With the fact that my benefits have been suspended due to action from my last employer and despite six interviews, I am finding it even harder to carry out the precise interview rituals that each company wants, we are well advanced on the path to having our house respossessed by the building society. I must say that their attitude has improved from this situation twelve months ago. Last year the society refused to even discuss the potential of me defaulting on my mortgage payments until I had less money than was needed to pay for a single month. This year I have been able to discuss with their 'triage' team three months ahead of that date. Of course, one option is to sell the house, but with the appalling weather and the stagnant housing market this has proven to be futile. Last week with time really running out we decided to change tactics. The woman who lives in my house and who shares the mortgage, signed up with a so-called 'express' estate agency which works in a very different way and one that seems to have gone in our favour, though not without some hiccoughs.
The company puts the house on the market well below the going rate for the district/street in which it is located. It only publicises online and reuses images that you have provided to other estate agents. Interestingly many letting agents and landlords/ladies apparently now has software which alerts them if a house comes on the market in a particular area or at a specific price. The company will not take buyers who are in a 'chain', i.e. have to sell property to buy this one or have not already arranged to have funds available before putting in an offer. Last year when we tried to sell the house, over a twelve month period we had three 'firm' offers but in each case the people could not either raise the money or wanted us to building on their behalf before they would complete the purchase so ultimately it was unsold after a year.
Anyway, this method seemed to work. In reverse of what usually happens, the owners show people around the house but saying nothing about money, this is handled purely by a negotiator over the telephone. Now, we had found many estate agents particularly useless at selling houses; they simply stood in the corner of the room waiting for questions. They had no idea of the background of the viewers, for example, if they were buying to let, buying for themselves or others, had concerns such as local schools or health centres, etc. So we felt we were much better positioned to do this aspect. An extra advantage was that all of the viewings were scheduled for the same day, which meant we did not have to keep tidying and cleaning the house so it was in an immaculate state just for one viewer and then again for another a few days later and again a few days after that; it gets exhausting especially with a 10-year old boy living in the house.
An additional benefit is that the viewers can see who they are competing against. Having all the viewings on the same day and then getting interested ones to telephone in an offer, makes it effectively an auction but one overseen by the company. As they get 1.9% of the sale price they are keen to drive up the price by going back and forth between 'bidders'. Anyway, we had 18 viewings with a total of 32 people plus a number of children. At one stage there were four sets of viewers in the living room, so the competition was clearly visible. The viewers were a mixture including a letting agent, representatives of landlords from this area and farther afield, people buying for relatives, couples wanting to rent the property out, young families and one retired couple. To some degree this reflects the sort of people who want a suburban, 3-bedroomed semi-detached house.
The striking thing was how few people understood how the process worked. Some thought me and the woman in the house were actually the estate agents, despite our casual clothes and were puzzled by the presence of the 10-year old boy once he returned from school. One set of viewers thought we had driven down from Manchester where the company is based and were surprised about how much we knew about the local area. Many expected us to be standing outside the house in the rain so did not even bother to knock or ring to come in. Many did not understand the effective auction process despite details on the company's website.
It is incredible how many people in the UK misuse the phrase 'Dutch auction'. Having had a tour around Dutch flower auctions I know how this works. In these auctions, the price starts high and then falls in increments until someone puts in a bid. This means that for any sale there is only a single bid which speeds up the sales. Now, if this had been a Dutch auction as one man had somehow come to believe it was, it would not have started at £170,000 (€214,000; US$263,500) in a street where no other property has sold below £200,000. No wonder this man was disappointed as the price went up from there rather than down. How he had got that idea from the company's website I have no idea.
Similarly the view that only 'sealed bids' were permitted was something else that viewers had dreamt up. A sealed bid is usually only for when people are tendering to complete a project and in the past literally involved people putting their highest bid on a piece of paper and sealing it in an envelope and handing it in. The seller or the one offering the work, opens all the envelopes and goes with the highest. Again this would be a foolish way to sell a house as everyone knows you get the best price from competition between different bidders even with traditional estate agent methods. It would be pointless to have a single day's viewing then expect sealed bids, but again, from somewhere, perhaps pure arrogance or experience in other contexts but certainly not from the website, people believed the sealed bid method would be used.
Others missed out on the fact that it was an auction and would only stay open for 24 hours. When they said they would get back to us next week, I had to tell them forcefully that there was no point as the house would be sold by then. We had already had two 'book offers' on or just above the reserve price so even if none of the 18 sets of viewers had been interested we could have gone back to them. Perhaps the company needs to be even more explicit about how it runs these sales, but people also need to wake up and understand what they are getting themselves into. It was almost like turning up at a car auction and expecting to be able to negotiate a deal as you would at a dealership. For us, it worked out fine. By 11.00 the next morning when the bidding closed, we had an offer of £195,000 (€245,700; US$302,250), so much better than what we had had by the traditional methods. Of course, it is far less than the £217,000 we were offered but never received last year let alone the £240,000 (€302,400; US$372,000) we paid for it in 2005, but the property market and our own circumstances are far worse then then. It is better to get anything rather than have the building society take the house from you. The one drawback from this method is that you get no deposit so we have had to go and borrow more money so that we can each put down a deposit on a flat to rent. Anyway, my brief and tortuous period as a property owner now finally closes and so means I cannot take out one of these new government loans to pay for my care when I am elderly and I continue my rapid fall out of the middle classes.
P.P. 13/09/2012
The process proved to be even more messy and unpleasant than I might have feared. It turned out that the highest bidder had actually lied to the estate agents and was actually in a chain so when it came to progress the sale she was not in a position to do so. We ended up with the third highest bidder, the second having gone on to spend their money elsewhere in the time we were being mucked around by the first bidder. This third bidder was offering £182,000 compared to the £195,000 of the first bidder. However, we had no choice but to accept. Of course within three days of the exchange of contracts he insisted on reducing his offer. He had seen that a derelict house in the same road had sold for £170,000, though neglecting to point out that three months later, when it was refurbished it sold for £247,000. He was clearly upset that he had not seen the house at a cheaper price and decided to take it out on us. Despite the fact that he had already arranged a loan for £182,000 and the documentation was with our solicitors he withdrew this. The estate agent probably conscious that their commission was dropping like a stone, managed after 3 hours of negotiation to keep him at £172,000, losing us a further £10,000 and meaning we are now worse off than when we were offered £170,000 by a developer without the estate agent fees. These men are going to turn £70,000 profit in less than 3 months as the house does not need to be refurbished, but as I have noted before: http://rooksmoor.blogspot.co.uk/2011/04/property-in-uk-11-squeezing-out-little.html they feel insulted if they have not been able to squeeze out extra money at the last moment. The auction process looked like it could deliver for us, but in the UK with those with wealth able to dictate in every transaction, taking such a personal attitude to everything and being determined not only to get the best deal, but as much more as they can squeeze, it is no better ultimately than a normal sale.
I am just denigrated so much by people I am trying to business with as stupid and naive that I have come out of this feeling utterly dirty. In Britain if you are an ordinary person, you are no longer permitted simply to buy and sell anything, whether a gift on eBay or a house without you being told that you must show such gratitude for being ripped off and accept that any buyer will come back to take more from you before the sale is done.
Showing posts with label estate agents. Show all posts
Showing posts with label estate agents. Show all posts
Wednesday, 11 July 2012
Tuesday, 26 April 2011
Property In The UK 11: Squeezing Out A Little Bit More
The house I live in has been on the market since September 2010. Not a good time to be selling a house, but as regular readers know, I have never been lucky with property. If it were not for HM Revenue & Customs admitting to overcharging me £16,000 worth of tax in 2008 and refunding it (with no apology) then, by now the house would have been repossessed. I have been unemployed for 11 months, bar six weeks' of a few days of work (some weeks one day, some two days per week) and despite still having regular interviews I seem no closer to getting back into employment. Consequently, because of the woman who lives in my house running a business I am not entitled to any benefit to pay the mortgage. The mortgage lender, Nationwide Building Society, has repeatedly refused to discuss my inability to pay, saying that if I have enough to pay at least one month's mortgage payments, then it is too early to discuss me defaulting or going on to interest only payments. With unemployment rising and despite 27 interviews now, no sign of work, the only option is to sell the house. Of course, that is easier said than done.
I acknowledge that I am very bad at selecting companies to provide me a service. I always pick the worst company available (though on a number of occasions, recommended to me) for the particular job. Consequently I have been ripped off by letting agents, removal companies, electrical repair companies and now estate agents. Within a five-minute walk of my house there are at least five estate agents, though the best decided to morph instead into a financial advice company, much to my frustration and the company they recommended nearby only lets, not sells properties. Consequently I picked a large company close to my house that was tied into national networks so as to get the coverage. However, the staff turned out to be clueless, making no effort to learn about the neighbourhood (even though you can see their office from my house) or the potential buyers coming round and what they were looking for (buy-to-let, buy-for-family, buy-for-self; elderly, middle aged, young; with/out children; local, from London, etc.) and said nothing bar 'this is the living room'. They had the cheek to say they would no longer do accompanied viewings because I simply took over the sales role. I said that was insulting as I had only taken that role because their staff made no effort to address the viewers or sell the property. Anyway, we got one buyer from them, but it took him three months and he had not even sent round a surveyor. We abandoned both him and the estate agent.
The next company we went for, is tiny, but works incredibly hard and within a week of transferring to them we have another buyer, offering £2000 more than the first. I live in a town with still high demand for property, very close to a good range of shops and good primary schools. Despite paying £240,000 for the house in 2007 it is now worth £230,000; to be expected with the downturn in the market. Offers have come in starting at £205,000, not leaving enough to clear the debts on the house and have enough to put down a deposit on a rented property. We have managed to get offers now up to £217,000 helped by the move from Winter to Spring, but still in line for a heavy loss. Given the location and the benefits of the property, once the economy recovers, the value is likely to rise fast, especially with the revival of buy-to-let mortgages reported this week. Thus, the person is getting a good deal on the property, £13,000 less than the valuation given even now by the estate agents.
These days, it is apparent, that a good deal is not enough for house buyers, they constantly want to squeeze out more from the seller. I have experienced this even back in 2007 selling my flat in London, a time when the housing market was much healthier. Due to being bullied by the landlord's representative, I effectively sold a two-bedroomed flat for the price of a one-bedroomed flat in the area of Newham. It was clean and modern and I had replaced the bathroom and the windows and made other improvements in the six years I had owned it, primarily for my own benefit when living there, but clearly improving it over some of the neighbouring flats. In my hurry, the buyer got a very good bargain. However, this was not enough. Living in rented accommodation I had no desire to move the furniture and white goods from it. This was initially not an issue, but then suddenly the buyer wanted them gone at my expense. Then he wanted the flat to be cleaned, by him even before he owned it, at a cost of £500 (€565; US$805). The flat was not unclean and it took £40 to employ a woman to clean it thoroughly. However, it was clear the buyer was using it as an excuse to squeeze more money for me, even though he was paying about £30,000 (€33,900; US$48,300) less than an equivalent flat in the same area would have cost him. Once the front door lock had been destroyed by the estate agents' carelessness on the day before the contract exchange occurred, I took the opportunity while it was being replaced to ensure that the buyer would receive a welcoming gift of rotten milk, a mouldy fridge and faeces when he arrived. Any waste paper and other rubbish I could find, was distributed over the flat so he could really see what an untidied flat looked like. As you can understand, I was angered, by the attempt to squeeze more and more from me, even when I was selling the place at a bargain price.
A very similar thing occurred with the current house. The second buyer we accepted first sent around three inspectors. The surveyor spent three hours at the property and people came to check the central heating and electricity too. This dragged out over a couple of weeks. The buyer did not take efforts to conceal her contempt for us and I overheard her ridiculing myself and the woman who lives in our house as stupid. Clearly she, like the buyer of my flat, believed that we were so desperate that she could humiliate us and we would have to swallow it. I have no idea why humiliation is now seen to be a necessary part of buying a house. Certainly getting an extra £500 from the buyer now seems to be part of a fashion. In this case she did not demand cleaning, she asked instead that we paid £500 towards the £1000 it would cost to build an additional wall around the kitchen; a wall that we would gain no benefit from. We naturally refused. The estate agent felt the demand was ridiculous, which suggests that it may not be as common behaviour as I have experienced, but he did offer to take £500 off his commission instead. The woman, disgruntled with our refusal to comply with us immediately withdrew her offer, over two months since she had made it, and like the first buyer, during that time, had effectively blocked other potential buyers.
These may be isolated incidents, but to me there does seem to be a trend that, as a buyer you see what you can squeeze out of the sellers. Getting a good price is not enough. There has to be some specific demand imposed on the sellers to make it clear to them that you hold the power. To me this does not seem to be a healthy way to do business. Either you want the property or you do not. Either you can afford to buy the property or you cannot. There is obviously room for discussion over the price and we have engaged with that, all the buyers (we are now on to the third, who rather worryingly has requested a third viewing of the house as I have been writing this) have got a price well below the asking price. When seeing Niall Ferguson talking about the success of Western capitalism and how now it is not thriving so well as it is in China, he noted the fact that honesty in business is one trait highly valued in Chinese commerce. This element seems to have gone from buying and selling in the UK and slows down exchange and discourages commerce. This applies to selling on eBay in the UK as it does to selling houses. Sometime in the previous decade, perhaps prompted by television programmes, buyers have been encouraged to move from simply getting a good deal, to squeezing unnecessary extras. After all, on a £217,000 sale, the commission to the estate agent is usually £4880 and unless the buyer if a first-time buyer the Stamp Duty Land Tax (SDLT) is £2,170, so what is the fuss over £500? It seems to be a principle that Ferguson missed that is damaging to capitalism in the UK today. It is not enough simply to make a profitable deal, now you have to 'win a victory' too and rub the face of your 'opponent' in the mud by asserting how much more economically powerful you are than them. This is one thing which harms sales and business in the UK and seems to be increasing as the recession widens the gap between people who previously would have been on the same economic level. Selling your house should not require you to kow-tow to someone who explicitly holds you in contempt.
P.P. 28/05/2011
This aspect of the house sale has taken on an additional unpleasant twist. It is clear that I have a sign on my forehead that I cannot see but which instructs everyone else: 'patronise and exploit this man as much as you can'. Last week I was fortunate enough to get work. This means there is no longer a need to sell the house, though we will struggle with paying the mortgage until my first salary arrives at the end of July. However, given that the house is worth tens of thousands of pounds less than when we bought it and we own 1/300th of it more, every month of the mortgage we pay, if we can hold on to it until prices have at least returned to their 2007 level, then we will at least be a little better off.
Once the job had been confirmed, I telephoned the estate agent to tell him we were taking the house off the market. I said I expected an invoice for services rendered in the four months they had been selling our house for us. I assumed he would inform all the relevant parties. Today, however, I received a very snotty letter from the solicitors' office, asking why they had not been informed as well. It was clear they had found out in two days of me telling the estate agent anyway, but that I did not crawl round to them and kiss their feet and apologise for not continuing with the sale, was clearly sufficient to leave them indignant. They were not our choice of solicitors anyway, we only took them as they are the ones the estate agent uses. All our communications, bar one visit, have been through the estate agent. Given their attitude now, I am actually glad I did not call them.
It gets worse. When our second buyer decided that because we were unwilling to pay her £500 and have a wall built to no benefit of us, she would break off the sale, we were left with the solicitor's charge for the work they had done already, a sum of £300 [€318; US$483]. We contacted the buyer to see if she would reimburse us this money. She did not say no, she simply refused to respond to any attempts to contact her. We accepted that with no written contract we could not get the money out of her. Now, however, this time we have broken the sale and now this latest buyer is trying to get his solicitor's fees back out of us. Despite being employed by us, our solicitor seems always to be working on behalf of other people. In the first case she did nothing to help us recoup the money from the buyer who broke off. In this second case, however, she has forwarded a bill from the buyer's solicitor, at a cost of £8 to us, and written to tell us it is 'only fair' that we reimburse the buyer. Why is it 'fair' that we have to pay the fees for everyone? The solicitor seems to have no interest in aiding us, despite being paid by us, at fees £66 higher than those levied by the latest buyer's solicitor.
Part of the problem seems to be that we are too honest and treat people politely. In contrast the two buyers have behaved in a 'chav-plus' manner. They behave as if thuggish, self-centred people from a housing estate, terse and rude in their manners, expecting always to get that bit extra, and yet, they have the money to speculate in property. I could be terse and aggressive in my business dealings, put on the accent and behaviour I learnt in Mile End and it is apparent in not doing so I somehow signal that I am open to being exploited by all and sundry. My advice is: the only way to go into buying or selling a house in the UK in 2011 is to behave as if you are some small-time gangster who has retired from the Ocean Estate in Stepney to Chigwell. In addition, avoid Aldridge Brownlee solicitors.
I acknowledge that I am very bad at selecting companies to provide me a service. I always pick the worst company available (though on a number of occasions, recommended to me) for the particular job. Consequently I have been ripped off by letting agents, removal companies, electrical repair companies and now estate agents. Within a five-minute walk of my house there are at least five estate agents, though the best decided to morph instead into a financial advice company, much to my frustration and the company they recommended nearby only lets, not sells properties. Consequently I picked a large company close to my house that was tied into national networks so as to get the coverage. However, the staff turned out to be clueless, making no effort to learn about the neighbourhood (even though you can see their office from my house) or the potential buyers coming round and what they were looking for (buy-to-let, buy-for-family, buy-for-self; elderly, middle aged, young; with/out children; local, from London, etc.) and said nothing bar 'this is the living room'. They had the cheek to say they would no longer do accompanied viewings because I simply took over the sales role. I said that was insulting as I had only taken that role because their staff made no effort to address the viewers or sell the property. Anyway, we got one buyer from them, but it took him three months and he had not even sent round a surveyor. We abandoned both him and the estate agent.
The next company we went for, is tiny, but works incredibly hard and within a week of transferring to them we have another buyer, offering £2000 more than the first. I live in a town with still high demand for property, very close to a good range of shops and good primary schools. Despite paying £240,000 for the house in 2007 it is now worth £230,000; to be expected with the downturn in the market. Offers have come in starting at £205,000, not leaving enough to clear the debts on the house and have enough to put down a deposit on a rented property. We have managed to get offers now up to £217,000 helped by the move from Winter to Spring, but still in line for a heavy loss. Given the location and the benefits of the property, once the economy recovers, the value is likely to rise fast, especially with the revival of buy-to-let mortgages reported this week. Thus, the person is getting a good deal on the property, £13,000 less than the valuation given even now by the estate agents.
These days, it is apparent, that a good deal is not enough for house buyers, they constantly want to squeeze out more from the seller. I have experienced this even back in 2007 selling my flat in London, a time when the housing market was much healthier. Due to being bullied by the landlord's representative, I effectively sold a two-bedroomed flat for the price of a one-bedroomed flat in the area of Newham. It was clean and modern and I had replaced the bathroom and the windows and made other improvements in the six years I had owned it, primarily for my own benefit when living there, but clearly improving it over some of the neighbouring flats. In my hurry, the buyer got a very good bargain. However, this was not enough. Living in rented accommodation I had no desire to move the furniture and white goods from it. This was initially not an issue, but then suddenly the buyer wanted them gone at my expense. Then he wanted the flat to be cleaned, by him even before he owned it, at a cost of £500 (€565; US$805). The flat was not unclean and it took £40 to employ a woman to clean it thoroughly. However, it was clear the buyer was using it as an excuse to squeeze more money for me, even though he was paying about £30,000 (€33,900; US$48,300) less than an equivalent flat in the same area would have cost him. Once the front door lock had been destroyed by the estate agents' carelessness on the day before the contract exchange occurred, I took the opportunity while it was being replaced to ensure that the buyer would receive a welcoming gift of rotten milk, a mouldy fridge and faeces when he arrived. Any waste paper and other rubbish I could find, was distributed over the flat so he could really see what an untidied flat looked like. As you can understand, I was angered, by the attempt to squeeze more and more from me, even when I was selling the place at a bargain price.
A very similar thing occurred with the current house. The second buyer we accepted first sent around three inspectors. The surveyor spent three hours at the property and people came to check the central heating and electricity too. This dragged out over a couple of weeks. The buyer did not take efforts to conceal her contempt for us and I overheard her ridiculing myself and the woman who lives in our house as stupid. Clearly she, like the buyer of my flat, believed that we were so desperate that she could humiliate us and we would have to swallow it. I have no idea why humiliation is now seen to be a necessary part of buying a house. Certainly getting an extra £500 from the buyer now seems to be part of a fashion. In this case she did not demand cleaning, she asked instead that we paid £500 towards the £1000 it would cost to build an additional wall around the kitchen; a wall that we would gain no benefit from. We naturally refused. The estate agent felt the demand was ridiculous, which suggests that it may not be as common behaviour as I have experienced, but he did offer to take £500 off his commission instead. The woman, disgruntled with our refusal to comply with us immediately withdrew her offer, over two months since she had made it, and like the first buyer, during that time, had effectively blocked other potential buyers.
These may be isolated incidents, but to me there does seem to be a trend that, as a buyer you see what you can squeeze out of the sellers. Getting a good price is not enough. There has to be some specific demand imposed on the sellers to make it clear to them that you hold the power. To me this does not seem to be a healthy way to do business. Either you want the property or you do not. Either you can afford to buy the property or you cannot. There is obviously room for discussion over the price and we have engaged with that, all the buyers (we are now on to the third, who rather worryingly has requested a third viewing of the house as I have been writing this) have got a price well below the asking price. When seeing Niall Ferguson talking about the success of Western capitalism and how now it is not thriving so well as it is in China, he noted the fact that honesty in business is one trait highly valued in Chinese commerce. This element seems to have gone from buying and selling in the UK and slows down exchange and discourages commerce. This applies to selling on eBay in the UK as it does to selling houses. Sometime in the previous decade, perhaps prompted by television programmes, buyers have been encouraged to move from simply getting a good deal, to squeezing unnecessary extras. After all, on a £217,000 sale, the commission to the estate agent is usually £4880 and unless the buyer if a first-time buyer the Stamp Duty Land Tax (SDLT) is £2,170, so what is the fuss over £500? It seems to be a principle that Ferguson missed that is damaging to capitalism in the UK today. It is not enough simply to make a profitable deal, now you have to 'win a victory' too and rub the face of your 'opponent' in the mud by asserting how much more economically powerful you are than them. This is one thing which harms sales and business in the UK and seems to be increasing as the recession widens the gap between people who previously would have been on the same economic level. Selling your house should not require you to kow-tow to someone who explicitly holds you in contempt.
P.P. 28/05/2011
This aspect of the house sale has taken on an additional unpleasant twist. It is clear that I have a sign on my forehead that I cannot see but which instructs everyone else: 'patronise and exploit this man as much as you can'. Last week I was fortunate enough to get work. This means there is no longer a need to sell the house, though we will struggle with paying the mortgage until my first salary arrives at the end of July. However, given that the house is worth tens of thousands of pounds less than when we bought it and we own 1/300th of it more, every month of the mortgage we pay, if we can hold on to it until prices have at least returned to their 2007 level, then we will at least be a little better off.
Once the job had been confirmed, I telephoned the estate agent to tell him we were taking the house off the market. I said I expected an invoice for services rendered in the four months they had been selling our house for us. I assumed he would inform all the relevant parties. Today, however, I received a very snotty letter from the solicitors' office, asking why they had not been informed as well. It was clear they had found out in two days of me telling the estate agent anyway, but that I did not crawl round to them and kiss their feet and apologise for not continuing with the sale, was clearly sufficient to leave them indignant. They were not our choice of solicitors anyway, we only took them as they are the ones the estate agent uses. All our communications, bar one visit, have been through the estate agent. Given their attitude now, I am actually glad I did not call them.
It gets worse. When our second buyer decided that because we were unwilling to pay her £500 and have a wall built to no benefit of us, she would break off the sale, we were left with the solicitor's charge for the work they had done already, a sum of £300 [€318; US$483]. We contacted the buyer to see if she would reimburse us this money. She did not say no, she simply refused to respond to any attempts to contact her. We accepted that with no written contract we could not get the money out of her. Now, however, this time we have broken the sale and now this latest buyer is trying to get his solicitor's fees back out of us. Despite being employed by us, our solicitor seems always to be working on behalf of other people. In the first case she did nothing to help us recoup the money from the buyer who broke off. In this second case, however, she has forwarded a bill from the buyer's solicitor, at a cost of £8 to us, and written to tell us it is 'only fair' that we reimburse the buyer. Why is it 'fair' that we have to pay the fees for everyone? The solicitor seems to have no interest in aiding us, despite being paid by us, at fees £66 higher than those levied by the latest buyer's solicitor.
Part of the problem seems to be that we are too honest and treat people politely. In contrast the two buyers have behaved in a 'chav-plus' manner. They behave as if thuggish, self-centred people from a housing estate, terse and rude in their manners, expecting always to get that bit extra, and yet, they have the money to speculate in property. I could be terse and aggressive in my business dealings, put on the accent and behaviour I learnt in Mile End and it is apparent in not doing so I somehow signal that I am open to being exploited by all and sundry. My advice is: the only way to go into buying or selling a house in the UK in 2011 is to behave as if you are some small-time gangster who has retired from the Ocean Estate in Stepney to Chigwell. In addition, avoid Aldridge Brownlee solicitors.
Sunday, 2 December 2007
Property in the UK 6b: Lessons Learnt
I am currently holding my breath regarding the purchase of a house, only my second in my life, but a process that has dragged on now for five months. The key thing that I have learnt and I imagine that I share this realisation with many people is that I have absolutely no power and influence. The bulk of the UK population is prey to the whims of both the professionals such as solicitors (for non-UK readers these a low-level lawyers who deal with house sales, wills, etc.), doctors, teachers, to salespeople like estate agents, insurance companies, etc. and to skilled manual workers notably builders, gas/electricity/water/car repairmen and so on. You can spend thousands of pounds and yet you are treated as naive (which you often are about particular issues) and so worthy of being both patronised and ripped off. I have experienced all of these things despite spending over £5000 (€7150; US$10,350) on estate agent and solicitors fees.
I was ripped off £10-15,000 on the sale of my flat and a further £5000-10,000 on the house I am buying. Constantly I have been pressured by telephone and email as if all the problems along the housing chain were my fault alone. Everyone has more power than me, the buyer of my flat constantly demanded extra payments and reductions that the estate agent encouraged me to pay rather than resisting him. The people further up the chain keep saying we are dragging our feet, but when we are ready, suddenly they want to delay 10 days and we are told there is nothing we can do about it. The only thing I have left is anger. When I hire someone I expect them to act in my interest not someone else's but none of the four people I hired this time (despite them being recommended, I do wonder how much worse those people do not recommend are) have done this.
I think paying thousands of pounds earns me the right to be addressed as an adult not a teenager, but clearly not. I accept that I am no expert on the housing market so I want clear, truthful information and then not to be told I am stupid. The mortgage lender seem to be the most well intentioned of the people I have been using, but even they despite direct questions like 'how much actual money will I get in terms of a mortgage?' they have been really opaque and the figure being lent to me fell from £128,000 to £113,000 then to £96,000 without any fees falling. If I had known at the start that in fact I could only borrow £96,000 then I would not have put an offer in on the house I did. This is the worst time to be buying a house. I know you will say I should have been better informed and so on, but given that I have attended university and do a job which pays 50% higher than the national average, if I have found it so hard it must be even tougher for the population without my education and earnings. Obviously I was in a weak position because of my landlord causing so much difficulty for me and with more time and less pressure, maybe, just maybe I could have escaped some of this bad treatment. The housing market is rotten to the core. These people may not be committing crimes but they are bullying and misleading ordinary people.
All I have left (given that all my savings have been wiped out to pay the shortfall in the money lent to me) is anger. Housing is at the core of British society to an extent unrivalled across the world so it is something we cannot escape, but why do we have to be over-charged and go through so much to be humiliated in order to participate in this process? I do really hope I am dead before I have to move house again. My fear now is that with all the expense and my persistent bad luck the new house will collapse or be repossessed.
I was ripped off £10-15,000 on the sale of my flat and a further £5000-10,000 on the house I am buying. Constantly I have been pressured by telephone and email as if all the problems along the housing chain were my fault alone. Everyone has more power than me, the buyer of my flat constantly demanded extra payments and reductions that the estate agent encouraged me to pay rather than resisting him. The people further up the chain keep saying we are dragging our feet, but when we are ready, suddenly they want to delay 10 days and we are told there is nothing we can do about it. The only thing I have left is anger. When I hire someone I expect them to act in my interest not someone else's but none of the four people I hired this time (despite them being recommended, I do wonder how much worse those people do not recommend are) have done this.
I think paying thousands of pounds earns me the right to be addressed as an adult not a teenager, but clearly not. I accept that I am no expert on the housing market so I want clear, truthful information and then not to be told I am stupid. The mortgage lender seem to be the most well intentioned of the people I have been using, but even they despite direct questions like 'how much actual money will I get in terms of a mortgage?' they have been really opaque and the figure being lent to me fell from £128,000 to £113,000 then to £96,000 without any fees falling. If I had known at the start that in fact I could only borrow £96,000 then I would not have put an offer in on the house I did. This is the worst time to be buying a house. I know you will say I should have been better informed and so on, but given that I have attended university and do a job which pays 50% higher than the national average, if I have found it so hard it must be even tougher for the population without my education and earnings. Obviously I was in a weak position because of my landlord causing so much difficulty for me and with more time and less pressure, maybe, just maybe I could have escaped some of this bad treatment. The housing market is rotten to the core. These people may not be committing crimes but they are bullying and misleading ordinary people.
All I have left (given that all my savings have been wiped out to pay the shortfall in the money lent to me) is anger. Housing is at the core of British society to an extent unrivalled across the world so it is something we cannot escape, but why do we have to be over-charged and go through so much to be humiliated in order to participate in this process? I do really hope I am dead before I have to move house again. My fear now is that with all the expense and my persistent bad luck the new house will collapse or be repossessed.
Friday, 15 June 2007
Property in the UK 4: Return of the Rentier Class
I had thought that maybe I had run out of things to be angry or frustrated about which was why my blog was moving over to nicer things like movies and books I find interesting. However, there is always the unexpected. This week my car broke down and I found I can only afford to buy and older or smaller one; it turned out someone had been misusing my credit card but weirdly only for sums of £10-20 and once just for 52p; then my landlord's father said his son (currently in the USA) wanted to sell the house we have been living in for the past five months. This fact, combined with what I heard from an estate agent at a barbecue recently, provoked me to return to the British obsession - property.
Up until now myself and the people I live with have had to move house on average every 16 months. We reckon we lose about £1000 (€1460, US$2000) every time we move. Now, however, the gap between when we are forced out of our houses seems to be decreasing. This is coming about because of interest rate rises to try to slow inflation in the UK. They make mortgages more expensive and there is a fear as in 1990-3 house prices will fall sharply and lots of people will have 'negative equity', i.e. they owe more on their house than it is now worth. Since the 1990s with so many companies stealing pension funds or closing them to workers UK people feel that the only way to secure their old age is to buy property and rent it out then sell it off when they retire. 'Buy-to-let' has been so common in the UK. In some ways this is good as it has put much needed rental property into the system, though this has not come without costs.
Many people, like me, rent a house but own a smaller property that they rent out as their pension scheme. I bought a flat having lived there for a while got work far away from it so I was not 'buy-to-let' but I moved into that class when I put it up for rental. It has now become such a liability because of random, arbitrary charges from Newham Council that I am selling it. I am not alone. Those buy-to-let people are finding the mortgage payments get harder to meet, especially as their rent is rising quickly (about 20% per 18 months in my town). The 'for sale' signs are appearing everywhere now and this is likely to trigger the crash in prices that they are all trying to avoid. For tenants it is proving a nightmare as with us, a few months after you move in, you find you have to leave when the house is sold. In the case of a couple I know, the house they rented once they married a few months ago, apparently was already on the market but the landlord never told them. His greed meant he wanted to keep getting rent up until the day he sold the property. (This is encouraged by the fact that the landlord since 2004 has had to pay council tax on empty properties). So much for their new home together, four months down the road they have to move again and have no guarantee they will not be treated the same at the next house they rent. This has happened to another local couple I know too and I imagine it is occurring across the UK. UK tenants have few rights and little comeback.
I was under the impression that a lot of rental property fell into this category, that as tenants these days you tend to rent from someone who owns one place. Often, as I thought was the case with my current landlord, they get work somewhere else abroad and rent the house out just in case they need to come back and live there again in the future. However, when I found out the landlord's father has bought 47 (forty-seven) houses since 2001, I realised that I had been missing a whole situation. The buy-to-let people are small fry, there is a whole 'rentier' class above them who distort the economy in many towns. In fact I then realised I had seen more examples in the newspapers. You may ask what is so bad about people expanding their businesses in this way. The problem is that it is them who are driving up both house and rental prices. This was where something else I had been oblivious to comes in. Talking to an estate agent recently she said that in her office they never advertise around 50% of the houses they are asked to sell, they just contact landlords directly and offer the houses to them. This restricts the supply of properties coming on to the market and so artificially inflates the prices. In addition landlords are not as fussed as owner-occupiers in getting the lowest price as long as the rental income can cover their mortgage, they would in fact like quicker rising house prices and it increases their equity faster. In addition, they get a pick of the properties meaning people actually trying to get a place to live in are simply left with the rejects. I know one family who are now searching over a 40 mile (64Km radius) to try to find a decent house.
You might say, well, with these rentiers owning so much property there must be a lot available for rent. Yes, that is true, but effectively in each town you get a cartel. There is no ability to shop around. In a town of say 150,000 people at any one time there are likely to be no more than 30 properties of a particular type, for example 3-bedroom houses, to rent across the town, these may all be owned by just 5-8 people. There are obviously seasonal fluctuations, the bulk of the agencies we visited in January had no properties at all to let, and if you want a 2-bedroomed flat there will always be more available than say 4-bedroomed houses. Anyway, they set the prices and you have little choice because there is no free market and little true competition. Inflation in the UK has been running around or below 3% for years now and interest rates below rising to a little over 5%. So how come rental prices are rising at 10-12% per year? With all the people who own one buy-to-let property now selling up, competition will shrink further as these will be snapped up by the big rentiers with the money to weather any financial squall.
Despite all the rhetoric since the early 1980s of the free market meaning competition and that meaning better service and lower prices, in fact the UK has ended up with capitalism working in a different way with a few individuals manipulating the market, unfettered by regulation to ensure that they grow even richer at the expense of the bulk of the population financially beneath them. Maybe we have got the flexible labour force Thatcher wanted, but unlike what the Thatcherites envisaged of workers moving where there is work, we are shackled by unbreakable long-term contracts and then are kicked out when the sale price of the house becomes worth more than keeping you living there. This is a labour force which does not move on its own accord, it is one that is driven like a flock of sheep by the rentiers.
Up until now myself and the people I live with have had to move house on average every 16 months. We reckon we lose about £1000 (€1460, US$2000) every time we move. Now, however, the gap between when we are forced out of our houses seems to be decreasing. This is coming about because of interest rate rises to try to slow inflation in the UK. They make mortgages more expensive and there is a fear as in 1990-3 house prices will fall sharply and lots of people will have 'negative equity', i.e. they owe more on their house than it is now worth. Since the 1990s with so many companies stealing pension funds or closing them to workers UK people feel that the only way to secure their old age is to buy property and rent it out then sell it off when they retire. 'Buy-to-let' has been so common in the UK. In some ways this is good as it has put much needed rental property into the system, though this has not come without costs.
Many people, like me, rent a house but own a smaller property that they rent out as their pension scheme. I bought a flat having lived there for a while got work far away from it so I was not 'buy-to-let' but I moved into that class when I put it up for rental. It has now become such a liability because of random, arbitrary charges from Newham Council that I am selling it. I am not alone. Those buy-to-let people are finding the mortgage payments get harder to meet, especially as their rent is rising quickly (about 20% per 18 months in my town). The 'for sale' signs are appearing everywhere now and this is likely to trigger the crash in prices that they are all trying to avoid. For tenants it is proving a nightmare as with us, a few months after you move in, you find you have to leave when the house is sold. In the case of a couple I know, the house they rented once they married a few months ago, apparently was already on the market but the landlord never told them. His greed meant he wanted to keep getting rent up until the day he sold the property. (This is encouraged by the fact that the landlord since 2004 has had to pay council tax on empty properties). So much for their new home together, four months down the road they have to move again and have no guarantee they will not be treated the same at the next house they rent. This has happened to another local couple I know too and I imagine it is occurring across the UK. UK tenants have few rights and little comeback.
I was under the impression that a lot of rental property fell into this category, that as tenants these days you tend to rent from someone who owns one place. Often, as I thought was the case with my current landlord, they get work somewhere else abroad and rent the house out just in case they need to come back and live there again in the future. However, when I found out the landlord's father has bought 47 (forty-seven) houses since 2001, I realised that I had been missing a whole situation. The buy-to-let people are small fry, there is a whole 'rentier' class above them who distort the economy in many towns. In fact I then realised I had seen more examples in the newspapers. You may ask what is so bad about people expanding their businesses in this way. The problem is that it is them who are driving up both house and rental prices. This was where something else I had been oblivious to comes in. Talking to an estate agent recently she said that in her office they never advertise around 50% of the houses they are asked to sell, they just contact landlords directly and offer the houses to them. This restricts the supply of properties coming on to the market and so artificially inflates the prices. In addition landlords are not as fussed as owner-occupiers in getting the lowest price as long as the rental income can cover their mortgage, they would in fact like quicker rising house prices and it increases their equity faster. In addition, they get a pick of the properties meaning people actually trying to get a place to live in are simply left with the rejects. I know one family who are now searching over a 40 mile (64Km radius) to try to find a decent house.
You might say, well, with these rentiers owning so much property there must be a lot available for rent. Yes, that is true, but effectively in each town you get a cartel. There is no ability to shop around. In a town of say 150,000 people at any one time there are likely to be no more than 30 properties of a particular type, for example 3-bedroom houses, to rent across the town, these may all be owned by just 5-8 people. There are obviously seasonal fluctuations, the bulk of the agencies we visited in January had no properties at all to let, and if you want a 2-bedroomed flat there will always be more available than say 4-bedroomed houses. Anyway, they set the prices and you have little choice because there is no free market and little true competition. Inflation in the UK has been running around or below 3% for years now and interest rates below rising to a little over 5%. So how come rental prices are rising at 10-12% per year? With all the people who own one buy-to-let property now selling up, competition will shrink further as these will be snapped up by the big rentiers with the money to weather any financial squall.
Despite all the rhetoric since the early 1980s of the free market meaning competition and that meaning better service and lower prices, in fact the UK has ended up with capitalism working in a different way with a few individuals manipulating the market, unfettered by regulation to ensure that they grow even richer at the expense of the bulk of the population financially beneath them. Maybe we have got the flexible labour force Thatcher wanted, but unlike what the Thatcherites envisaged of workers moving where there is work, we are shackled by unbreakable long-term contracts and then are kicked out when the sale price of the house becomes worth more than keeping you living there. This is a labour force which does not move on its own accord, it is one that is driven like a flock of sheep by the rentiers.
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