prices went into reverse in February, falling 1 per cent on the previous
month, as factors such as the snow and the expiry of the stamp duty holiday
discouraged buyers and pushed down prices, according to Nationwide. The
average price of a property in February was £161,320.

House prices rose by 1.4 per cent in January. However, Martin Gahbauer,
Nationwide’s chief economist, said it would have been surprising if house
prices had maintained the upward momentum seen for most of last year.

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Santander gives first-time buyers new hope

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Santander will today open its doors to first-time buyers of new-build property for the first time since the banking crisis began.
The UK’s second-biggest mortgage bank — formerly Abbey — will increase the maximum loan sizes for first-time buyers who want new apartments or houses in a move designed to stoke activity at the bottom of the housing ladder.
The limit for first-time buyers of new apartments will rise from 70 per cent of the property’s value to 80 per cent, while for those buying houses the limit will rise from 80 per cent to 90 per cent. The bank’s loan-to-value (LTV) limits for non-first-time buyers of newly built property will remain at 70 per cent for apartments and 80 per cent for houses.
The decision will slice thousands of pounds off the savings pot that first-time buyers need to get a loan. The move was welcomed by housebuilders, which have struggled to sell one and two-bedroom properties — typical first-time buyer purchases — because of the huge deposits that lenders have required.

The deposit needed by a Santander customer on a typical first-time buyer new-build house costing £160,000 will now be £16,000, rather than £32,000.
Commentators said the decision was a sign that lenders had a renewed appetite to compete at the bottom end of the market, after banks all but shut out first-time buyers almost two years ago. The last time Abbey lent a 90 per cent mortgage on a new-build property was in March 2008.
It was also a sign that lenders’ confidence in new-build valuations was returning, after taking a knock as a result of falls in value of up to 50 per cent for some city centre apartments.
A senior figure at a large UK housebuilder said: “This is potentially very significant. This addresses the issues of selling new-builds to first-time buyers and that is where the real issues have been.”
Stewart Basely, executive chairman of the Home Builders’ Federation, said: “Provided the terms and conditions are competitive, we know there is a huge pent-up demand for such a product.”
Santander will offer a two-year tracker at 4.99 per cent with a £995 fee up to 90 per cent, or a 5.99 per cent three-year fixed rate with a £495 fee.
The announcement comes as the first signs of a double dip in the housing market began to emerge. Housing transactions plummeted by more than 30 per cent in January, from 100,000 in December to 67,000, according to HM Revenue & Customs. Meanwhile figures from the British Bankers’ Association showed that mortgage lending fell to its lowest level since May 2009 in January, down by 23 per cent from December to 35,083, because of the bad weather and the end of the stamp duty holiday. Separate figures on the new-build market showed a 0.9 per cent decline in the average price of a new build in January.
Brokers said that while the Santander deal would benefit first-time buyers and boost competition, other lenders including Woolwich and Northern Rock offer more generous LTVs on some deals.

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OFT warns letting agents to amend unfair terms

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Tens of thousands of landlords could be in line for refunds after the Office
of Fair Trading (OFT) confirmed that it was writing to a number of letting
agents warning of unfair contract terms.

The move follows a final ruling in the High Court yesterday regarding a case
brought against Foxtons by the OFT.

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