Here’s a chart to sum up:
This is the daily net increase of number of properties for sale from the major estate agents between 28 July and 25 August. Four points:
1) Purplebricks is well ahead on growth adding an average 17 properties per day as growth has powered on through the traditional summer lull.
2) YOPA has also grown well as it benefits from the capital it raised from Savills in June. It’s still relatively small having 1,000 properties for sale vs Purplebricks 9,200 and growing more slowly in absolute terms but it shows the development of the hybrid sector and looks like a smart move by Savills.
3) Growth is only with hybrid/online. The only traditionals that shown even slight For Sale growth are the letting franchise groups that also have estate agency functions – Martin & Co and Belvoir. Could the hybrid model spell the end of the summer lull as a strong effect? Conceptually participants, especially sellers, could be happy to do business via an app while on holiday. The time intensive traditional service is simply too tedious but most people have phone time while abroad. Its potentially an unconsidered competitive advantage for hybrids. (Note LSL’s brands were not part of this analysis. They will be in future).
4) Countrywide’s Flexi-Service has failed to generate growth. The three agents piloting the scheme continue to behave like traditionals with the summer lull and has also seen volumes fall over the last 2 months. As I have emailed previously, that likely reflects the fact they really don’t want to sell it to you – it’s entirely defensive to stop loss of business to the hybrids and they actually try to push their traditional service. Haart is taking a different tack with its “we’ll refund half your hybrid upfront fee”.
Belvoir leading the legal fight against “landlord taxes”
Belvoir and the National Landlords Association is funding a legal challenge by a group of landlords against the phased reduction of mortgage interest tax relief for BTLs. The legal argument is that section 24 of the Finance (No.2) Act 2015 is an infringement on BTL investors rights and is discriminatory. The hearing into whether to launch a judicial review is scheduled for 6 October. I’ll keep watching it but see it as an uphill struggle to get it overturned – it’s rather well established that the government has the right to set taxes. For Belvoir it’s a good idea to back the case. If successful it will a major benefit for landlords and an improvement in sentiment. If that result is elusive, it’s a good marketing exercise for Belvoir to be seen at the forefront of developments and doing the right thing by landlords for a relatively low fee. The landlords will meet the new housing minister ahead of the court hearing.
Also relevant is that a YouGov poll put support for George Osbourne’s 3% second home SDLT surcharge at 47% with opposition at 18%. That shows public sentiment to some additional hurdles for BTL investors.
Help to Buy ISA “betrayal”: a hiccup not a scandal
There’s noise in the press as the first users of the government’s Help-to-Buy ISAs have found that the 25% top up from the government only gets paid at the point of exchange of contract. That has meant a catch-22 with conveyancers refusing to take it into account for the 10% deposit required to allow exchange. The 10% deposit isn’t a legal requirement but an established penalty if a buyer pulls out of a sale post-exchange so conveyancers are used to seeing 10% paid into their client account (I’m a big believer in “the power of normal” holding things back by the way, and this is just another example). The headlines talk of a ‘betrayal’ and ‘misleading’ statements by the treasury. They have been echoed by Labour MP David Lammy who is ‘absolutely outraged’ by the ‘scandal’ of ‘false advertising by the Government’. He could of course just work to get conveyancers comfortable with 7.5% upfront + the top up soon after, thus resulting in lower deposits being required by buyers, the point of the scheme. To me, exchange is the obvious point at which the top up should be paid otherwise the government can’t be sure the money will actually go towards buying a house. This can be easily resolved for a useful buyer support from the ISAs. Almost all major housebuilders see 30%-50% of customer’s use Help to Buy with the notable exception of Gleeson which hasn’t seen any to date.