Collapse of the UK housing market

[Steveam]

I was in the process of buying a flat and all parties had agreed that we’d aim for exchange at the end of September. About a week before the aimed for exchange date my solicitor received a message from the vendor’s solicitor that the vendor had decided to delay exchange and completion by three weeks … no explanation just a statement. We enquired about reasons but got nowhere so I told my solicitor to withdraw my offer - no discussion. The vendor was suddenly able to keep to the original date but I played hard ball and said I was prepared to submit a new, reduced offer but would require sureties regarding dates.

The vendor’s agent tried to sweet talk me and admitted that they’d decided to have a short holiday which they were now willing to cancel. I explained that I no longer felt under any obligation, no longer trusted them, and really wasn’t sure I wanted to buy from people who behaved in this manner. I then decided not to go ahead.

I’m now in a very much better flat which I like very much.

Best wishes, Steve

So in return for a trivial (though rather silly) delay, you reopened the negotiations on price in order to gain an advantage. No wonder chains fall apart.
Overall the UK system of chains is a major headache and there are no obvious ways of reforming it. Unless we go over to the US (and other) system where people sell their house first and move into rented, and only then go on to offer on a new place. For that we need a larger and more organized rental sector, perhaps offering very short term rentals.

Thanks for your comments. We take quite different messages from the story (which I think is a fair representation of what happened). I view honesty and integrity and decency in relationships as very important. The vendors behaved in a way, in the absence of explanation, which I viewed as abusive. They thought they had me over a barrel and treated me with indifference. I’m in the fortunate position that I didn’t have to accept this so decided that there would be a cost for their treatment. Eventually I didn’t submit a new offer as I’d lost trust in the vendors.

I do accept that I’m eccentric

Best wishes, Steve

[murraypaul]

What rubbish.

Why?
I'll wait...

Because either the offer would have so many conditions that effectively the deposit could always be withdrawn, or you have just redefined "offer" to mean "exchange". And then another pre-offer, indication of interest stage would appear, that is functionally the same as the current offer stage.

[servodude]

Why?
I'll wait...

Because either the offer would have so many conditions that effectively the deposit could always be withdrawn, or you have just redefined "offer" to mean "exchange". And then another pre-offer, indication of interest stage would appear, that is functionally the same as the current offer stage.

Strangely it seems to work elsewhere; makes folk genuinely committed sooner

[Nimrod103]

Because either the offer would have so many conditions that effectively the deposit could always be withdrawn, or you have just redefined "offer" to mean "exchange". And then another pre-offer, indication of interest stage would appear, that is functionally the same as the current offer stage.

Strangely it seems to work elsewhere; makes folk genuinely committed sooner

It works in the USA because vendors expect to go into rented accommodation while they look for a new house. Vendors in the UK don’t seem to be prepared to do that.

[Lootman]

Strangely it seems to work elsewhere; makes folk genuinely committed sooner

It works in the USA because vendors expect to go into rented accommodation while they look for a new house. Vendors in the UK don’t seem to be prepared to do that.

I have done that twice, in the UK.

Both times we were buying in a different location from where we were selling, however. And there were schools to consider etc. The rental in both cases was 6 to 9 months.

[bluedonkey]

Me too, twice.

[gnawsome]

I do accept that I’m eccentric

Best wishes, Steve[/quote]

Please please more eccentrics.

My situation was a rental, part retail, in need of complete attention.
Offer of £31k(mid eighties I think) and nearing exchange purchaser decided to reduce his offer because of bad roof.
The bad roof was entirely obvious when he made his offer so no chance.
I told the agent to not consider any offer from that buyer or from any others using that solicitor.
The offer had only been made to attempt restriction on further marketeing.

[Mike4]

What rubbish.

Why?
I'll wait...

Because we already have 10% deposit (non-refundable) on exchange of contracts.

Move the NR deposit to making an offer and all the same conditions and checks currently needed prior to exchange of contracts will just shift to being needed prior to 'making an offer'.

[CliffEdge]

What rubbish.

Why?
I'll wait...

The huge disadvantages of such a daft idea clearly outweigh any putatitive advantage.

[CliffEdge]

BTW there is nothing under the present system to prevent you selling your house before buying another. We rented for three years while selling our house. Yes it took three years to sell, partly our own fault as our personal circumstances intervened.

Of course our beautiful government has royally screwed the housing market (that includes rental, rental houses are still houses in case anyone on here doesn't know that- maybe they've made an even worse screw up of rental with their latest cr*p), particularly with the second property stamp duty increases which have no honest justification.

[Nimrod103]

BTW there is nothing under the present system to prevent you selling your house before buying another. We rented for three years while selling our house. Yes it took three years to sell, partly our own fault as our personal circumstances intervened.

Of course our beautiful government has royally screwed the housing market (that includes rental, rental houses are still houses in case anyone on here doesn't know that- maybe they've made an even worse screw up of rental with their latest cr*p), particularly with the second property stamp duty increases which have no honest justification.

Surely the reason selling then renting while looking for a new house, is not so popular in the UK is because of problems in the rental market. There just isn't a good supply of stop-gap rental accommodation. Interesting to debate why that is, but government meddling in the rental market and over-taxation have to be two of the main reasons.

[servodude]

Why?
I'll wait...

The huge disadvantages of such a daft idea clearly outweigh any putatitive advantage.

Why?
I'll wait...
bearing in mind it's standard practice where I am and we don't suffer the nonsense the English seem to put up with (that said we didn't in Edinburgh either really)

[Charlottesquare]

BTW there is nothing under the present system to prevent you selling your house before buying another. We rented for three years while selling our house. Yes it took three years to sell, partly our own fault as our personal circumstances intervened.

Of course our beautiful government has royally screwed the housing market (that includes rental, rental houses are still houses in case anyone on here doesn't know that- maybe they've made an even worse screw up of rental with their latest cr*p), particularly with the second property stamp duty increases which have no honest justification.

Surely the reason selling then renting while looking for a new house, is not so popular in the UK is because of problems in the rental market. There just isn't a good supply of stop-gap rental accommodation. Interesting to debate why that is, but government meddling in the rental market and over-taxation have to be two of the main reasons.

Agreed but not sure of your causes. We put our last house on the market in 1997 and had an acceptable offer very quickly, but they wanted entry in 4 weeks on 30/9/97 and whilst we concluded missives to purchase the one we are still in now , our entry was to be 25/11/97. Whilst furniture all went into store finding a let for circa 7 weeks was really difficult and only by chance did I find an agent who would oblige- very pleasant New Town two bed flat in Doune Terrace which my wife fell in love with and wished we could have afforded rather than the much bigger 5 bed one that we actually bought in North Edinburgh which was then, and likely still is ,cheaper.

[Nimrod103]

Surely the reason selling then renting while looking for a new house, is not so popular in the UK is because of problems in the rental market. There just isn't a good supply of stop-gap rental accommodation. Interesting to debate why that is, but government meddling in the rental market and over-taxation have to be two of the main reasons.

Agreed but not sure of your causes. We put our last house on the market in 1997 and had an acceptable offer very quickly, but they wanted entry in 4 weeks on 30/9/97 and whilst we concluded missives to purchase the one we are still in now , our entry was to be 25/11/97. Whilst furniture all went into store finding a let for circa 7 weeks was really difficult and only by chance did I find an agent who would oblige- very pleasant New Town two bed flat in Doune Terrace which my wife fell in love with and wished we could have afforded rather than the much bigger 5 bed one that we actually bought in North Edinburgh which was then, and likely still is ,cheaper.

In your case it was just 7 weeks between sale and purchase. Presumably for both transactions, contracts had been exchanged (or the Scottish equivalent, my memory is rusty on this now), so you knew the duration of your rental. Maybe a hotel (or nowadays AirBnB) would have been more appropriate.
What I was pondering was a longer period where the sale of your property went ahead, and you moved into rented for may 3 or 6 or 12 months until you found and bought a new proerty. So the chain gang is avoided. For this type of arrangement there should be a generous supply of suitable houses or flats for rent in the neighbourhood where people need short term rentals, with landlords prepared to rent for relatively short periods. IME landlords want long rentals if they can get them if only because of the high costs of advertizing, finding tennants, managing checks and legal fees, licensing, repairs and decoration and the hassle of dealing with bad short term tennants. And then there is tax on top. It means the rental market is not as well supplied with properties as it needs to be.

[Lootman]

For this type of arrangement there should be a generous supply of suitable houses or flats for rent in the neighbourhood where people need short term rentals, with landlords prepared to rent for relatively short periods. IME landlords want long rentals if they can get them if only because of the high costs of advertizing, finding tennants, managing checks and legal fees, licensing, repairs and decoration and the hassle of dealing with bad short term tennants. And then there is tax on top. It means the rental market is not as well supplied with properties as it needs to be.

One issue is that short-term rentals are often housing units that are furnished and equipped. So any family doing this might have the extra cost of storage for their stuff, which was several hundred quid a month the last time I did that.

In the US where this kind of thing is more common, almost all rental units come unfurnished, unless it is an Airbnb deal.

[Charlottesquare]

Agreed but not sure of your causes. We put our last house on the market in 1997 and had an acceptable offer very quickly, but they wanted entry in 4 weeks on 30/9/97 and whilst we concluded missives to purchase the one we are still in now , our entry was to be 25/11/97. Whilst furniture all went into store finding a let for circa 7 weeks was really difficult and only by chance did I find an agent who would oblige- very pleasant New Town two bed flat in Doune Terrace which my wife fell in love with and wished we could have afforded rather than the much bigger 5 bed one that we actually bought in North Edinburgh which was then, and likely still is ,cheaper.

In your case it was just 7 weeks between sale and purchase. Presumably for both transactions, contracts had been exchanged (or the Scottish equivalent, my memory is rusty on this now), so you knew the duration of your rental. Maybe a hotel (or nowadays AirBnB) would have been more appropriate.
What I was pondering was a longer period where the sale of your property went ahead, and you moved into rented for may 3 or 6 or 12 months until you found and bought a new proerty. So the chain gang is avoided. For this type of arrangement there should be a generous supply of suitable houses or flats for rent in the neighbourhood where people need short term rentals, with landlords prepared to rent for relatively short periods. IME landlords want long rentals if they can get them if only because of the high costs of advertizing, finding tennants, managing checks and legal fees, licensing, repairs and decoration and the hassle of dealing with bad short term tennants. And then there is tax on top. It means the rental market is not as well supplied with properties as it needs to be.

6 or 12 month leases are already obtainable, yes there is competition in busy places but there is a supply.

[Charlottesquare]

For this type of arrangement there should be a generous supply of suitable houses or flats for rent in the neighbourhood where people need short term rentals, with landlords prepared to rent for relatively short periods. IME landlords want long rentals if they can get them if only because of the high costs of advertizing, finding tennants, managing checks and legal fees, licensing, repairs and decoration and the hassle of dealing with bad short term tennants. And then there is tax on top. It means the rental market is not as well supplied with properties as it needs to be.

One issue is that short-term rentals are often housing units that are furnished and equipped. So any family doing this might have the extra cost of storage for their stuff, which was several hundred quid a month the last time I did that.

In the US where this kind of thing is more common, almost all rental units come unfurnished, unless it is an Airbnb deal.

Not really that much more expensive compared with removal company fees times two if contents are moved to temp flat. Placing in store counts as one move plus storage when box containers are used which are lifted from removal van at depot and stacked to then be placed back in removal van when second part of flit required, so limited manpower needed at storage depot.

[scotia]

6 or 12 month leases are already obtainable, yes there is competition in busy places but there is a supply.

I'm remembering back to the Scottish system 50 years ago. I seem to recall that my solicitor told me that an offer was binding. and if I bought before selling, then I would need a bridging loan. There were no such things as chains. And I recall that still was the case about 35 years ago. I believe that we now suffer from chains in Scotland - when did this change and why?

[Charlottesquare]

6 or 12 month leases are already obtainable, yes there is competition in busy places but there is a supply.

I'm remembering back to the Scottish system 50 years ago. I seem to recall that my solicitor told me that an offer was binding. and if I bought before selling, then I would need a bridging loan. There were no such things as chains. And I recall that still was the case about 35 years ago. I believe that we now suffer from chains in Scotland - when did this change and why?

It just seems to have morphed forward into it, I really have no idea why.

Perhaps it was limited bridging.

Whilst I work in property we are these days just commercial property and financing in that market is different. Post 2008 up to 2014 we started selling our residential properties (60 in total) and I did notice that the solicitors were pretty much concluding missives on the same day the buyers were settling.

My daughter and her other half were looking to buy a few months back, he has a flat and I did ask if he was going to sell before making an offer on something for both of them, I got looked at as if I had two heads, that was not how things were done, basically the deals would be coordinated and the one they wanted to buy would need to wait until he sold- I indicated I could get them temporary funds from a friend if that would make them more attractive to the seller but told that did not matter so I beat a hasty retreat. All academic as it went to a closing date and their offer was not good enough anyway.

[funduffer]

A bit of a history lesson on house prices in the UK from John Kingham:

https://www.ukdividendstocks.com/blog/t ... -be-ending

After a 13-year experiment with near-zero interest rates, this key driver of UK house prices has, at long last, returned to historically normal levels.

This is a seismic shift for the UK housing market and it could be the pin that finally pops the UK’s 20-year property bubble.

"A 20-year bubble? Impossible!", I hear you cry. But it's true and, in fact, the seeds of this bubble were sown in the 1980s.

Nice report, and why we might see wages rising faster than house prices over the next 10 years or so.

FD