Here Kitty, Kitty….

The role of the letting agent is a varied one, but until yesterday I was unaware that my ‘coat of may colours’ (name the musical), sported a badge saying ‘pest control’.  I was also unaware that cats were considered ‘vermin’ by certain members of the community.  I am not myself a cat person but I think that I would find it a little excessive to ring up a lettings agency demanding the immediate demise of the feline belonging to one of their tenants.  The fun and games started when a ‘gentleman’ (I suggest that one looks up the definition of ‘irony’ in the dictionary), rang the office and opened the conversation with the immortal line, “one of your tenants has a cat that keeps @&*ting in my garden” with the follow up question of,”what are you going to do about it?”

Having been on all the corporate b!”£*&^t courses, I responded by thanking him profusely for his call, confirming that his call was important to us, that I was taking on board what he had to say and that by singing from the same song sheet we could all move forward…. and all those course lecturers thought that I was looking at the sports pages… To allow me to give him the relevant feedback I asked for his name, which he declined to offer, his number, which he also declined to offer and his address, that (un)surprisingly he also failed to provide.  He had identified us as the agent because he remembered our company sign being outside the property prior to be it being let.  He was not wholly reticent on providing me with information as he confirmed that he would continue to trap the cat in a purpose built cage designed to catch cats, whom he considered to be vermin.  He did though ask me to confirm what I was going to do about it. Cynicism about the content of corporate courses aside, I would in normal circumstances have told him that I would investigate the matter and as a matter of courtesy would report back to him with my findings. I would in fact have been telling a falsehood as returning calls is a little difficult with no contact details.  In all seriousness, a lettings agency does have an obligation to investigate and attempt to resolve genuine complaints involving one of their properties.  It becomes a little more difficult when anonymous callers demand the instantaneous extermination of a much-loved family pet that has been seen in the vicinity of a property where our agency once had a sign.  For those of you who are perhaps wondering whether I have failed in my duty of care – not least to the felis catus community – I made some calls and established that the cat did exist and did belong to one of out tenants.  Neighbours (with the exception of Mr Anonymous) had no issue with the cat’s behaviour or toiletry habits. I am now confident that although I was unable to collect my vermin control badge, I will forever be invited to the Cats’ Protection League Christmas party.

What is the most dangerous financial asset in the world?

This was the question posed to Faisal Islam, the economics editor of Channel 4 News.  It was posed by the chief executive of a leading European bank.  His answer was some spectacularly erudite but wholly over-complicated one involving, ‘security-collateralised debt obligations” (sic) but was very much the wrong one; as he happily admits in his column in The Observer (Sunday 18 August 2013).  The correct answer – according to one of the big-hitters in the Western financial world – was something of which we all have knowledge and experience – the humble mortgage.  The clue is perhaps in the title: the word ‘mortgage’ comes from the French amalgamation of two words; ‘mort’ meaning ‘death’ and ‘gage’ meaning ‘contract’.  So your mortgage is actually your death contract; a meaning that has had a somewhat fitting prescience for many since 2007. I am no advertising guru, but I do not think that the marketing department of any bank or building society would sanction a campaign offering the latest, ‘No set -up fee, first-time-buyer death contract’ ( I think that I would rather pay the fee).

Faisal also points out that, “housing is the only basic human need for which rapid price rises are met with celebration rather than protest” (sic).  Elsewhere in the news that day, a headline celebrated the fact that in one financial quarter in the UK, buy-to-let lending topped 5 billion pounds.  Groups serving and representing landlords were equally joyful in welcoming the news.  George Spencer, chief executive of online lettings company ‘Rentify’ said, “this growth is fuelled by renewed appetite from investors – both experienced and novice-alike, along with better availability of buy-to-ley mortgages at lower rates and with looser criteria than at any time in the past 5 years”. (sic)  Let us hope that the words, ‘novice’, ‘looser’ and ‘availability’ do not turn some of these-buy-to-ley mortgages into buy-to-let death contracts.

If your aunty had balls….

When I was in school (approved), one of my more notable reports commented how, “Gareth sets himself increasingly low standards that he often fails to achieve…” (sic) .  The same could be levelled at the marketing departments of various corporate estate agents.  An experienced, local independent estate agent – and in fairness, there is more than one in Cwmbran-  will tell you that there are three things that decide whether you are successful in getting the instruction of a potential vendor: does the vendor like you?  what’s my house worth?  and how much are you going to charge me? It does not matter how many shiny brochures you distribute, how many taglines you put in the local paper or how many people comment on how they ‘saw your sign ‘ on the local roundabout, if the potential vendor, doesn’t like you, and doesn’t like what you have to say, (the former usually goes hand in glove with the latter), it is end of sports.  In a turning market, always remember that the right house, in the right place, at the right price will always sell. The last point has and always will be the deciding factor on whether a house ends up with a ‘sold’ board in front of it, or remains for eternity on a corporate glossy website.  ………….she would be your uncle.

The Fates conspire…

In classical mythology, man’s destiny is determined by the three Fates who decide the what, the how much and the ”that’s it, lights out”.  In real life, Clotho, Lachesis and Atropos (the all-girl group from Aberdare…) get a day off when it comes to real estate.  I have just got back in from a valuation where the buyers paid too much for it, have spent too much on it and now won’t get their money back.  Apparently, it is everybody else’s fault bar their own.  I sympathise because of course, it was fate that made them pay the asking price , it was fate that made them choose the builder and it is fate that will stop them getting what they want and making a fortune.  There might also be an outside chance that they made a decision as adults and it was the wrong one.  In the last few days every media outlet led with the story that booming property prices are back, and one of the areas with the greatest improvement in house prices is South Wales. The other two areas of noted improvement and increased activity are the West Midlands and the North East. These three geographic regions are areas where prices are coming from an already low base in comparison to the rest of the country; so an upward curve is not entirely surprising.

If prices do increase as the experts are predicting, will house owners reap the rewards because they are property experts or simply because the three Fates have looked benignly upon them?

Viva Espana….

Isn’t it comforting to know that good news breeds further glad tidings…  Not only do we read about becoming buy-to-let millionaires overnight, pregnant pandas and Katie Price’s affirmation that you can be a great rugby player (take a bow, Danny Cipriani) but be lacking in other departments, giving us some hope that there is a God, we are also told that the Spanish property market is just about to boom (like the last 4 times).  Applications for the position of manager in our new Marbella branch are cordially invited.

Who’s the daddy?

Mark Carney the new Governor of the Bank of England, has broken new ground by becoming the first in his role to set out a plan in relation to interest rates. Earlier this week, following a meeting of the Monetary Policy Committee (MPC)  it was announced that interest rates would be kept at 0.5% until the level of employment fell below 7% (it is currently 7.8%). Added to this, it was announced yesterday that they would stay low until at least 2016.  Without wishing to over-egg the power of my crystal ball, we have at Cheshire and Co been intimating that this would be the case for some time.  This morning, the Fourth Estate has been awash with stories of a further boom in the buy-to-let market.  As of now, buy-to-let loans make up 13% of gross lending and experts in the field are predicting that this is set to increase dramatically.  Without wishing to sound like the voice of doom, I have to comment that I  have seen this all before; after every boom there is a bust.  After everyone has followed the experts’ advice and dived headfirst into the buy-to-let market, what will happen when interest rates go up by 1 or 2%?  Actually, I can go someway to answering that; the experts will be advising people to invest in fracking north of Macclesfield.

Competing with the interest rate story we are told that Great Britain’s only pair of giant pandas Tian Tian and Yang Guang (my fellow mandarin speakers will  know that these translate to ‘Sweetie’ and ‘Sunshine’), are expecting twins.  However Mr Valentine, Director of Edinburgh Zoo’s Giant Panda Programme has voiced a note of caution;  the twins may have different fathers, one of whom may be Yang Guang.  That may be a surprise in Edinburgh, but would not be deemed to be unusual in Cwmbran.  As you can tell, I am fitting very well into my role as an ambassador for Torfaen…

It’s that Friday feeling….

Here we are again on a Friday being told by another survey from a property-orientated institution (on this particular occasion, the Nationwide), that house prices are rising at the fastest rate for three years.  In fairness to the chief economist of the UK’s biggest building society he does point out that the annual figure has been boosted by a downturn in July 2012 which meant that the comparison was against a low base. (sic) According to his employer the average UK home has increased in value by £8563 since the end of 2012.  If extrapolated down to the Cwmbran environ this means that for some or our bigger landlord clients they will have made over £100k in the first 6 months of this year. Mmmm… let’s look at the facts.  House prices are still around 10% below the all-time highs recorded in 2007.  So if you actually bought a property around the 2007/2008 period for around £170,000, your house on average is now worth approximately £17,000 less than you paid for it.  We therefore need another 6 months of repeated growth to get these people back to the break even point.  If you bought years ago, well before the peak and subsequent crash, it is party time again.  It is also worth remembering that there is a huge difference between buying a property with a view to it being your home and buying a property as an investment.  For many people reading this survey, its findings are almost irrelevant; they are first time buyers for whom taking a step onto the property ladder and finding somewhere to live is their priority, not how much money they are going to make some years down the line. For those first time buyers who may feel that they are going to find it even more difficult to find the funds to buy a property, help is apparently on its way in the form of the second part of the government’s Help-To-Buy Scheme.  Through this scheme, first and second time buyers will be able to apply for a government guarantee for 15% of the value of the purchase price of the property that they wish to buy. As we blogged weeks ago, this runs the risk of inflating house prices as vendors are going to start pushing prices up by  up  to 15% as the view is taken that ‘well the government is underwriting it, so that’s ok’.  Our view, which is reiterated by the Business Secretary, Vince Cable, is to think about what happens when the £130 billion allocated to this scheme runs out and perhaps even more pertinently what happens when the Help-To-Buy ‘followers’ start defaulting.  Then the government help-to-buy scheme becomes the government have-to-pay debacle.  Then we are back to the RBS, HBOS, Lloyds and Mack and Mabel situation that brought the world to its knees.

Why not sell your house in one day….

  If only it were that easy. So trumpeted the headline in a recent article in a national newspaper.  What the ‘property expert’ whose name was attributed to the article was promoting was the American and Australian practice of selling houses through an “open house” event.  What this entails is the agent marketing the property holding an open ‘day’ (in real time this is usually a couple of hours), whereby any number of potential buyers or interested parties can come and walk around the property.  This takes place once, thereby affording would-be buyers one single chance to view a property before putting in their bids.  Our Antipodean friends (no cheap jokes about convicts), are also able to make an immediate offer or wait until the property is auctioned at the end of the viewing.  The plus points of such a day are that it is quick, clean, easy and there is no to-ing and fro-ing, cogitating, gazumping, counter-bidding or people not making a decision to make an offer until Aunty Mavis and the cat have come to look at the downstairs loo.  In theory, fantastic; no wonder American and Australian realtors (get the terminology right, please) and sellers love them.  Over here, it is a slightly different story.  In the UK we have a unique conveyancing system that offers many benefits, but swiftness and speed in closing the deal are not two of them. Here at Cheshire and Co we have held open viewings, and however many people turned up on the day, due to the vagaries of English and Welsh conveyancing law and however badly the prospective buyers wanted the property, the sale did not complete until some 8 weeks after the viewing.  I would heartily opine that an open day can and has worked on an empty property; but I cannot recommend crowds of unqualified individuals with whom we, as the agent, have never had any interaction, traipsing around somebody’s home full of their personal possessions without our full supervision.  If more than one groups turns up at the same time, it takes on all the challenges of herding cats.  I would not wish to have to deal with the phone calls in the following days reporting that the Ming vase was no longer adorning the Ikea – looks- a lot- better- in -the- advert- than -it -does- in -real- life-table.  However, having said all that, if the property expert and the vendors want to adopt the American/Australian system – together with their commission rates of 10%- I’m all for it.