Buying, selling and letting - September, 2005

Mortgage lending up

Mortgage lending gained pace in August, according to the British Bankers’ Association (BBA), and this has been taken as a sign that the worst of the housing market slowdown is over.
Underlying mortgage lending rose by £4.3 billion last month, according the BBA’s report; this figure has been seasonally adjusted. The figure is a vast improvement on July’s £3.7 billion and is on an even keel with the monthly average of £4.4 billion of the last six months.
In a separate report the Council of Mortgage Lenders (CML) said gross mortgage lending (excluding redemptions) rose by nine per cent in August to £27.5 billion, the highest amount since July last year.
The rise was mainly driven by remortgaging, the CML said.

Price decline at lowest in a year

House prices continued to fall in August, according to the Royal Institution of Chartered Surveyors (RICS). However, declines were the smallest for a year and support an overall picture of a stabilising market. Chartered surveyors reported that the pace of price falls eased across the country, with modest rises still evident in Scotland.
Completed property sales rose for the second month running, which suggests that a degree of confidence is returning to the market. In addition, enquiries from would-be buyers rose for a third consecutive month, up at the fastest pace since January 2004, as the August interest rate cut provided a lift to confidence.

Investors returning to market

Investors have come back to the new homes market during September, heralding a revival in the housing market and avoiding a repeat of last year’s autumn market ‘hibernation’, reports house builder Linden Homes. Research carried out by Linden shows that reservations of new homes across the UK during the first two weeks of September this year stood at 2,196, compared with 1,484 during the same period last year, a 47.9 per cent increase. A staggering 83 per cent of Linden’s units in key Sunningdale and Dorking sites last week were sold to investors.
Philip Davies, Chief Executive of Linden Homes comments, ‘I am encouraged by the numbers of investors returning to the market this September and making reservations. Professional landlords with plenty of cash have held their nerve over the summer but many were choosing not to expand their portfolios until now. They are investing for the long term and are not expecting a return to the house price inflation of previous years.’

2005’s widely predicted housing market crash has failed to materialise and instead the market appears to be heading for an autumn resurgence, as fears of sizeable drops in house prices subside. House hunters are now expecting prices to remain broadly stable into 2006 – and this has caused a noticeable change in attitude amongst buyers.
August’s reduction in interest rates to 4.5 per cent has restored faith in the market to some extent, especially for first-time buyers who feel more confident taking on their first mortgage at the start of a probable downward trend in rates.
‘The combination of a more realistically priced secondhand home market and a general lowering of expectation regarding sale prices mean we can look forward to the market gathering momentum over the autumn period,’ says Davies.

Jeremy Leaf, Housing Market Spokesman for the Royal Institution of Chartered Surveyors, offers some guidance about choosing and using a surveyor.    

Making the most of your surveyor
 
Q    How much should a surveyor cost? Is there a national standard rate?

A    There is no national standard rate for services provided by a surveyor. Each surveyor sets their own charges and the cost of carrying out a RICS HomeBuyer Survey and Valuation or a Building Survey will normally be related to the size or value of the property.  Surveyors will usually set their charges having regard to the fee structures of other professional practices in the area but it is worthwhile comparing costs and ascertaining the services on offer.
 
Q    How do I find a surveyor?

A    The Royal Institution of Chartered Surveyors can assist you in finding a surveyor in your area who provides the services you are seeking either via their website on www.rics.org  or by telephone on 0870 333 1600. Alternatively it is a good idea to obtain recommendations from friends or relatives who have recently used the services of a surveyor.

 
Q    Should I use a lender's valuation surveyor for any extra reports? Why or why not?

A    Using a lender’s valuation surveyor for extra reports can be a way to reduce costs as many, but not all, valuers will be able to carry out a private survey for the purchaser at the same as providing a valuation for the lender. Employing two separate surveyors is likely to be more expensive.  However, some purchasers prefer to have sight of the valuation report prepared for the lender before deciding to proceed with the purchase and committing themselves to further expense. If the lender’s valuation is substantially below the agreed purchase price or major defects are found the purchase is likely to prove abortive and any money spent on a more detailed survey will have been wasted.

 
Q    Should I use a surveyor recommended by my estate agent? Why or why not?

A    Chartered Surveyors have a duty of care to their clients but there is a perception among some purchasers that a surveyor recommended by the selling agent may be less critical of the property being inspected than one who has no contact whatsoever with the agent. Furthermore, some purchasers are wary of their surveyor discussing the results of the survey with the selling agent. Some buyers stall for time by blaming delays on their surveyor being “booked  up for weeks”.  The selling agent would prefer to have contact with the surveyor to monitor exactly how the sale is proceeding.  In most cases it is best to ensure that there is no possible conflict of interest.

 
Q    What should people expect from a surveyor?

A    Before instructing a surveyor it is important to establish the exact nature of the service being provided so that the client’s expectations are adequately met.  The client can certainly expect the appointment to be made, the survey carried out and the report prepared within a reasonable and usually previously agreed time scale. Some clients like to meet the surveyor at the property during the survey to discuss defects found or to speak to the surveyor on the phone soon after the inspection.  Not all surveyors are happy to do this and may only be prepared to have a discussion with the client after the report has been prepared. The client needs to clarify the level of communication which will be provided.
 
Q    What should people think about before getting a surveyor?

A    Before getting a surveyor the client needs to think about what they expect to achieve by commissioning a survey and how detailed the information about the property being purchased needs to be. Some clients want to be told about every single minor defect down to a loose door handle or missing bath plug whereas others only want to know whether there is a serious major defect.  The type of survey being commissioned will depend on the level of detail required as well as the type and age of the property.  An initial discussion with the surveyor should help the client in deciding how to proceed.

 
Q    What should I ask my surveyor before contracting one?

A    Before contracting a surveyor to act for you the client should ask whether he has experience of carrying surveys of the type of property being purchased in that location and will be able to meet any required deadlines.  In some cases a surveyor finding a major problem will contact the client and ask whether they wish him to proceed with preparation of the report. If no report is required due to the purchase not proceeding a reduced fee may be payable but this needs to be clarified at the outset.

 
Q    What are the common complaints or problems with surveyors experienced by homebuyers?

 A    Common complaints experienced by home buyers are often the result of lack of communication or a misunderstanding regarding the amount of detail which will be provided in the survey report.  Some defects present in the property may have been covered by carpets or furniture at the time of the inspection but become all too apparent when the property is vacated. The test is really whether a reasonably competent surveyor could have identified the defect at the time of the inspection or could have been aware of a potential defect requiring further investigation. In many instances advice given by a surveyor is ignored by prospective purchasers because they are so keen to proceed with the purchase.  

Q    What can people do if they think they have had bad service from a surveyor - is there a complaints procedure?
A    If people do experience bad service from a surveyor they should initially contact the surveyor’s practice which should implement its complaints procedure. This will normally involve another member of staff or an associate investigating the complaint to ascertain whether it is a valid one.  If a client is still not satisfied they could contact the RICS which can instigate a mediation process.  In most cases the matter can be resolved between the parties in this manner but in some cases the clients will wish to exercise their legal rights in the courts.

 
Q    Finally, what three key questions should I ask my surveyor?

A    The three key questions to ask a surveyor before giving instructions are :

Are you qualified to carry out the work required ?
When can you carry out the work ?
How much will it cost me in total ?

The best way to get a surveyor to be too busy to help you is to ask “Can I sue you if you make a mistake ?”

Recovery linked to rate drop

One month after the Bank of England lowered interest rates to 4.5 per cent the market is already showing signs of a recovery, according to the latest figures from the National Association of Estate Agents (NAEA). Following August’s decrease, the first in over two years, consumer confidence is rising once again. Both the number of buyers and the number of sales were up in August. The number of houses on estate agent’s books also increased as sellers regained confidence in the market.
Agents reported that the number of house buyers on their books rose 4.6 per cent in August, from 350 to 366 per agent, demonstrating renewed consumer confidence as the holiday period reached its peak.
Sellers also demonstrated increased confidence as the number of new instructions rose 3.7 per cent from 13.6 to 14.1, with the number of houses available increasing 40 per cent, from 55 to 77 per agent. The 2005 housing stock figures were also up on the same time last year, when an average of 61.4 houses were available per agent, in a further sign that consumer confidence is returning to more normal levels.

The number of sales agreed increased by ten per cent between July and August, from ten sales per agent to 11. With sales figures now at similar levels to those of August last year – when agents reported an average of 10.7 sales – it seems that the market is indeed getting back on track.
However, while numbers were generally up in August, buyers were still demonstrating a degree of caution when choosing property. The number of viewings before a sale remained steady at 15, up from 13 in August 2004, and the number of weeks between instruction and exchange also remained fairly consistent, with a slight rise from 19 in July to 19.6 in August.

Council tax revaluation postponed

The government has shelved plans to revalue homes for council tax purposes until after the next General Election. The revaluation was supposed to be in place for April next year. David Miliband, local government and communities minister, denied the move was a political ploy aimed at avoiding fallout from expected rises just before local elections.
Council tax was put in place in 1991, and with the steep rises in property prices since then the figures now look grotesquely out of date: band D, for instance, applies to properties that were then worth between £68,001 and £88,000.
Peter Bolton King, chief executive of the National Association of Estate Agents, said: ‘The NAEA was pleased to hear the decision to delay the revaluation of council tax. This has clearly been causing concern to a number of people who will feel relieved that the threat of increased council tax payments has been lifted.’