Ed Mead
Politicians have no idea about housing
Politicians have no idea about housing, so said the press yesterday morning. Why should they, it’s a market?
No one has really got any idea, so disparate is our market, and with Labour admitting they got it wrong and CLG carrying out a review of the private housing market it’s perhaps time for everyone to go back to encouraging people to move and to stop hand wringing.
Ultimately various Governments have failingly addressed the supply side of the market, and they’ve periodically tried to encourage the demand side with the resulting boom and busts. So sensitive are homeowners as voters that it wouldn’t be that prescient to suggest that interest rates are watched more for their effect on the housing market than they are for Industry or anything else.
If it is that important why is there so little attention given to keeping the wheels oiled. It’s been an immutable law that as Stamp Duty has gone up so the volume of sales has gone down. The plethora of amateur (and apart from the Land Registry that’s all they are) commentators can say what they like about whatever sector but volumes continue to fall and we’re about to get another cynical rise that’s going to lead to a further contraction.
Is it really that much of a leap of faith for the Coalition to accept that the best way they can free us the supply side of the property market is to put Stamp Duty where it should be, at 1%? There’s little doubt prices would come down in the short term but those voters they help move and get on the ladder would, I’m sure, be eternally grateful.
Ed Mead is a regular contributor to The Big Property List blog. An Estate Agent for over 30 years, he has been writing and commentating on the market for over half of that as the Sunday Times Property Expert and The Agent Provocateur for the Telegraph. He sits on the Board of The Property Ombudsman Ltd, has a regular LBC slot, and is happy to say it as it is.
Other places you can find him online are the Douglas & Gordon blog and Twitter
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Garage sales and gardens
Interestingly I’ve just been asked to dispose of a chunk of garden. It sounds simple and relatively inexpensive. A couple of years ago an agent in Knightsbridge was asked to dispose of a garage, and by the way this story has buggered up almost all garage sales since.
The agent suggested a guide that sounded pretty punchy, c. £150k I recall, and expected to get offers on what was, after all, a single lock up garage with no other planning angles. What they didn’t expect was to get two super rich egos to decide they wanted to have a ‘mine’s bigger than yours’ competition. The resulting price was over four times the guide and the owner must have though all their Christmases had come at once.
I’m not sure the garden will go the same way but it is possible. Surrounded by some of the most expensive real estate anywhere in the world, nine stucco fronted porticoed jobbies to be precise, lived in mostly I suspect by people who move money around and get paid a fortune for doing so.
It’ll be fascinating to see what someone will pay to add c.1000 sq ft of outside space, that can only ever be a garden, to their pile especially given that one or two are woefully short on outside space. More soon……….
Ed Mead is a regular contributor to The Big Property List blog. An Estate Agent for over 30 years, he has been writing and commentating on the market for over half of that as the Sunday Times Property Expert and The Agent Provocateur for the Telegraph. He sits on the Board of The Property Ombudsman Ltd, has a regular LBC slot, and is happy to say it as it is.
Other places you can find him online are the Douglas & Gordon blog and Twitter
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Ed Mead is carrying the Olympic torch (not literally)
For many who spent the tail end of last year trying to predict this year it must have seemed a doddle compared to forecasting now. Suddenly the press, and even me, are beginning to sense that although the year may be a dreadful dirge, it does look as if prices in London will end the year higher than they started. This is not saying a whole lot but from where I’m sitting there are occasional deals being done that simply beggar belief, whereas if you wander out of London, particularly in a Northerly direction, the stories are of a very different nature as the press are keen to let us know.
Sadly all commentators agree that volumes will be a victim this year, and many fear this malaise will continue into next year which is depressing. But hang on a minute next year is Olympic year isn’t it? We’re all supposed to feel good about that, and I’ve even registered for tickets as any self respecting Londoner should, but will it be enough to dispel the fog.
One thing everyone forecast, and the auspices loom good, is that rental numbers will increase in London next year because of the 2012 Olympics being here. With perhaps the worst area for sales currently being small flats, no demand from first time buyers still, it’s very likely, and beginning to be the case, that buy to let investors are beginning to lick their lips and dive in. I sat in a meeting with some heavyweight agents yesterday and all the ones I spoke to said if they had money they’d be buying investment property now. The fact that they can’t shows the general level of nervousness and lack of income in the estate agency game at the moment, but perhaps whilst many top end agents gloat about how many £5m plus properties are selling those who deal at the bottom end might just be about to get their own timely boost.
Ed Mead is a regular contributor to The Big Property List blog. An Estate Agent for over 30 years, he has been writing and commentating on the market for over half of that as the Sunday Times Property Expert and The Agent Provocateur for the Telegraph. He sits on the Board of The Property Ombudsman Ltd, has a regular LBC slot, and is happy to say it as it is.
Other places you can find him online are the Douglas & Gordon blog and Twitter
Ed Mead: Sellers need a notional interest rate rise to smack them across the face
Today was a corker. Daily Express headlines saying that the property market is set to surge this year, sadly they were narrow mindedly talking about prices only, and on the same day the FT were talking about prices set to fall.
I’m guessing that overall we know who to believe even if we want to believe The Daily Express.
But it sums up the issues puzzling any buyer or seller. It seems buyers mostly want to get on with it and most sellers exist in a world of inertia, needing a notional interest rate rise to smack them across the face and get them moving.
What I can tell you is that a couple of weeks in to the new year and it’s beginning to look a touch better here in London. A strange confluence of events, namely mortgage rates bottoming out, dollar pegged buyers from India Russia China and the US here in strength, Eurozone buyers worried about the future of their currency and looking for a safe home for their money, and the fact that Stamp Duty Land Tax (SDLT) is going to 5% for transactions over £1m (not that uncommon in Central London), means that perhaps a market that never really kicks off until the end of Jan might just be perking up a bit earlier.
More soon.
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Ed Mead is a regular contributor to The Big Property List blog. An Estate Agent for over 30 years, he has been writing and commentating on the market for over half of that as the Sunday Times Property Expert and The Agent Provocateur for the Telegraph. He sits on the Board of The Property Ombudsman Ltd, has a regular LBC slot, and is happy to say it as it is.
Other places you can find Ed online are:
Douglas & Gordon blog
Ed Mead on Twitter
2011 property market…early signs?
Frankly there wasn’t much appetite or excitement for predicting what might happen in 2011. It’s a mug’s game at the best of times and most of us in the business have been so worn down by the last few months of 2010 that anything would be better. So are the first signs good?
Well it depends again on who you are and what constitutes good. If you’re an estate agent the chances are it’s not looking overly good right now. More of the same grind with no sellers and a frustrated bunch of buyers who have good mortgage offers but nothing to buy.
If you’re a property owner in London chances are you’d be feeling happy with that as the lack of supply is creating the same effect as a strong demand, ie it’s keeping house prices up. Indeed for really good quality property this year is looking very good for values.
But is that what the market needs or wants? For all the people jumping up and down delighted at any woes affecting estate agents it’s worth reiterating that estate agents are the bellwethers of the wider economy. If agents are going bust (and they have been, with 40% of individual agents out of work since 2008), and companies likely to this year, then it means the entire industry that depends on property: building, decorating, soft furnishings, surveying, solicitors, movers etc etc are all in trouble. If people aren’t spending on property the chances are they aren’t spending elsewhere. That’s a universal truth whether you like it or not.
So there’s nothing much more to say as it’s early, and things may yet get busier, but if they were going to get busier I’d be seeing more sellers looking to get their properties valued now with a view to taking on the Spring market. I cannot grasp why sellers aren’t going for it with historical low rates for buyers likely to have bottomed out and price gains from the unexpected bounce last year still crystallised, and perhaps looking as if they may slip later this year. Perhaps we’re back in that dreadful spiral that potential sellers can’t find anything and so aren’t bothering to go to the market.
As usual when these situations arise it’s difficult to see who’ll blink first, and with buyers very reluctant to pay the asking prices some desperate agents are putting on property, I think it’ll be sellers who’ll blink and go to the market, the only question is can the cleverer ones avoid a possible lemming like rush later in the year.
Finding investment property is rather akin to sticking a pin in a map
Last week we thought about buy to let, and whilst that suits certain investors one of the real issues that’s been pondered increasingly is that of institutional money finding it’s way into residential investment.
Commercial property is a safer bet, at least in terms of a solid income, and simpler to manage. Most tend to be for 15 years with the tenant responsible for all rent and rates as well as insuring and repairing the premises. With luck the investor gets the rent paid, upwards only rent reviews and is handed back premises in re-lettable condition. Capital growth is of less concern than income.
Residential letting is a different ball game. Tenants come and go more often, with attendant void periods. Management is often of the micro variety and there’s little control of how the place will look when you get it back. That’s before legal issues around tenants not paying or leaving are taken into account.
Whilst there’s more protection for residential tenants now landlords can still be at the mercy of rogue letting agents who still don’t (yet) have to belong to a redress scheme or be licensed. Good management is not cheap and as usual you do tend to get what you pay for and this cost eats into the bottom line. It’s certainly higher than with commercial lets.
The holy grail of course, and never has so much money been crying out for a good home, is the potential capital growth, and seeming rent increases, available to small time landlords. Of course both capital values and rents can go down, as was seen a couple of years ago in London when both dropped dramatically, but overall the inexorable rise in capital values is enough to drive money into this area.
One fly in the ointment here is that traditional volume landlords have learned long ago that they don’t do this for income, long term capital growth has been spectacular. In an ideal world rent pays any finance costs and upkeep as of course every few years the property will need updating. This is fundamental and has held institutions back. But the gains these landlords have made, just look at the number of property people in the rich lists, have been enviously watched for many years.
My company seeded and started a fund three years ago (great timing eh!) in only prime property, and given that we have over 50 years experience of managing such investments it’s been a success because we know what we’re doing, but has still been hard work. Money is still slow to come in as for some reason the FSA has said that a property fund with ANY gearing (ours has 20%) is a “risky” one. However, it has shown that efficient management is the key, and for any institution looking to start a purely residential fund it is the key.
Sourcing property for investment is also a headache and I was heartened to see an entrepreneurial company looking to help potential investors. Rankdesk (www.rankdesk.com) is currently something of a blunt tool but it seeks to rank properties with the kind of criteria used by potential tenants, i.e. closeness to transport, lift, condition etc.. With take up the efficacy will improve and become of real use, and given that finding investment property is still rather akin to sticking a pin in a map it could be the first step to genuinely helping people invest.
As for the players that control the really big money looking for a home in the resi world, they’re circling, but where will they land.
House Prices: London may continue to confound
For years it’s been said that what starts in London spreads out to the rest of the country. Whether that’s been true in the past or not those of us who live in London recognize now perhaps that there’s a disconnect between us and the rest. Resentment outside the Capital towards those of us that live and work here has always been rife, but having been convinced we were all in this together I’m beginning to think that the London housing market might just be different, and lucky, enough to avoid some of the larger slowdowns affecting those living elsewhere.
The first thing that needs to be defined though is what constitutes a slowdown. It’s been increasingly easy over the last few years to be smug about London property and it’s been the smiles on faces of these London homeowners that have perhaps been in the crosshairs of those looking to have a pop at us. We’ve been lucky in Great Britain, a quirk of geographical fate has determined that not only are we an island but also on the Greenwich Meridian. This means, and has done for centuries, that we’ve been politically and economically stable, and has meant that whichever part of the world is doing well, and there’s usually at least one, those who’ve benefited financially tend to want to have a place somewhere in London. Over the last few years pretty much everyone has hence why values have gone beserk.
But a slow down, or a poor market, can de defined in two ways: prices and sales volumes. What has perhaps surprised many is the resilience of Greater London in the maintenance of those prices, but what’s bad for the economy as a whole is what’s maintaining those prices, low volumes. And it’s going to get worse, or better, depending on how you look at it. Some agents are reporting record numbers of sellers withdrawing from the market. It’s tempting to ask why, the recently deserting foreigners, having taken advantage over the last three years of a weak Pound, now appear to be coming back because they fear for the future of their currency and are wanting to buy whilst their exchange rate remains relatively, for them, advantageous.
Those of us who work in London are more likely to earn relatively well, have deposits and thus access to historically low mortgages, so it’s likely demand will remain relatively strong. So why are sellers abandoning ship when more buyers are chasing their properties. Taking off the market for Christmas always was a waste of time, and at the moment there’s an odd feel that’s unlikely to be as positive at the beginning of next year when perhaps more sellers will come to the market.
So, if you’re the kind of person who watches prices, London may well continue to confound. As someone who recognizes the importance of volumes to the wider economy I fear that this market is disappearing up it’s own b***side.
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Ed Mead is a regular contributor to The Big Property List blog. He has been an estate agent for over 30 years, and has been writing and commentating on the market for over half of that as the Sunday Times Property Expert and The Agent Provocateur for the Telegraph. He sits on the Board of The Property Ombudsman Ltd, has a regular LBC slot, and is happy to say it as it is.
Other places you can find Ed online are:
Douglas & Gordon blog
Ed Mead on Twitter
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Ban Estate Agents boards in central London? Inspired, says Ed Mead
If there’s one thing snow does it’s make London look clean. Covers all sorts of grubbiness, is a great leveller and there’s nothing anybody can do to stop it. You could probably say all that about the inspired decision by someone to finally ban Estate Agents boards across large swathes of central London.
When I started in this business you couldn’t go into certain streets, like Ifield Road next to Chelsea’s football ground, without being blown away by the sheer number of agent’s boards. As an example, boards in that street were a major blight and no one wanted to live there, hence more tried to sell, hence more boards and so on. Some bright spark in the late 80s finally banned them in Conservation areas but left other big chunks of Victorian and Edwardian homes open to infection and abuse. Early this year ironically someone somewhere missed a deadline to renew the Conservation area regulations and for a ghastly moment boards were allowed anywhere. Luckily only the usual blaggers decided to risk the wrath of residents and erect signage in streets that had hitherto enjoyed decades of delicious virginity.
The venom with which said residents responded, and this is typical of the general behaviour of aforementioned blagging estate agents – they simply don’t give a sh*t, meant that the authorities actually decided not only to put things back as they were pre balls up, but to actually extend the ban throughout most of central London.
The result is likely to mean hordes of Japanese tourists can now take shots of our beautiful central London houses without their rellies back home wondering who the hell ***t*** or ****d are. It means that local residents have their streets back and are no longer as likely to be conned by the local agent who worries less about which local residents they piss off and more about putting up as many boards up as possible.
The ban IS policed which is good and it would be reassuring to think that this is a precursor of a wider decision to do away with them altogether.
In the meantime get out and enjoy unsullied streets for the first time in a generation and don’t be afraid to report the minority of agents who’ll continue to flout the new regulations. Feel like the school sneak there a bit, but actually the idea of sellers being persuaded that the placement of a few £6 boards denotes heavy market presence has, for years, allowed the real fringe of our industry to get a foothold, and this might just mean they’re walking on ice for a change.
Author Biography
Ed Mead is a regular contributor to The Big Property List blog. He has been an estate agent for over 30 years, and has been writing and commentating on the market for over half of that as the Sunday Times Property Expert and The Agent Provocateur for the Telegraph. He sits on the Board of The Property Ombudsman Ltd, has a regular LBC slot, and is happy to say it as it is.
Other places you can find Ed online are:
Douglas & Gordon blog
Ed Mead on Twitter
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Buy to Let may be the investment of choice, says Ed Mead
For the first time since I’ve been at Douglas & Gordon we made more money last month from lettings than we did from sales.
Given that we are a medium sized company that’s not as trite as it sounds. Renting seems to have finally lost it’s stigma and even seems to be where sensible people reckon they should be when property values appear to be on the way down.
Those who work in lettings have often felt, because of the lack of crash bang months, that the drip drip [albeit constant] nature of their income means they’re the poor cousins.
But with buy to let borrowing on the agenda again and with all the publicity surrounding Council tenants suddenly they’re front page news. About time I reckon. Having rented for over 20 years and been dead pleased with it, many commentators were amazed and quick to point out how I was missing out on the market. I politely replied that I had been investing in something slightly old fashioned and possibly more rewarding. It’s called your own company.
Such is the obsession with property (thank heavens as I’m an estate agent after all) that investing in something that actually yields jobs AND a return seems to have become a lost art. With 70% of the world’s wealth now tied up with property it’s hardly surprising.
Perhaps with standard investments yielding derisory returns entrepreneurs might start to see the light of day again, but with residential rents looking set to rise sharply, capital values stagnant at best, and borrowing costs as low as they’ve ever been I would think buy to let might just become the investment of choice for a few years to come.
Author Biography
Ed Mead is a regular contributor to The Big Property List blog. He has been an estate agent for over 30 years, and has been writing and commentating on the market for over half of that as the Sunday Times Property Expert and The Agent Provocateur for the Telegraph. He sits on the Board of The Property Ombudsman Ltd, has a regular LBC slot, and is happy to say it as it is.
Other places you can find Ed online are:
Douglas & Gordon blog
Ed Mead on Twitter