Second homeowners panic over CGT rise.

The forthcoming review of capital gains tax (CGT) is causing panic amongst property investors who own more than one residence and shares. Second home owners are eager to get rid of their extra assets in a bid to escape the levy, according to the Times, which states the tax threatens the stability of the coalition government. Conservative backbenchers are fiercely opposed to the changes, which are part of Liberal Democrats' desires to rebalance the tax system. The CGT rate is supposed to be raised from its current 18 per cent to a level "similar or close to" income tax levels, but there are widespread fears that it could be increased to as much as 40 or even 50 per cent. According to the newspaper, there are more than 250,000 second-home owners in the UK and many could be caught out by the changes, which could come before the emergency budget on June 22, when they sell assets. It could also deter new landlords coming into the market.

 

Scramble to escape capital gains tax

Estate agents say that many concerned owners are approaching them to offload properties before the emergency Budget on June 22. Anxious investors are preparing to offload second homes and shares in an attempt to avoid a government tax raid that is causing growing fury among Conservative ranks.
The coalition Government is facing its first serious rift after Lib Dem aspirations to rebalance the tax system ran into angry opposition from Tory backbenchers and grassroots supporters in the shires. In response, George Osborne has opened talks on watering down the planned increases to capital gains tax before his emergency Budget on June 22.

The unrest comes amid signs of a rebellion among high-earning Tory supporters preparing for a fire sale of shares and second homes because they are worried about the imminent tax crackdown. There are thought to be more than 250,000 second-home owners in the UK and it is thought that hundreds of thousands more investors could be caught out by the changes when they sell assets.

Simon Aldous, of Savills, the estate agent, said that he has seen a 40 per cent increase in valuation inquiries over the past ten days.

Stephen Herring, senior tax partner at BDO, the accountants, said: “We are being inundated, and I wouldn’t say that lightly.” Meanwhile, one wealth management chief said that his clients had issued instructions to sell their shareholdings in anticipation of a higher capital gains rate.

The mood of discontent among Tory backbenchers was underlined when MPs emphatically chose Graham Brady to represent their interests as chairman of the 1922 Committee. Mr Brady, who resigned from David Cameron’s frontbench team while the Conservatives were in opposition, won 126 votes while Richard Ottaway, the leadership’s favoured candidate, received 85.

The Chancellor is now holding discussions with Tory critics, signaling that he is prepared to negotiate a compromise. He is understood to be looking at a range of options, from minimising the rise to restricting the scope of tax so that it hits fewer people.

But Mr Osborne must still raise enough cash to satisfy Lib Dems that there has been progress on their signature plan for a tax break for lower and middle earners, due next April.

With many backbenchers expressing dismay at the rise in private, John Redwood, the senior Tory MP who chaired an inquiry for Mr Cameron into economic competitiveness, aired his concerns in public. He urged Mr Cameron to scale back planned rises in capital gains tax, insisting that they would be unfair and damaging.
Mr Redwood said that he had been “swamped with support” from those also opposed to increasing the tax on long-held assets.

An initial promise to raise the CGT rate from 18 per cent to “similar or close to” income tax levels prompted fears of an increase to something approaching 40 or even 50 per cent. The language was watered down in the Queen’s Speech, so that the pledge is now for rates “closer to” income tax levels, but the subtle climbdown has failed to quell opposition. Senior Tories predict that there will be problems for Mr Osborne with his party if the level is set above 25 per cent.

The Treasury is looking at further ways of limiting the impact, perhaps by scaling back the type of assets caught by the new tax. The coalition document says that it will only target “non-business assets” but Revenue & Customs does not have a legal definition for this term. A Tory source said: “If you have one holiday home, that isn’t a business asset. But what if you have three and get rental income? Or you have one then a relative leaves you a second? These are the questions this needs to deal with.”

Another unresolved issue is the level of the tax-free allowance, currently set at £10,100. The Lib Dems suggested lowering the level to £1,000 but this appears to have been vetoed by the coalition. The Lib Dem plan to raise the starting rate of income tax — a “longer-term policy objective” for the coalition — will cost around £17 billion.

Extracts taken from the Times online

What will errupt next?

What a tempestuous year it has been so far. If the elements, including snow and volcanic ash, were not enough to bring a level of uncertainty to the conveyancing market place this year, try adding a general election and a football world cup!

 

With David and Nick forming the first coalition government for more than 80 years we look ahead to see what this government has in store for the housing market and the investors that have driven it through the last few years.

 

The new government certainly hasn’t been slow to act in the removal of Home Information Packs.  Some would say that their decisive action in suspending HIPs on the 21^st of May was as reckless as the legislation was flawed, with potentially thousands of jobs lost as a result.  I firmly believe that quick, decisive action is always necessary as far as the housing industry is concerned.  If you are going to do it – do it.  Delaying the inevitable would have certainly effected the market with vendors delaying putting their properties onto the market pending the abolition of HIPs.

 

It is definitely going to be a very interesting year for the housing industry, as

we wait to see what the new Housing Minister, Grant Schapps, has in store for us and the effect that these housing policies will have on the property market in terms of activity and prices.

Why you should use an Estate agent

During tough times we try to save every pound we can and try to remove every unnecessary expense possible. So when it comes time to sell the house we see the agent’s commission and think we can save that money.

 There is a false economy, especially in a weak property market, for not hiring an estate agent.

Listed below are four reasons why.

1. Better Access/More Convenience

An estate agent’s full-time job is to act as a liaison between buyers and sellers. This means that he or she will have easy access to all properties listed.

2. Negotiating Is Tricky Business

Many people don’t like the idea of doing a property deal through an agent and feel that direct negotiation between buyers and sellers is more transparent and allows the parties to better look after their own best interests. This is probably true–assuming that both the buyer and seller in a given transaction are reasonable people who are able to get along. Unfortunately, this isn’t always an easy relationship.

3. Estate Agents Can’t Lie

Well, OK, actually they can. But because they are licensed professionals there are more repercussions if they do than for a private buyer or seller.

4. Not Everyone Can Save Money

Many people eschew using an estate agent to save money, but keep in mind that it is unlikely that both the buyer and seller will reap the benefits of not having to pay commissions.

 

Why you should use an Estate agent

During tough times we try to save every pound we can and try to remove every unnecessary expense possible. So when it comes time to sell the house we see the agent’s commission and think we can save that money.

But there is a false economy, especially in a weak real property market, for not hiring an estate agent.

Listed below are five reasons why.

1. Better Access/More Convenience

An estate agent’s full-time job is to act as a liaison between buyers and sellers. This means that he or she will have easy access to all properties listed.

2. Negotiating Is Tricky Business

Many people don’t like the idea of doing a property deal through an agent and feel that direct negotiation between buyers and sellers is more transparent and allows the parties to better look after their own best interests. This is probably true–assuming that both the buyer and seller in a given transaction are reasonable people who are able to get along. Unfortunately, this isn’t always an easy relationship.

3. Estate Agents Can’t Lie

Well, OK, actually they can. But because they are licensed professionals there are more repercussions if they do than for a private buyer or seller.

4. Not Everyone Can Save Money

Many people eschew using an estate agent to save money, but keep in mind that it is unlikely that both the buyer and seller will reap the benefits of not having to pay commissions.

 

 

 

 

Low valuations hinder market

The most recent figures from Nationwide say house prices rose one per cent last month, and are up more than ten per cent in the past year. Halifax says they're nearly seven per cent higher than a year ago, while the Royal Institution of Chartered Surveyors is predicting a post-Election bounce, with modest increases expected across most of the country in the next three months.

But mortgage borrowers say this good news isn't yet being reflected in the prices that valuers put on their homes, and that low valuations are jeopardising their chances of getting the mortgage they want, or of moving home. 

A typical example is a seller from South London who paid £176,000 for a house four years ago. After spending £24,000 on improvements and getting three estate agents round, the house was valued at between £200,000 and £216,000 in February. But when the owners tried to remortgage last month, their bank's surveyor put a maximum price of just £160,000 on it. The couple have a £155,000 mortgage so were rejected for their bank's best-buy fixed rate because it is on offer only to people with at least 20 per cent equity in their homes.

They're now paying the bank's standard variable interest rate and are worried that they will not be able to afford the repayments if interest rates rise  -  and that if they try to sell, a low valuation will mean potential buyers will not get a mortgage either and will have to withdraw from the deal.

Experts say low valuations continue to plague the market and that victims may struggle to overturn them. You cannot expect high valuations from estate agents to carry much weight with lenders. They assume that agents overvalue homes to try to win business from sellers.

As there is no conciliation or independent ombudsman service for people unhappy with low valuations, the odds are you will have to accept the price your lender puts on your home. If it's so low that you don't qualify for one of its best-buy deals, you may need to look elsewhere if you don't want to stay on its standard variable rate.

Low valuations hold back market

The most recent figures from Nationwide say house prices rose one per cent last month, and are up more than ten per cent in the past year. Halifax says they're nearly seven per cent higher than a year ago, while the Royal Institution of Chartered Surveyors is predicting a post-Election bounce, with modest increases expected across most of the country in the next three months. But mortgage borrowers say this good news isn't yet being reflected in the prices that valuers put on their homes, and that low valuations are jeopardising their chances of getting the mortgage they want, or of moving home. A typical example is a seller from South London who paid £176,000 for a house four years ago. After spending £24,000 on improvements and getting three estate agents round, the house was valued at between £200,000 and £216,000 in February. But when the owners tried to remortgage last month, their bank's surveyor put a maximum price of just £160,000 on it. The couple have a £155,000 mortgage so were rejected for their bank's best-buy fixed rate because it is on offer only to people with at least 20 per cent equity in their homes. They're now paying the bank's standard variable interest rate and are worried that they will not be able to afford the repayments if interest rates rise  -  and that if they try to sell, a low valuation will mean potential buyers will not get a mortgage either and will have to withdraw from the deal.Experts say low valuations continue to plague the market and that victims may struggle to overturn them. You cannot expect high valuations from estate agents to carry much weight with lenders. They assume that agents overvalue homes to try to win business from sellers. As there is no conciliation or independent ombudsman service for people unhappy with low valuations, the odds are you will have to accept the price your lender puts on your home. If it's so low that you don't qualify for one of its best-buy deals, you may need to look elsewhere if you don't want to stay on its standard variable rate.

 

Referral fees don't harm consumers

There is no evidence that referral fees have caused consumer detriment within the conveyancing market, according to an economic analysis commissioned by the Legal Services Board.

 

The report stated that there was no evidence that referral fees have led to a decline in the quality of work or to increases in price.

Studies show the average conveyancing fee when a referral fee is paid is £543, while the average price paid by consumers when no referral fee is paid is £687.

 

The report said that while referral fees have risen from around £50 to £100 in 2004, to £259 to £400 today, conveyancing prices have remained broadly constant.

It found customer satisfaction was high among those who use referrals from estate agents, with 90% stating performance was better than others used in the past.

 

Firms have greater certainty in the volume of work they receive, so they have invested in technology to increase their efficiency, and these efficiency gains are passed on to the consumer.

 

 

Suspension of Home Information Packs: Questions and Answers

I am just about to put my house on the market.  Do I still need a HIP?
The duty to have a HIP has been suspended from 21 May. This means homes put on the market on or after that date will no longer need a HIP. However, you will need to have commissioned, but not necessarily received
an Energy Performance Certificate before marketing can start.

What do you mean by "commissioned an EPC"?
This means that a seller or a person acting on their behalf i.e. an estate agent must have instructed an accredited Energy Assessor to carry out an energy performance assessment.

Who or what is an Energy Assessor?
This is someone who is accredited (regulated) to provide energy assessments on buildings. HIP providers may be able to provide this service as long as they are accredited under scheme as an energy assessor.

I have ordered a HIP but have not received it yet - what should I do? 
You should contact your HIP provider as soon as possible. The duty to have a HIP will be suspended on Friday 21 May and homes put on the market on or after that date will not need one, although you will still need to have commissioned but not necessarily received an Energy Performance Certificate before marketing can start.

My home is already on the market with a HIP - do I have to do anything?
No. Sellers still need to provide an EPC to potential buyers under separate legislation but that should be included in your HIP.

Will I still need an EPC after the suspension of HIPs?
Yes. Sellers will need to have or to have commissioned but not necessarily received an Energy Performance Certificate before marketing can start.

Whose duty is it to provide the EPC?
The duty to provide an EPC falls on the seller.

When does the EPC have to be provided?
An EPC has to be available or have been commissioned before a home can be marketed for sale. It should be provided to potential buyers at the earliest opportunity and before entering into a contract to sell the property.

What is the penalty for not providing an EPC - who will enforce it?
There is a fixed penalty of £200. Enforcement of these requirements is the responsibility of Trading Standards Officers. There are also penalties for not complying with the duty to commission an EPC before putting the property on the market.

How do I get a copy of the EPC done on my home - I never received a copy of my HIP?
If you have had a HIP prepared on your home, the person who prepared your HIP should be able to provide you with a copy of the EPC.

Can I reuse the EPC I received in the HIP when I come to sell my home if it (the EPC) is more than 3 years old?
Yes. Following the suspension of HIPs, all EPCs will be valid for 10 years.

Can I still rely on the HIP produced for the home I am buying?
Yes.  There is no reason why a buyer cannot rely on the documents contained in the HIP.

I know there was a HIP produced for the house I am buying but the agent is now refusing to provide a copy - is that right?
Yes.  There is no longer a duty on estate agents to provide a copy of the HIP to potential buyers.

Does this mean more expense for first time buyers?
First time buyers will still receive an energy performance certificate from the seller but will now have to commission their own searches. These will typically cost in the region of £150 which is a relatively small amount in the context of overall transaction costs.

Why hasn't the Government consulted on this, they promised to do so in opposition?
The manifestos of the current Government (Conservatives and Liberal Democrats) promised to abolish HIPs and will do so as soon as primary legislation is available. 

But the Government believes it needs to act quickly to suspend HIPs to remove unnecessary cost and bureaucracy from the housing market.

Supporters of HIPs are of course free to put forward their views on the suspension in the period leading up to the Government seeking powers from Parliament to abolish HIPs.

I am a HIP provider - will I get compensation?
No. The present Government (Conservatives and Liberal Democrats) have consistently opposed the introduction of HIPs and promised to abolish them in their respective manifestos.

Important to note that only requirement to provide a HIP is suspended. Sellers are free to choose to provide information to buyers on a voluntary basis and HIP providers can offer such products.

Thousands of people involved in the production of HIPs will now lose their jobs? 
It is not good enough to carry on with a policy that is both unnecessary and costly, purely on the basis of providing job security. HIPs are not providing value for money for sellers or for buyers, so we should not continue burden to the market with this extra layer of bureaucracy.

HIP providers could still have a part to play in the housing market offering as buyers and sellers will still require Energy Performance Certificates (EPCs), evidence of title and local searches.

I am a Home Inspector and abolishing HIPs means that there is no possibility of using my qualifications?
There is work available to Home Inspectors who are accredited energy assessors in producing domestic EPCs which continue to be required for rental properties and properties marketed for sale.

Will the Government compensate Home Inspectors?
We appreciate that abolition of HIPs would remove the option of compulsory Home Condition Reports. However, when the Government was in opposition they made it clear that they opposed HIPs and set out in their manifestos plans to abolish them if elected.

Will an EPC still be needed after the suspension of HIPs?
Yes. Sellers will need to have commissioned but not necessarily received an Energy Performance Certificate before marketing can start. Estate agents cannot start marketing until they are satisfied that a HIP is available or has been commissioned.

Agents will also have to include energy information in written particulars, as was the case before the suspension of HIPs. They must do so as soon as the energy information becomes available.

Who will be responsible for providing the EPC?
The duty to provide an EPC falls on either the seller, in the case of a building being sold, or the landlord, in the case of a building being rented. In the case of new buildings the duty to provide an EPC falls on the builder.

When does the EPC have to be provided?
An EPC has to be made available at the earliest opportunity and, in any event, no later than exchange of contracts.  As soon as the EPC is obtained the energy rating or the EPC must be included with any written particulars.

Where is the legislation on EPCs contained?
The legislation is contained in the Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007 (as amended by the Energy Performance of Buildings (Certificates and Inspections) (England and Wales) (Amendment) Regulations 2010).

What are the penalties for non-compliance?
The penalty for not ensuring that an EPC is available or has been commissioned and failing to include energy information in written particulars is £200. The enforcement of these requirements is the responsibility of Trading Standards Officers.

How long will the EPC be valid for if it is not part of a HIP?
All EPCs for all buildings are valid for 10 years from the date that they are prepared.

What about the requirement to include energy information in written particulars?
The duty to include energy information in written particulars has been retained. It arises once an EPC has been obtained.

What if the EPC is not available when I prepare the written particulars?
Written particulars can still be prepared and made available but the energy information should be added to the written particulars as soon as it is available.

Is there a time limit on this?
The seller and estate agent must use all reasonable efforts to ensure that the EPC is available within 28 days of the property going on the market.

How long will the HIP suspension last - why don't you just abolish them outright?
Outright abolition will need primary legislation and we will do that as soon as practicable. 

Why not just suspend HIPs and leave it at that?
The Government is committed to implementing its policy to abolish HIPs. The power to suspend is therefore an interim measure.

Will estate agents have any HIP duties once they are suspended?
No but there will be duties under the EPB Regulations for agents to ensure that an EPC has been commissioned before marketing starts and to include the rating in written particulars when available.

Am I still obliged to provide a copy of the HIP?
No but there is no reason not to do so if it improves the chances of a successful sale. The seller will still have to provide a copy of the EPC to potential buyers at the earliest opportunity and in any event before exchange of contracts.

I received a request for a copy of the HIP before the suspension date - am I still obliged to provide it?
No but see answer to previous question. 

Can buyers still rely on a HIP after the suspension date?
Yes.  If the HIP was compliant with the regulations there is no reason why a buyer should not be able to trust it.

Will estate agents still be liable for breaches that occurred before HIPs were suspended?
Yes. The suspension of the duties is not retrospective. However, it will be for enforcement authorities to decide whether to pursue the matter.

Can personal search companies go back to using insurance in their searches when they can't get information from local authorities?
The rules on the content of searches only applied to searches in the HIP and will not apply to searches provided in other circumstances. 

Will the CLG be providing guidance on the effect of these changes?
Yes, the CLG website and others (DirectGov & Business Link) will be updated as soon as possible.

There is evidence that HIPs were beginning to work - why not try and improve them rather that abolish them altogether? And where is the evidence that HIPs were damaging the market? 
The election manifestos were clear that if elected, the Conservative Party and Liberal Democrat parties would abolish the HIP.

HIPs to go!

The news was welcomed yesterday that the government is indeed to scrap the controversial Home Information Packs. The Conservatives and the Liberal Democrats have both agreed that it is the right course of action. They will be keeping the energy performance certificates.

 

What is needed now is for this to be actioned as soon as possible to avoid confusion and any further damage to the housing market.

The HIPs have been a real thorn in the side of the Industry, they have failed to benefit homebuyers and have really discouraged sellers putting their properties up for sale.

 

The HIPs are supposedly aimed at reducing the time spent on all sale and purchase transactions by providing buyer information.

These packs costing approximately £350 are needed before you even consider marketing your home. They have stifled the housing industry at a time when it least needed it.

 

The speed in which the government acts is vital. There will be a vast number who will wait until these HIPs are gone to put their homes on the market. The implications of this ‘hold off’ could have a detrimental effect for the housing market.

 

 

How to Buy at an Auction

Auctions are fast becoming a popular way of selling and buying residential property due to their ease and speed. When the hammer falls it is equal to an exchange of contract, so the purchaser cannot be gazumped and there can be no last minute price battles.

The auction process

It is a whole different ball game selling via an action as apposed to sale by private treaty. The instant the property is ‘knocked down’ to a bidder, contracts are exchanged.

So it is vital that all the ‘homework’ is done before the auction, such as all preliminary legal enquiries, surveys and the arrangement of funding.

Sales particulars are distributed a few weeks prior to the auction date. The brochure contains full details of the property, these include  :

• Photographs
• Facts about tenure
• Possession
• Fixtures and fittings
• Rateable value, etc the conditions of sale a Memorandum of Agreement
• Details of viewing arrangements

Before the auction

1. Study the property particulars in great detail; there may be unacceptable conditions or disclaimers. Look for references to planning restrictions or refusals, and ensure these would not prejudice any alterations or improvements you would want to make.

2. Go and see the property.

3. Research the neighbourhood, Talk to neighbours and estate agents if you can.

4. Send the property details to your solicitor or licensed conveyancer, and arrange for him to carry out the necessary enquiries and searches.

5. Arrange a survey and a valuation.

6. Set your budget, and arrange the necessary finance. You´ll need to be able to produce a deposit of 10 per cent (or the amount stipulated in the conditions of sale) on auction day, and the remaining 90 per cent within 28 days thereafter. A lender will insist on inspecting and valuing the property in the usual way before agreeing a mortgage, so allow time for this.

If you would want to make improvements to the property, obtain estimates at this stage, so that you can include the costs in your calculations.

7. Attend an auction if you haven´t done so before, to familiarise yourself with the procedures.

You are now ready to bid ...

During the auction

Have with you two forms of identification, your chequebook and your bank details.

Don´t exceed your price limit.

Bid clearly, by nodding (or shaking) your head, or raising your hand.

As bidding continues, the auctioneer will indicate what further increments he will accept. He may refuse a bid, and is not obliged to explain why. In any dispute, his decision is final.

In the majority of cases, the property will be sold subject to a reserve price. This figure is not usually disclosed, but the guide price should give an indication. If the bidding does not reach the reserve, the auctioneer will withdraw the property.

After the auction

If you are outbid, you lose not only the property but also the money you have spent on the survey, legal fees, and so on, just as you do when exchange of contracts fails to take place in a transaction by private treaty.

If the property for which you were bidding is withdrawn, it is worth informing the agent of the figure at which you are prepared to buy; the vendor may be willing to consider your offer.

If your bid is successful, you must pay the deposit to the auctioneer there and then. As confirmation of the sale and acknowledgement of receipt of the deposit, the vendor´s agent will countersign the Memorandum of Agreement.

The remainder of the transaction follows the same pattern as a sale by private treaty. Completion generally takes place 28 days after the auction, with the balance of the purchase price being paid at that point. Penalties for failure to complete are severe.

Always seek professional advice before deciding to bid at auction, and remember that, once the hammer falls, you are legally obliged to go through with the purchase, at the price you have agreed.

Auction and the buying process

Auctions are fast becoming a popular way of selling and buying residential property due to their ease and speed. When the hammer falls it is equal to an exchange of contract, so the purchaser cannot be gazumped and there can be no last minute price battles.

The auction process

It is a whole different ball game selling via an action as apposed to sale by private treaty. The instant the property is ‘knocked down’ to a bidder, contracts are exchanged.

So it is vital that all the ‘homework’ is done before the auction, such as all preliminary legal enquiries, surveys and the arrangement of funding.

Sales particulars are distributed a few weeks prior to the auction date. The brochure contains full details of the property, these include  :

• Photographs
• Facts about tenure
• Possession
• Fixtures and fittings
• Rateable value, etc the conditions of sale a Memorandum of Agreement
• Details of viewing arrangements

Before the auction

1. Study the property particulars in great detail; there may be unacceptable conditions or disclaimers. Look for references to planning restrictions or refusals, and ensure these would not prejudice any alterations or improvements you would want to make.

2. Go and see the property.

3. Research the neighbourhood, Talk to neighbours and estate agents if you can.

4. Send the property details to your solicitor or licensed conveyancer, and arrange for him to carry out the necessary enquiries and searches.

5. Arrange a survey and a valuation.

6. Set your budget, and arrange the necessary finance. You'll need to be able to produce a deposit of 10 per cent (or the amount stipulated in the conditions of sale) on auction day, and the remaining 90 per cent within 28 days thereafter. A lender will insist on inspecting and valuing the property in the usual way before agreeing a mortgage, so allow time for this.

If you would want to make improvements to the property, obtain estimates at this stage, so that you can include the costs in your calculations.

7. Attend an auction if you haven't done so before, to familiarise yourself with the procedures.

You are now ready to bid ...

During the auction

Have with you two forms of identification, your chequebook and your bank details.

Don't exceed your price limit.

Bid clearly, by nodding (or shaking) your head, or raising your hand.

As bidding continues, the auctioneer will indicate what further increments he will accept. He may refuse a bid, and is not obliged to explain why. In any dispute, his decision is final.

In the majority of cases, the property will be sold subject to a reserve price. This figure is not usually disclosed, but the guide price should give an indication. If the bidding does not reach the reserve, the auctioneer will withdraw the property.

After the auction

If you are outbid, you lose not only the property but also the money you have spent on the survey, legal fees, and so on, just as you do when exchange of contracts fails to take place in a transaction by private treaty.

If the property for which you were bidding is withdrawn, it is worth informing the agent of the figure at which you are prepared to buy; the vendor may be willing to consider your offer.

If your bid is successful, you must pay the deposit to the auctioneer there and then. As confirmation of the sale and acknowledgement of receipt of the deposit, the vendor's agent will countersign the Memorandum of Agreement.

The remainder of the transaction follows the same pattern as a sale by private treaty. Completion generally takes place 28 days after the auction, with the balance of the purchase price being paid at that point. Penalties for failure to complete are severe.

Always seek professional advice before deciding to bid at auction, and remember that, once the hammer falls, you are legally obliged to go through with the purchase, at the price you have agreed.

Housing market still picking up, surveyors say

The UK's property market is benefiting from its normal spring pick up, the Royal Institution of Chartered Surveyors (Rics) said.

Its latest monthly survey of 245 members who work as estate agents suggests that prices are still going up.

In April, 17% more surveyors said prices were rising rather than falling, up from 9% in March.

Sales have picked up very slightly as well, Rics reported.

The average number of homes sold per surveyor rose to 17.4 over the three months to the end of April.

A rise in the number of homes being put up for sale again outstripped the increase in enquiries from potential new buyers, which might suggest downward pressure on prices in the coming months.

But overall, Rics said its members had become much more optimistic about both sales and prices.

"The start of spring has seen renewed optimism with the good weather improving sentiment and surveyors expecting an increase in both sales and house prices," said Rics spokesman Jeremy Leaf.

"The housing market often sees an increase in new instructions in the early part of the year with sales boosted in the spring and this year has been no exception," he added.

Regional variation

The feedback from Rics members contrasts with other recent reports on the state of the property market.

Although prices have risen noticeably in the past year, the upward trend has been easing off in recent months, according to lenders such as the Halifax and Nationwide.

Sales have been distinctly sluggish too across the UK.

Although slightly higher than in the first three months of 2009, sales were still lower than in the first quarter of any year since statistics were first kept in their present form by HM Revenue & Customs in 1977.

According to Rics, whether prices are rising or falling depends very much on where you live.

They have been rising fastest in London and the South East, but are falling in Yorkshire, Humberside, Wales and Northern Ireland.

UK Property Growth Figures

The average price of a Prime UK property rose to £449,689 in April - an increase of 0.5% on March and of 3.2% on April 2009

Prime Platinum UK property recorded an average value of £625,849 this month. This tier saw annual growth of 6.0%, with a strong monthly increase of 1.1%

In contrast to the stronger-performing Prime and Prime Platinum markets, annual growth for overall average house prices was a modest 1.6% in April. The UK average house price increased by 0.3% over the month and now stands at £217,434

The level of Prime and Prime Platinum stock has risen by over 4.0% in April and is now 41.0% higher than a year ago. Stock remains higher than at any time since the beginning of 2008

In London, average Prime property prices grew by 1.7% to £1,113,903 this month and are now 4.7% up on their value of a year ago. Prime Platinum property in the capital climbed 2.0% to £1,688,421 in April. Annual growth was 7.8%

Regionally, the best performing Prime markets were in the South East and South West, which recorded monthly price rises of 2.0% and 1.5%. Annual growth was highest in Scotland (7.8%), the South East (7.5%) and the East of England (5.5%), with only Yorkshire and the Humber and the North West not seeing an annual increase in prices

Prime Platinum property prices also fared best in the South East (3.0%) and South West (2.5%) over the course of April. The greatest annual growth was experienced in Scotland (12.7%), followed by the South East (9.2%).

HIPs to be abolished?

After five days of deliberation and intense political drama, we have a coalition government. David Cameron and Nick Clegg are, as I write trying to work through exactly how this new government will work. The Conservatives stated within their manifesto that they will abolish the Home Information Pack "within a 100 days" of government.

If this is indeed the case, the question of the Energy Performance Certificate (EPC) rears its head.  This was created as a response to the EU Directive 2002/91/EC on the Energy Performance of Buildings.  Therefore it would not necessarily be easy to drop it IF the HIP is to be removed.

The Directive specifically states the following, "Member States shall ensure that, when buildings are constructed, sold or rented out, an energy performance certificate is made available to the owner or by the owner to the prospective buyer or tenant, as the case may be." All which suggests that the EPC may have to remain in place in a "HIP light".

Any proper Consultation into abolishing the Home Information Pack could also reveal opportunities to improve the Conveyancing process.  For example, in looking at the not-implemented Home Condition Report, or in the area of ordering and preparing documentation that is essential and could (and does) help speed up the process by creating Exchange Ready contracts.

The markets react

The Markets have had a roller coaster trip today in reaction to a Hung Parliament. Gordon Brown's announcement that he had asked the civil service "to provide support on request" to parties in talks over forming a Government triggered a fresh sterling sell-off amid worries over political paralysis. The statement sent the pound below 1.45 dollars and 1.14 euro, but it recovered some ground minutes later as Liberal Democrat leader Nick Clegg said the party with the most votes and seats - the Conservatives - should have the first right to seek to govern. Fears over delays in tackling the UK's yawning deficit have punished sterling in a turbulent day as markets fear a Lib-Lab coalition in a hung Parliament. At one stage the pound fell more than 2% against the dollar to its lowest level since April 2009, while strong recent gains against the euro to above 1.18 were undone at a stroke as the pound slipped as low as 1.136.

Currency traders warned the political uncertainty sparked by an indecisive election result was likely to mean more volatility for sterling in the days ahead.

London's FTSE 100 Index also came under early pressure - it shed 100 points to hit a three-month low as trading began - although it recouped some losses later.

The pound's weakness and official figures showing factory gate prices rising at the fastest rate for 18 months also prompted concern over the return of inflation - leading to possible interest rate hikes from the Bank of England and jeopardising a fragile recovery.

The Bank's Monetary Policy Committee (MPC) is meeting today to make its latest policy decision, which will be announced on Monday.

The committee's inflation benchmark, the Consumer Prices Index, is well above the 2% target at 3.4% although it is currently forecasted to fall back below the target later this year.

It will be with intense interest that the world watches to see what will happen next. Undoubtedly, a strong united government is the best way for any country to move forward as it rears its head from a deep dark recession.

 

What a result

As many commentators have pointed out, the election result is about as bad as it could be from a market sentiment point of view – strong government of any hue being vastly more to international investors’ tastes than the horsetrading and vacillation of a hung parliament.

So what’s going to happen? Well, Cameron is sure to have a go at forming a government of some kind, whether in coalition or as a majority. He has already said as much, vowing to govern as best he can ‘in the national interest’. He is thus set to be the next PM one way or another.

But his only chance of majority rule – and of getting to occupy Downing Street for anything like the full five-year term – is to forge an unholy alliance with the LibDems. A pretty tall order – a poll this morning by Conservative Home estimates that 94% of Tory grass roots supporters want nothing to do with Clegg. In his favour, Cameron can probably count on Clegg’s support – despite having said the opposite only a few days ago. Nick’s only way to salvage anything from the dismal LibDem performance is to hook up with Cameron in return for a promised referendum on electoral reform. But he won’t find it easy to persuade his party to swallow such a deal either.

The alternative is a minority Tory caretaker government and another election, probably next year. Hardly a glorious prospect, given the urgency of action required to tackle our debts and get economic growth back on the menu.

It’s true what they say about democracy – it really is the worst form of government, apart from all the other ones.

What is a Hung Parliament?

We have all by now heard (unless you live in Outer Mongolia) that we have a Hung Parliament. What does all this actually mean? Set out below is an explanation. What exactly is going to happen in the next few days is anyone’s guess, but it will cause a lot of uncertainty.

A hung Parliament is created if no party wins an outright majority. In this election that would require one party to win 326 seats out of 650 with the Tories predicted to win only 309 at the current count. If the Tories do not form a minority government, two parties must form a coalition to govern in order to create an overall majority of MPs.

The government will not be able to win votes to pass laws without the support of members of other parties. Smaller parties could join forces to outvote the government which would make it difficult to pass laws.

The bigger parties can try to persuade smaller parties to support them, either each time there is a vote, or by creating a coalition government with an absolute majority.

The largest party - in this case the Conservatives - does not automatically have the right to try and form an administration. That right falls to Gordon Brown as the incumbent Prime Minister.

 

What does it mean?

There is no formal deadline for when an administration must be formed but a key date is 25 May, when the Queen's Speech is due to set out the government's priorities during the Parliament.

Negotiations to form a government in a hung Parliament could take between a week and 10 days.

If no agreement can be reached between parties and no government was unable to command enough support to get the Queen's Speech through Parliament there would be a need for a second election.

Some economists fear that a hung Parliament could affect Britain's economic recovery if the financial markets lose faith in a British government's ability to be decisive. This could impact upon the country's credit rating. David Cameron has previously warned that a hung Parliament can lead to politicians being able to endlessly "haggle and bicker and scheme" delaying decision-making and leading to paralysis.

 

What happens next?

If Gordon Brown remains prime minister he could try and form a coalition with the Liberal Democrats in order to amass a greater number of seats than the Tory party.

If Gordon Brown resigns then the Queen may invite David Cameron to form a government. He could seek to form a minority government and make arrangements with individual parties to pass individual bills through the Commons. However, if he decides to form a coalition he could also try and form an alliance with the Liberal Democrats to create a majority. He may have hoped to have enough seats through his electoral alliance with the Ulster Unionist Party but current electoral arithmetic indicates that they have not got enough seats to create a majority.

Nick Clegg could be in a position to decide which of the main parties he is willing to work with.

 

House Price Rise in April

House prices rose by 1 per cent in April, according to Nationwide, taking the annual rise to 10.7 per cent — the first time it has reached double digits since June 2007. The average cost of a home in the UK is now £167,802, compared with £184,070 in June 2007. However, the pace has slowed in the past three months and the building society expects sellers to start outnumbering buyers, pushing down prices, as the year goes on.

Martin Gahbauer, Nationwide’s chief economist, said: “While the recovery in new buyer inquiries at estate agent offices appears to have petered out, the past few months have seen an increase in the level of new instructions from sellers. This should lead to a gradual flattening out of the recent upward price momentum.”

The Land Registry reported a 0.6 per cent fall in the average house price from February to March. The Land Registry figures, which are a lagging indicator of prices based on completed transactions, show that the average house price in March stood at £164,288. However, the figure could show a rise in April. A 38 per cent rise in the average number of monthly sales in the three months to January, compared with the same period last year, showed improved sentiment among homeowners.

Mortgage approvals in March also improved, the Bank of England said, increasing to 48,901, up from 46,882 in February. The figure is 17 per cent higher than in March last year, but the Bank’s figures still suggest that mortgage lending has had a sluggish start to the year. Approvals in the first three months were the lowest on record for the first quarter of any year, apart from 2009.

Lenders are also still demanding average deposits of 25 per cent from borrowers, while banks have warned that mortgage rationing may worsen next year when some of them are forced to repay the emergency government loans they accepted in 2008.

House prices may have regained some of their value, but the surveyors who valued them may still be in for a fall. Legal actions against estate agents and surveyors reached record levels last year, with 25 High Court cases alleging professional negligence over property valuations, according to Reynolds Porter Chamberlain, the law firm, compared with only one case in the previous five years. This comes after banks began to threaten surveyors with legal action for overvaluing properties before repossessing them and then selling them for a lower sum.

Recovery glitch?

Nationwide’s April index shows that house prices have risen by 10.5 per cent since last year. This finding suggests that the election has not, despite some forecasts, filled the thoughts of the nation to the exclusion of all else. It is possible to discuss the respective TQs (telegenic quotients) of Brown, Cameron and Clegg while checking online the performance of property values in your neighbourhood.

Although the figures are a confirmation of the continuing recovery, the upward trajectory could be slowed by the larger number of properties coming up for sale and the deteriorating job prospects of many potential buyers. The uncertain outlook for employment is, indeed, one factor supporting the market.

Martin Gahbauer, Nationwide’s chief economist, notes that landlords, who may have been thinking of leaving the business, are now earning such good rental income that they have no reason to sell. Their tenants include many workers too nervous about the future even to contemplate house purchase.

Shed culture Some call it a shed. Others prefer the term summer cabin. But whatever name you give to this structure, the increase in its sales appears to be one unexpected side-effect of the mortgage drought. B&Q, which is reporting strong demand for any garden edifice, considers that the trend is caused by the larger number of young adults compelled to return to the parental home because they cannot climb on the housing ladder.

First-time buyers remain the group most likely to be refused a mortgage, mostly because they do not have large enough deposits. The shed/summer cabin provides them with a personal retreat where they can contemplate the woes of their generation. Or perhaps mums and dads go there when overcome with irritation at the invasion of their grown-up offspring.

As the banks are determined to shun first-time buyers whose parents can provide only shelter, not finance, shed culture seems set to flourish. The status-symbol purchase could be the £11,995 summer cabin, pictured above — more a home from home than a lawnmower storage facility. This sum, by the way, is equivalent to the 20 per cent deposit needed to buy a share in a one-bedroom flat in a Leeds affordable housing scheme.

Tesco homes might help

Home is traditionally linked to food. But the move of a supermarket into housebuilding has provoked a mostly distasteful reaction. You could almost hear the nationwide “er, yeuch!” at the news that Tesco will be creating four mini-villages in London and the South East, each grouped around one of its stores, but also including parks and schools. Even those who rely on the store for most of what they eat — at home or at their office desks — are deploring the “Tesco-fication” of Britain that this diversification appears to threaten.

Some of these concerns are justified; the ubiquity of Tesco outlets has added to the oppressive uniformity of city centres and out-of-town malls. But Spen Hill, Tesco’s development arm, is doubtless aware that its residential products will not sell unless they meet the highest customer expectations on convenience, quality, price and looks.

The elegant recycling of existing buildings must be part of the offer, as must clever, contextual architecture. Maybe the process could even throw up some ideas to improve the identical Tesco Express shopfronts?

Sneering at Tesco homes may sound smart, but the supermarket will at least nibble away at the problem of the housing shortage. Lack of affordable and other homes is one issue on which political parties agree, though all will struggle to deliver an effective solution because the banks are disinclined to get involved. Lloyds and its peers are at present more preoccupied with extricating themselves from the consequences of their past ill-judged associations with developers. Yolande Barnes, residential research director at Savills, points out that Tesco is one of the few groups with pockets deep enough to finance new housing. The supermarket’s own bank could also be one of the few sources of funds for mortgage borrowers — it plans to sell home loans by Christmas. In Tesco, as in other supermarkets, we are spoilt and sometimes almost overwhelmed, by choice. But without Tesco, the shelves could look awfully bare for someone shopping for an affordable home next year, especially as government funding for this sector will be scarce, whoever is having his dinner at No 10 after May 6.