“Laws control the lesser man… Right conduct controls the greater one” Mark Twain

As I recline this evening on the chaise longue at Cheshire Towers-indulging my inner sybarite-to watch a celebration of Her Majesty, I have been given pause to ponder the behaviour of my fellow humans.  As HM has shown throughout her reign, it is advocated to do the best that one can and what one believes to be the right thing. Having been incapacitated during the past week (fear not dear fan club members, The Chesh lives to fight another day), I have had time for reflection on the vagaries of the human condition. Due to my enforced withdrawal from sports, I was able to watch the fallout from the budget and the resignation of IDS. Principled or precious?  As always with the departure of any public figure, there was an immediate stampede of those wanting to jump on the bashing bus.  What made me chuckle was the amount pf people who somewhat sanctimoniously offered how they could not believe that he could sit at Cabinet for four years when he clearly was not wholly supportive of the PM and the Chancellor.  Without digressing into a discussion of democratic freedom of expression and the intelligent exchange of educated opinion (that is normally reserved for ‘Spoons on a Thursday night), I do have to point out one small thing that I learnt many years ago when sitting with the big boys at the corporate table; having gained one’s place at the trough that is accompanied by the procuration of the big bucks, big car, secretary with the big…WPM count, one soon learns to weigh up whether keeping those perks is more beneficial than making a stand over one of your principles. Hypocritical? Possibly. Sensible (particularly when you have a wife who has to have the latest Louis Vuitton)? Most definitely. As has often been opined, money does not buy you happiness.  Very true, but it is preferable to be miserable in the back of a Mercedes than on a push bike.

Even allowing for the vast quantities of drugs that have passed through my system-all legal I may add- you may well be wondering what my musings have to do with estate agency? As with any group dynamic, be it at a COBRA meeting (if ever an acronym belied the banality of its meaning-COBRA is far sexier than Cabinet Office Briefing Room A), or a regional managers’ meeting at head office, to survive one does have to go along with the collective view, or for those ballsy enough,one makes the conscious decision to leave.  I have no problem with employees who do their master’s bidding.  At some point all us independent estate agents have taken the corporate shilling with all its associated lagniappes (look it up).  For most of us, independence was thrust upon us-forget the PR spin-because for any number of reasons we were, if not unemployable, at least less employable than some eager young buck willing to play the corporate game.

Closer to home in the metropolis of Cwmbran, I have received a panacea to my ills; no, not Tatiana in the nurse’s outfit, but evidence that imitation is indeed the most sincere form of flattery. Thank you, you know who you are.  For those of you who think that you may know, answers on a postcard please.

 

 

Statistics are like bikinis. What they reveal is suggestive, but what they conceal is vital.

As the Easter Bunny limbers up for his annual exertions with a few zumba sessions and holding back on the Jagermeister during the week, the season of publishing reports awakes from its 10 months of slumber where no one really gives a hot cross bun about figures and their interpretations.  Cheshire & Co have a somewhat dim view of surveys, but would like to think that a report does occasionally contain something pertaining to the truth.  Alas, this week’s editions show that the ‘truth is out there’, sort of; but how it is collected, assimilated, interpreted and then presented to the unsuspecting public is as varied as the ‘medications’ being taken for all manner of genuine heath reasons by members of the World Tennis Association Tour…

In the past seven days, Halifax have reported that house prices in the UK rose in 2015 by 9.5% (compare that to the rise in wage inflation), yet Nationwide report that house prices during the same period only went up 4.5%.  The Office of National Statistics says the average house price increase in the UK was 6.7%, but for those people living in Blaenavon it was only 1%.  Unlucky.  Halifax also said that house prices increased by more than the average worker’s annual earnings in more than a quarter of local authority districts in the UK in just two years.  Firstly, that is an awful lot of data inputted to give one average figure and secondly, it is more than a few mores and how is ‘more’ quantified?  Having thought about this for a minute, I realised that actually, this is just a reflection of the UK demographic and actually means b”£&*er all.  If you live in SW1 and earn your monthly wage as a hedge fund manager, your house will increase in value by a considerable amount.  If you work as say, the Prime Minister on £163,000 per annum and own a property with £2.5 million, then it is easy to se that over two years your house will have increased in value by more than your salary.  If you live in Blaenavon, a 1% increase on a house valued at £90,000 would come nowhere near the wages of someone on the minimum wage.  One does have to wonder what the reporting of the said reports actually means and what relevance they have to the general populace.  I think that I can safely report, ‘not alot’.

The one that did hold my attention was that of the accountancy firm Moore Stephens that published that in in 2015, 285 estate agents went bust in the UK and that their findings showed that this was due to independent firms being squeezed out by large corporates and new online companies charging vendors far less than their high street office based counterparts.  In fact the likes of Connells and Countrywide are not squeezing out agents, they are actually buying up medium sized agents.  The big boys are not interested in selling houses, but have their eyes firmly fixed on the data capture that acquiring smaller agents brings.  The information on buyers, sellers, landlords, tenants, pet budgies etc allows them to sell more products and services.  Remember that emails cost nothing and once they have this data, they have it forever.

Buy-to let; the end is nigh…maybe…possibly…

‘Could’, ‘may well’ and ‘possibly’; all suggestives and in the reporting this week of a BOE survey, cloaked in the shroud of doom and financial misery. Ah well. In another classic example of shutting the stable door after the horse has bolted, been caught, trained and handicapped to win the 2.50 at Chelmsford City, then ended its days in the Happy Horse Home/glue factory/lasagne, the BOE is looking at the potential risks stemming from the increasing number of participants in the buy-to-let market. What pre-empted Sir Jon Cunliffe-the BOE’s deputy governor for financial stability-briefing a hearing at the House of Lords that buy-to-let could potentially be risky, were figures released by the central bank that show lending to landlords has “surged” (is it just me or are you rather bored of hearing that word?) from 11.3% of new loans in the third quarter of 2007 to 15.6% in the same period of last year. Ok Jon-Boy (those of you who have been around long enough could start humming the theme tune to The Waltons). Firstly, we are looking at a period of 8 years, not 8 months. The increase in landlords may well be reflected in other comparable figures for the same time frame; not least an increase in the populace. For those who wish to embrace their inner nerd, the population of the UK on 31 December 2007 was 61, 327, 759.  The UK population on 31 December 2015 was 65, 039, 298 and as of 17:54 hours today 06 03 2016 it was 65, 102, 983. Got those memorised? Secondly, the 15.6% of the whole lending market means that 84.4% of the whole lending market isn’t engaged in facilitating buy-to-let borrowers. Sir Jon then offered up the results of a recent survey that threw up the result  that 60% of buy-to-let landlords would consider selling up if rental income could no longer cover their mortgage costs or if house prices fell by 10%. Let us consider these statistics. It was a survey, which by definition opens itself up to dubious results that frequently fail to materialise in the real world. For example, in the most recent census in England and Wales almost 0.9% stated their religion as Jedi, surpassing Judaism, Buddhism and Sikhism and making it the fourth largest reported religion in the country… and let us not forget the predictions of last year’s General Election, where a certain A Campbell was still insisting that the polls were right and the figures coming in were wrong, wrong, wrong. Mmm. More relevant to Sir Jon’s figures however, is 60% of what? Of whom? And the portent of doom is somewhat diminished by the lack of confirmation. They “would consider”, “if… they might”.  I might be considering taking up holy orders and if Miss Minogue decides to call off her engagement (be still my beating heart), I might consider offloading the current Mrs Chesh to a permanent vacation in the Rest Home for the Bewildered. Sir Jon then adds to the air of general indecision and vagueness by commenting that the buy-to-let market could lead to a downward spiral in house prices with the accompanying threat of instability in the housing market in general. He then does say that buy-to-let ,”looks like a pretty good investment” compared to what is offered elsewhere. What that be contradiction with a capital ‘C’ Jon-Boy?

Ok. Buy-to-let was not the cause of the 2007 crash; it was risky lending. Not to potential landlords, but to anyone who had a pulse. With a minimum 20% deposit required for a buy-to-let mortgage, a 10% drop in prices will not, in our opinion make people leave the landlord sector. As for rental not covering mortgage costs, with the same minimum 20% deposit and interest rates still at record levels and predicted to fall further (as we at Cheshire & Co have opined for the past 18 months, I may add), the chances of mortgage payments outweighing rental income is not going to happen anytime soon. If they did, landlords would simply put up rents and people would pay; because they could manage to make their rental payments whereas they would not have a snowball’s chance in hell of meeting the stress test criteria for a mortgage.

Speaking of passing tests, for those devotees of The Walton clan:

  1. What was the name of the town where Team Walton lived?
  2. Who were the US presidents during the era in which the series was set?

Answers on a post card or via social media. The winner gets a signed headshot photo of The Chesh. Second prize, is the full body shot. Third prize is the same, but without any clothes on. You have been warned.