Basic Principles

The Act, which controls property developers as well as estate agents, creates criminal offences for misdescribing property but does not alter the contractual position between vendor, buyer and agent.

You will not have to refer to any item in the specified matters list, but if you do, your descriptions must be truthful. Things you say about the property will be covered as well as the printed word, photos, plans etc.

The Act will not stop you acting in vendors’ interests by presenting property in the best light provided what you say does not mislead.

Specified Matters

• Location or address.
• Aspect, view, outlook or environment.
• Availability and nature of services, facilities or amenities.
• Proximity to any services, places, facilities or amenities.
• Accommodation, measurements or sizes.
• Fixtures and fittings.
• Physical or structural characteristics, form of construction or condition.
• Fitness for any purpose or strength of any buildings or other structures on land or of land itself.
• Treatments, processes, repairs or improvements or the effects thereof.
• Conformity or compliance with any scheme, standard, test or regulations or the existence of any guarantee.
• Survey, inspection, investigation, valuation or appraisal by any person or the results thereof.
• The grant or giving of any award or prize for design or construction.
• History, including the age, ownership or use of land or any building or fixture and the date of any alterations thereto.
• Person by whom any building, (or part of any building), fixture or component was designed, constructed, built, produced, treated, processed, repaired, reconditioned or tested.
• The length of time during which land has been available for sale either generally or by or through a particular person.
• Price (other than the price at which accommodation or facilities are available and are to be provided by means of the creation or disposal of an interest in land in the circumstances specified in section 23(l)(a) and (b) of the Consumer Protection Act 1987(a) or Article 16(1 )(a) and (b) of the Consumer Protection (NI) Order 1987(b) (which relate to the creation or disposal of certain interests in new dwellings)) and previous price.
• Tenure or estate.
• Length of any lease or of the unexpired term of any lease and the terms and conditions of a lease (and, in relation to land in Northern Ireland, any fee farm grant creating the relation of landlord and tenant shall be treated as a lease).
• Amount of any ground-rent, rent or premium and frequency of any review.
• Amount of any rent-charge.
• Where all or any part of any land is let to a tenant or is subject to a licence, particulars of the tenancy or licence, including any rent, premium or other payment due and frequency of any review.
• Amount of any service or maintenance charge or liability for common repairs.
• Council tax payable in respect of a dwelling within the meaning of section 3, or in Scotland section 72, of the Local Government Finance Act 1992 or the basis or any part of the basis on which that tax is calculated.
• Rates payable in respect of a non-domestic hereditament within the meaning of section 64 of the Local Government Finance Act 1988 or, in Scotland, in respect of lands and heritages shown on a valuation roll or the basis or any part of the basis on which those rates are calculated.
• Rates payable in respect of a hereditament within the meaning of the Rates (Northern Ireland) Order 1977 or the basis or any part of the basis on which those rates are calculated.
• Existence or nature of any planning permission or proposals for development, construction or change of use.
• In relation to land in England and Wales, the passing or rejection of any plans of proposed building work in accordance with section 16 of the Building Act 1984 and the giving of any completion certificate in accordance with regulation 15 of the Building Regulations 1991.
• In relation to land in Scotland, the granting of a warrant under section 6 of the Building (Scotland) Act 1959 or the granting of a certificate of completion under section 9 of that Act
• In relation to land in Northern lreland, the passing or rejection of any plans of proposed building work in accordance with Article 13 of the Building Regulations (Northern Ireland) Order 1979 and the giving of any completion certificate in accordance with building regulations made under that Order.
• Application of any statutory provision which restricts the use of land or which requires it to be preserved or maintained in a specified manner.
• Existence or nature of any restrictive covenants, or of any restrictions on resale, restrictions on use, or pre-emption rights and, in relation to land in Scotland, (in addition to the matters mentioned previously in this paragraph) the existence or nature of any reservations or real conditions.
• Easements, servitudes or wayleaves.
• Existence and extent of any public or private right of way.

Practical things you can do:

• Get vendors to sign to say that particulars are correct before you market a property. Give them a chance to amend anything that is wrong. This won’t protect you if you print a misdescription you could have reasonably checked out for yourself, but it will minimise the risk.
• Think about all the descriptive phrases you use and ask yourself what they will mean to an average purchaser.
• Make it somebody’s task to proof-read particulars and sign to say they have done so.
• When you get queries about a property, get the person who prepared the details to answer the questions and make a record of what is said on file. You won’t be held responsible for what vendors tell purchasers in your absence unless you knew what they were going to say, but remember that purchasers might forget who told them what.
• Check everything you can. Ask to see receipts and guarantees for work carried out. Ring up to check council tax bands. Ask for evidence of sales and turnover if you want to describe the success of a business property.
• Set up a system to ensure that your staff are adequately trained and that their work is regularly checked. You should consider random double-checking of property details against the property itself during this auditing process. Any deficiencies can then be dealt with by issuing corrected particulars and retraining where necessary.

General Descriptions

Terms such as ‘immaculate condition’ or ‘recently decorated’ are not banned by the Act, but these terms will be taken to refer to the entire property. If there are any particularly attractive features, your client will obviously expect you to use them as selling points but they should not be emphasised to the exclusion of bad features if the overall result is a misleading description.

The Act does not require you to disclose defects such as a leaky roof even if you have seen a survey, but your description as a whole must not give the impression that the property does not have that defect.

Location

Use the correct postal address. If a house is in one county geographically, but its postal address is in a neighbouring county, you should include both with equal prominence.

Comments concerning the proximity of properties to local services should be used with care. Terms such as ‘close’ or ‘easy access’ are best avoided, as are estimates of journey times. A statement of the actual distance is more accurate.

Environment

If a house has open fields on three sides and an abattoir or night-club on the fourth, the safest option is not to refer to the outlook. If you said that it was surrounded by views across open fields, you would mislead unless you made equal reference to the view on the fourth side. If you use a photograph of the back or the side of a property on its own, you should make that fact clear.

Photographs

A photograph can be misleading. Do not doctor photos or use extreme lenses. If you take a photo of the view from a bedroom window, but cannot include the rubbish dump, don’t say ‘panoramic views’ or ‘unspoilt countryside’.

Measurements

You should try to make measurements as accurately as you can. We suggest an error margin for rooms in domestic properties of eight centimetres either way is reasonable. Sonic measures are not specifically banned, but, as with any measuring instruments, they should be calibrated every twelve months and used with great care. Our advice is that physical measures are better.

Be careful with gardens, where large length or area measurements can be involved.

Pricing and ‘New Instructions’

You may advertise a property as a ‘new instruction’ to your agency for only a short period (we would suggest a month) after you have been asked to become the vendors’ agent. This applies even if the property has been advertised previously with another agency.

Newly built and newly converted properties are covered by the pricing controls in the Consumer Protection Act 1987. Such a property should only be described as ‘reduced’ if it has been on sale at the higher price for twenty eight consecutive days in the last six months and you state what that higher price was.

Tenures

You should be able to provide adequate evidence to show that you have tried to obtain information on the length of any lease or freehold of the property. Alternatively, say that this aspect has not been checked.

Re-checking

If you have a property that has been under your instructions for a long period of time, it is advisable to check to see if the details are still correct. If a new road is planned which wasn’t before, or if the local train operator withdraws a train service you had referred to, then you should modify your details and adverts.

Disclaimers

General disclaimers in small print telling buyers not to rely on details won’t be effective in preventing offences. However, there are some cases where a specific qualifying description, may be acceptable. For example, if the vendor claims without documentary evidence that the property was treated for dry rot, you may only mention this if you say as part of that description that you have not seen any documents to verify this. A similar qualification might be applied to the working order of household appliances or central heating or claims about the history of a property. The crucial fact in assessing whether a qualified description is valid is the ease with which you could have reasonably checked it.

As well as the Property Misdescriptions Act, Trading Standards enforces a range of consumer and trading legislation that might affect you. Examples include the Estate Agents Act and the Consumer Credit Act.

Guidance on the Act can be found at www.dti.gov.uk/ccp/topics1/guide/property_description.htm

Estate Agents Act

The Estate Agents Act 1979 requires:

• That you make sure you offer clear written information to your clients including:
  • details of how much they will be charged and when payments are due.
  • details of any charges that are additional to your fees, this could include any charge you will make if the property is taken off the market without a sale. If you cannot give them the exact charges you must tell them how the cost will be worked out.
  • if you make an additional charge for things such as a ‘for sale’ board or advertising you must state the amounts you charge or give an estimate of them.
  • you must explain clearly what certain technical phrases mean. You will need to consult the Act itself for this information.
• You must also tell your clients in writing:
  • of all offers that you receive unless the client informs you in writing that they are not interested in offers below a certain amount.
  • if you or someone connected with you, such as a relative or a business partner, wants to buy the property.
  • if you or someone connected with you owns or has an interest in the property.
• If you offer other services, such as organising surveys, valuations, arranging mortgages or life insurance, you must:
  • tell your clients in writing about any service that you, or a person connected with you, might offer.
  • give details of the type of service offered and tell your clients if you make a commission.
• You must not:
  • discriminate against a prospective purchaser who does not want other services that you offer.
  • misrepresent the details or existence of any offer or the existence or status of any purchaser.

Please Note

This is not an authoritative interpretation of the law and is intended only for guidance. For further information please contact your local Consumer Protection or Trading Standards office.

The boom has been bloated by cheap and easy consumer credit, massive Government borrowing and the irresponsible behaviour of lenders. For some people the fact that days, even years have gone by and they have seen no crash proves that it will not happen. Rather think more of someone waiting for a train, the non arrival of the train does not mean that it will never come, it just means that each minute that passes the probability of its arrival increases. Every minute that passes makes it more dangerous to step on the track, not less. With a property crash, the longer it is coming the harder, longer and more painful it will be.

However, many commentators continue to look forward to a soft landing for the property market and base their optimism on three things:

1. Interest rates remain historically low and unless some other factor in the economy, rising unemployment, or a more general slump occurs, then prices will not be forced down because demand will remain strong.
2. There is a shortage of supply and we need millions more new homes to satisfy the demand.
3. There has been a fundamental shift in the income multiples that people will have to borrow to buy homes.

Nothing is going to happen to cause a crash 

Leaving aside that booms and crashes are driven more by sentiment than anything else, it seems to me that this is fairly easy to debunk. Firstly, the credit crunch is dramatically changing the practices of lenders and the losses sustained by banks will result in an altogether more cautious attitude to mortgage lending. In other words, the easy supply of credit, necessary to sustain a boom, has gone. Secondly, the Brown “economic miracle” is the result of high levels of Government borrowing which will have to come down and are indeed projected to come down. This will impact on public sector funded jobs, both direct and indirect and on Government capital projects and therefore the economy as a whole. Thirdly, the financial markets, already jittery on the back of the credit crunch will, at some point, go through a period of retrenchment. This last may be caused by oil price rises or simply the drying up or increase in the cost of credit as the US starts to raise its interest rates.

The thing is, I am not saying that one of these things needs to happen now, or next year, merely that it will happen at some point before the market has completed the hoped for ’soft landing’.

A soft landing will take more than a decade to be completed!

I really don’t see how anyone would believe that there will be no bad economic news, ever, during that time frame. Can anyone point to any decade of which that has been true? The charts below show this in practice. The first is from the Nationwide Building Society, the second extrapolates forward the long term trend, and, as can be seen, even if house prices don’t rise at all in real terms it will still be 2018 before the soft landing is complete and equilibrium is restored.

 Chart 1 Nationwide “Real House Prices” (prices adjusted for inflation)

 Chart 1 Nationwide “Real House Prices” (prices adjusted for inflation) extrapolated, house prices static.

 Property is in short supply and will remain so

The argument runs that there is a long term shortage of supply, because we have an increasing population choosing to live in smaller,  more numerous households and it will require millions more units to house it.

Well, the indigenous population is roughly stable.

Immigration is optional.

1. We don’t have to accept immigrants from outside the EU. There is an increasingly negative climate about immigration and once people start quoting Enoch Powell, you can expect that Gov will want to be seen to be doing something about it.
2. EU migrants have been coming here because of short term economic factors.
   
3. Most of them would much rather be at home and when the debt-driven boom we have been enjoying ends, they will either go home, or move on to the next country, be it Germany, Spain, Denmark or wherever.
   

So the more people need more houses bit doesn’t quite stack up.

Secondly, the other part of the argument is that the number of households is increasing - i.e. even with the same number of people, our desire to live in smaller households means that the number of housing units will increase. This is true.

But, the large part of the increase in the number of households will be elderly people living on their own. The demand from this group will not be for big houses out on big estates far from where they live now. What they will want are smaller, high quality properties in the places they are familiar with. This demand can best be satisfied by redeveloping existing properties - converting one house into two maisonettes, and by the development of purpose built sheltered homes. These latter are high density and lend themselves well to brownfield sites in the heart of existing communities - if you are old you want to be very near your (remaining) friends and family.

So, given that the extra households should be small, high density and in existing communities, the campaign for more liberal planning in areas which have previously been sacrosanct is exposed. It is simply more profitable for major builders to work on big, greenfield sites than small brownfield ones and it has nothing to do with the real housing needs or wants of the people who will be effectively obliged to buy and live in them.

There is one last area to debunk and that is the relatively minor factor of increased demand for second homes. Well frankly, what do you expect in a housing boom? People with money to spare, who otherwise would invest their money in shares or pensions funds see the speculative gains of the buy to letters and decide that they too “can’t lose on property” and divert their capital. If the speculative gains dwindle so will the demand.

So, given a stable indigenous population and smaller households made out of existing units or redevelopment of existing units, there is no fundamental demand for 3,000,000 new builds. I am not arguing that no more new developments will be needed to achieve a sustainable balance in supply and demand, just that the real requirements have been both misstated in character and overstated by vested interests.

People will have to accept higher income multiples than historically

This is an example of retro-fitting. I can’t recall anyone forecasting that this would be the case back in, say, 2000. But if you are determined that there has been no boom than you must believe that this is the case in order for price growth to continue unabated. It also helps to justify builders’ demands for freeing up of more land. According to Professor Stephen Nickell, of the National Housing and Planning Advice Unit (NHPAU) “Our projections suggest that, if we stick to existing house-building plans, they (house prices) could get up to as much as 11 times incomes.”.

Well let’s take a look at that.

Median earnings of full-time male employees £487 per week for women the median was £387 (in April 2006)

Let’s assume a couple on median earnings want to buy a house. That means they have incomes of £25324 and £20124 per annum making a total of £45448.

Mortgage Advance (11 times income):    £499928.

10% Deposit (where this might be from is another matter):    £55548

Purchase Price:    £555476

Interest only payments at say 6%:   £29995.68

Council Tax:    £1,302

National insurance and income tax:     £11621

So after paying the mortgage and direct taxes they will have £2529.32 remaining to live on.

Even if Professor Nickell was merely being sloppy and was not referring to household incomes and you based the calculation solely on the larger pay packet, which would reduce mortgage interest payments to £16713.84 then the couple would be left with just £15811 for all other living expenses.

One infers that Professor Nickell recognises that he is simultaneously forecasting the collapse of the UK car market as well as the travel and leisure industries? House prices must reflect what buyers are both capable of paying and willing to pay. Neither Professor Nickell nor any other expert predicted a long term shift of this kind before this boom, and there is reason to do so now.

To sum up, we will not have a crash if interest rates remain low and no other adverse factor in the economy arises in the next decade and we need millions more new homes to satisfy existing demand and there has been a fundamental shift in the income multiples that people will have to borrow to buy homes. I don’t believe any of those are good assumptions to make.

When sentiment gets out of step with underlying realities you have a boom. When sentiment changes, as it must, then the market corrects. The catch is that it is almost certain that the correction, when it comes will also be driven by sentiment, just as the boom was, and that means that you get over-correction and prices plummet back below the long term trend creating the rollercoaster ride effect of the chart on the left.

So how much will the correction be? The second chart shows the trend since the last boom at the end of the 1980s and I think that it is pretty much certain that the price line will nosedive below the long term trend. That means that the correction is likely to be at the higher end of the range of projections which are being published.

Bear in mind, many of the experts reporting have vested interests, so they are very wary of saying things which will scare people too much. Also, one thing I have noticed is that the optimists tend to be young, and I suspect that because their own experience is that house prices only go up, they find it hard to conceive that anything else could happen. My remarks draw on my own experience. As an estate agent in the 1980s boom, I worked in the English market town which saw the most severe drop of all (38%). In that locality, from 1982 I saw prices rise year on year at rates of 20 - 30%, culminating in a staggering local 100% rise between 1987 and 1988 before falling off the cliff in September 1988.

The mental image I have when I tried to describe the mechanics of the crash is something like Wile E Coyote chasing the roadrunner across a canyon. The ground drops away beneath him, but he keeps on running. It is only when he looks down that he sees that he is running in mid air and crashes to the canyon floor.

So long as you can keep up your mortgage payments through the hard times, then, eventually, you will reach the other side of the canyon and life will go on as if nothing ever happened. For most people, that is how the coming crash will be. An average person only moves about once a decade, so a market slump doesn’t make much difference to them. 

The pain is felt only by those forced to take the hit. These include all those who find they can no longer service their mortage debt, for whatever reason, divorce, illness, redundancy and for landlords, falls in rental returns. Mostly, it will hurt younger people who will be trapped in the rabbit hutch they were so desperate to buy by negative equity and wanting to start familes, they are the ones who are most likely to have taken on excessive debt, least likely to have savings to draw on, most likely to be effected by changes in their circumstances - children, divorces, job relocations,promotions and redundancy and layoffs.

Where this boom differs from the 1980s boom is in its scale. Relatively, prices are more out of step than they were then, and the problem is not localised. This time round the whole country has boomed.

In the end, this is all about sustainability. There is no way that price rises can continue to outstrip earnings forever.

Which brings me on to population. I live in England, and as can be seen in the chart, in the last two centuries England’s population has increased five fold and we are now reading projections of a further increase of 20% over the next half century. I have to say that I lack confidence that the English economy can continue as it has been over the last decade. We have been running the place at a loss, borrowing to keep up appearances, and at some point we will reap a bitter harvest. When that happens, England will not be such an attractive place for migrant workers to come to, and we will probably also lose many of those who have come here over recent years. With the native population in decline, maybe we can avoid more growth. I certainly hope we can, as I really do not believe that we can go on as we have been. Again, it is about sustainability. 

If you think I am wrong, and I know many people think population growth is desirable and even economically vital, then please tell me this - there must be some limit to population and even if you think a billion people living in England would be good, what happens when we get there? I think it is time to stop, I think that our quality of life is deteroriating already and will get worse as the population rises so why not plan for a stable or decreasing population now. I would point out that I am talking about England, the situation in Scotland and Wales is very different, their population densities are nothing like ours, but I don’t think it makes sense to lump all three countries on the island of Great Britain together. Having said that, the Optimum Population Trust suggests that the sustantial population for all three countries is only 29,000,000, and I am sure that in the end we will need to make deals on how resources are shared between the three countries.

Even if you think that the population of England has room to grow, global population trends terrify me. Where will all these people live and how will they live? Recommended reading:- Optimum Population Trust

US House Prices rendered as a rollercoaster ride!

The Act set up a system under which the production of cars was planned on the basis of past ownership patterns and no more than this number were allowed to be produced. No vehicles were allowed to be imported, and anyone wishing to order a new car had to wait until a manufacturer had obtained production permission from the local authority on their behalf. The application was considered by the local transport planners and by the local transport planning committee, which could refuse or grant permission. To make the system democratic, people could write in to say why someone should not get permission. Often the objection was based on the fact that the objector did not have a car and did not see why his neighbour should have one. Such people were called NIDDIES from the acronym NIDHI (Not If I Dont Have It).

As incomes rose and the population increased the demand for cars increased, but the number of cars permitted to be produced did not increase to the same extent. It was felt that allowing more cars would create unfair competition for bus and rail.

The price of cars rose substantially. It was argued by some that this was because of the constraint on production, but the transport planners thought that this was not so. The constraint on production did not affect the price; the increase in price was solely caused by the increase in demand caused by things like lower interest rates, so they said. And anyway car prices were not their concern. They were concerned with the real economy. It was for them to plan and for the market to follow.

People adjusted to the situation of course. They drove their old cars as long as possible. Indeed it was rare for a car in Britain to be scrapped if there was any possibility that it could be repaired. After road accidents cars were reconstructed which would have been written off as scrap elsewhere. Tourists visiting Britain were often overwhelmed with nostalgia when they discovered car models they had not seen for years in their own countries.

They also adjusted to the increase in the price of cars. People who had cars discovered that far from depreciating in value the price actually increased over time. This increased the demand further as people without a car felt that they had to get a foot on the ownership ladder. Banks were willing to lend money on the security of the vehicle. Of course, as car prices rose people who wanted to buy cars found that they could not afford anything very large and so the cars built and sold in Britain became much smaller than elsewhere. The transport planners said that this showed that small cars were what people wanted in Britain. The British were different from foreigners who wanted large cars. Indeed, people had so much invested in their cars that they resisted any relaxation in the control of production because this would result in their cars losing value.

The justification for this came to be that the limitation of car production was in the interests of global sustainability, to reduce pollution and fuel usage. Some economists said that the stock of old cars in Britain polluted far more and were far less fuel efficient than the newer cars used elsewhere. But these critics were ignored, because after all, they were merely economists and what did they know…

From Unaffordable Housing - Fables and Myths by the Policy Exchange

Properties Tab
On the main properties tab you will need to enter the following details:

• Property Type - choose from
  • Bungalow
  • Character Property
  • Commercial Property
  • Flat / Apartment
  • Garage / Parking
  • Hotel / Guest House
  • House
  • Land
  • Mobile / Park Home
  • Other
  • Retirement Property
• Caption/Short Description - Enter something like “Three bedroomed Detached House” - this will appear in the title bar and at the head of the details.
• Street/Road Name
• Town/City
• County/State
• Country
• Postal or Zip Code
• Introduction - You can use this to provid an introductio to the details, for example, a description of the area and local amenities.
• Full Text - Enter the full details of the property, rooms, room sizes and descriptions into this box.
• Notes - optional, not published on the property details, use it for any information you want to store for your own reference.

Once you have completed this tab, click on the ‘optional’ tab. While you don’t absolutely need to complete these fields, they are highly recommended.

• House No/House name - remember that this will be made public - it may be that you only want people to contact you through the viewing form, if so, you may choose to leave this blank.
• Currency - Choose from £, $, €
• Tenure - Freehold, Leasehold, Rental, Holiday Rental. If you are not sure which of these applies, seek legal advice.
• Services - use Ctrl + click to select multiple options.
• Property Details Style - we currently have four different styles which you can choose from:
  • simple
    
  • classic blue
    
  • cherry
    
  • nature green
    

  When you are happy with the details you have added so far, click on the Save and Insert Photos link above.

  This will store the information you have already added, and open the image manager so that you can upload your pictures. You may have as many as you wish.

Publishing Tab

Once you have finished adding your pictures and are happy with all the details, go to the publishing tab and change the status to published and click on Save at the top of the page. The Add property interface will close and you will now see your newly added property in your property listings.

Click on the link to view your property.

You are now ready to start marketing your property.

• Work out what price you are able to command.
• Write up your property details
• Take photos
• Add your property to homesby.net
• Decide what marketing channels you are going to use.
  • Free ads web sites
  • Paid for advertising on the web
  • Press Classifieds
  • Cards in local shops
  • Estate Agents