Oxford Property Market and Hammond’s Budget Promise to Build 300,000 more homes

I miss the good old days of George Osborne as Chancellor, with his hardhat and hi-vis jacket. He must have visited every new home building site in the UK with his trademark attire! For the last few years, the nearest Philip Hammond got to donning a ‘Bob the Builder’ outfit was at his grandchild’s birthday party. However, with what appears to be a change in focus by the Tories, they appear to have fallen in love with house building again with the Chancellor’s promise to create 300,000 new households in a year.

Nationally, the number of new homes created has topped 217,344 over the last year, the highest since the financial crash of 2007/8. Looking closer to home: in total there were 320 ‘net additional dwellings’ in the last 12 months in the Oxford City Council area, a respectable increase of 113% on the 2010 figure!  Evidence of a prolonged period of under-investment.

The figures show that 66% of this additional housing was new build properties. In total, there were 211 new dwellings built over the last year in Oxford. In addition, there were 43 additional dwellings created from converting commercial or office buildings into residential property and a further 81 dwellings were added as a result of converting houses into flats.

While these all added to the total housing stock in the Oxford area, there were 15 demolitions to take into account.

I was encouraged to see some of the new households in the Oxford area had come from a change of use. The planning laws were changed a few years back so that, in certain circumstances, owners of properties didn’t need planning permission to change office space in to residential use.

With the scarcity of building land available locally (or the builders being very slow to build on what they have, for fear of flooding the market), it was pleasing to see the number of developers that had redeveloped vacant office space into residential homes in the local council area. Converting offices and shops to residential use will be vital in helping to solve the Oxford housing crisis especially, as you can see on the graph, that the level of building has hardly been spectacular over the last seven years!

Now we have had the autumn budget, Theresa May and Philip Hammond have set out their stall with housing as their key focus, including more funding for the supply side and an injection of urgency into the planning system.

The biggest question is, just where are the Government going to build all these new houses? Whilst the apparent new focus on the housing market by the Government is good news for all homeowners and buy to let landlords, in the short term, demand still outstrips supply for owner-occupied and private rented homes and that will mean continued upward pressures on prices for buyers and on rents for tenants.

Propertymark predict 2018 will be a year of change

This article was first published in Property Investor Today, and is republished in the Blog with our own comments added:

NAEA Propertymark and ARLA Propertymark have shared their forecasts for the rental and buying market in 2018, with rental prices set to rise in the 12 months ahead.

According to 59% of ARLA Propertymark letting agents, rent prices will increase next year, while 19% believe they will decrease. Some 62% predict the supply of rental stock will fall in 2018, while 53% think demand will rise. Meanwhile, seven in 10 letting agents expect private rented taxes to rise further in 2018.

Blog comment:  I am entirely aligned with these findings.  There should be no doubt about landlord tax costs rising given that Mortgage interest relief tapers-off further from April 2018.

“2017 was a big year for the lettings industry, and tenants felt the effects of this,” David Cox, chief executive of ARLA Propertymark, commented.

“Unfortunately, it looks like rising rent costs are going to continue into the New Year as agents need to be moving into a 0% fee business model by October, which will push rents up as the costs are passed through landlords and onto tenants.”

Blog comment: ARLA is advising its members that the tenant fee ban will be introduced from October 2018.  Whilst there is no firm date provided by Government, this is our current working assumption.  This will immediately impact the Oxford student lettings market for the 2019/20 academic year.

Cox believes the regulations making their way through Parliament next year will have a positive effect on the rental market, including the prospect of housing courts and longer-term tenancies.”

He said: “While these policies will be developed rather than implemented, they should start to affect the market as agents adapt their business in anticipation.”

Blog comment: I believe the new legislation will prove disruptive for at least 6 months as the market gets to grips with the ban on tenant fees.  Once a date for implementation of the ban is confirmed, tenants will seek to delay their decisions until as late as possible in the hope they can avoid paying a fee.  There is no clear market-wide consistent response to the fee ban emerging, suggesting that the market will adopt different approaches, causing uncertainty for tenants and landlords.

“Overall, the industry is going through a seismic change and the lettings market we know today will be radically altered over the next five years,” warns Cox. “This change will be painful for agents, but we firmly believe that the industry will come out of the other end stronger, more professional and with a robust reputation among consumers.”

Blog comment:  Any letting agent which is not actively planning for the ban now, is in danger of financial instability.  In my own agency we have been preparing now for well over 12 months.

By contrast, 43% of NAEA Propertymark’s estate agents predict that house prices will fall next year. The majority (44%) expect supply to remain the same in 2018, while 29% think it will decrease. Some 32% think demand will decrease in line with this, but almost half (46%) expect it to remain the same.

Blog comment: Prices in Oxford remained robust in 2017 rising around 6% despite transaction volumes falling around 17% YoY.  I expect Oxford prices to perform well relative the wider SE market and remain in positive territory.

Meanwhile, a third (34%) expect incidences of gazumping to decrease in the New Year, while the trend of renovating rather than moving is expected to continue as 60% think more homeowners will do this.  “However,” he continued, “looking ahead to next year, more than half of our members don’t think the first-time buyer tax relief will have a real impact on the number of sales being made to the group.

Hayward added: “Agents expect supply to remain the same but demand to grow which sounds like bad news, but if we can improve the process of buying a property, we’ll be making vast improvements to the sector which will ultimately make it easier and provide more certainty for first-time buyers.”

The trade body also has high hopes as well as predictions. “Our members want to see stamp duty relief rolled out nationally to all buyers, and hold out hope that housing stock will increase,” said Hayward.

“This will be a case of ‘wait and see’ – the Government has made many such promises in the past which we’ve never seen translated into reality.

Blog comment:  Predictions on the future property market always seem to be pessimistic, partly because that seems to sell more copy, and partly because there is so much Government intervention it is hard to predict the fall-out.  The fundamentals in Oxford are strong.  There is an under-supply of new build property, and under-supply of affordable starter homes, and an under-supply of private rented accommodation.  Under-supply can create stagnation particularly when 2nd time buyers can't afford to move, and 1st time buyers can't find or afford a starter home.  But, where demand stays strong, prices tend to hold-up well.  Despite far lower sales transactions in 2017, prices rose 6%.  Lon-term new supply of starter and small family homes is desperately needed to increase sales volumes and lubricate the market.

Housing front and centre in 2017 Budget, but what will it mean for Oxford?

The Budget has been announced and analysed, so far with relatively few unannounced ‘nasties’ having been found.  It is welcome that housing is receiving the attention it deserves, recognising: the challenge faced by first-time buyers; that too few new houses are being built; and, that renting is now a preferred alternative for many people.  But, are the Chancellor’s plans going to serve Oxford and the County well?

No Stamp duty for first-time buyer for the first £300,000 spent

Oxford is well known as having one of the largest gaps between average property price and average salary anywhere in the UK.  With one-bedroom apartments in central Oxford selling for £385,000 or more, even without stamp duty, most first-time buyers can’t afford to live in the City.  But places such as Littlemore, Greater Leys, parts of Marston and Barton do provide realistic opportunities, particularly where a shared ownership option is available.

But, the changes to stamp-duty do not benefit those looking for their second home, who need to vacate their starter homes to make way for first time buyers.  House building takes time, and consideration should be given to a tapered reduction in stamp duty benefitting 2^nd and 3^rd time buyers encouraging them to move.  Only then, would these measures really benefit Oxford’s market where 97% of sale transactions are within existing housing stock.

100,000 new homes for Oxfordshire

As part of plans to connect Cambridge and Oxford, one million homes are planned between these great University Cities.  Of those, 100,000 are expected in Oxfordshire.  Oxford must fight, and fight hard for the lion’s share of those new homes.  Without them, the local property market will remain supply constrained.  With Oxford Parkway train station, North Oxford – Kidlington, Marston and Wolvercote present significant opportunities to build with easy access to the City centre, and transport links to the Midlands and London.

A consultation on longer tenancies

The Chancellor announced a new consultation on how to encourage longer tenancies.  This will bring the total housing consultations to 16!  Oxford, like most places in the UK is experiencing a trend towards longer tenancies.  Once student tenancies are removed from the average tenancy length is between 24 and 30 months.  Longer tenancies benefit both landlord and tenant where each is satisfied with the other (the majority of tenancies).  This suggests to me that no consultation is required to stimulate a trend that is already occurring under current arrangements.

It is great that housing is getting the Government attention it deserves, but our local authorities must seize the day, facilitate the planning process and secure their fair share of the new funds.

Kidlington – Reasons to be cheerful whether you are buying or selling

With its easy access to London and the Midlands via Oxford Parkway train station, and public transport links to Central Oxford, Kidlington is now one of the top 5 areas in the UK where houses are bought by City leavers.  According to a recent study, 50% of all property transactions completed are now to people moving out of a City, with London being a popular source location.



Over the last 12 months close to 95,000 people have decided to move out of London, up 16% on 2016, with 30% of leavers being between 20 and 29 years of age.



Many of these movers are cashing-in on the value of their City properties, and moving to more rural and cheaper locations.  With many using the move to change their work life balance, while others being motivated by ease of commuting links to where they have moved from.



Key attractions are a sense of community, period properties and access to good schools.  Many movers are shunning the traditional commuter towns where everyone is there for commuter convenience for authentic towns where people choose to live for a variety of reasons.



The slowing market in London presents a challenge for Kidlington and other popular places with City leavers.  There are currently 20% more homes for sale in London that at this time last year.  This is an example of how the Oxford market is affected by the Capital, and has contributed to the fall in transaction volumes across Oxford.

Many City leavers choose to rent initially in their chosen location, to enable them to make the move more quickly, confirm their preference and look for suitable properties to buy. 



So, how is the local Kidlington market performing?  Well, transactions over the last 12 months are down by 5% on the previous year at 372 transactions in total.  Of those 13% were for flats at an average price of £210,274, and just 4% of the market was new build.  Terraced houses averaged £306,720; semi-detached £349,353; and, detached homes £481,612.  The most expensive flat sold over the last 12 months changed hands for £382,950 and the most expensive house for £1,405,000.  Overall across the last 12 months prices have held firm making Kidlington look like better value when compared against the rest of Oxford where prices are up 6% on the prior 12-month period.  On average a home in OX5 is 16% cheaper than the average for Oxford as a whole, and accounts for around 12.5% of Oxford total transactions.



Many City leavers rent initially in their chosen location, enabling them to make the move more quickly, confirm their preferences and look for suitable properties to buy. 



Recognising this source of demand is important when marketing your Kidlington property, which also remains popular with families struggling to trade-up to larger properties in Oxford itself.

Oxford house prices matching National average growth rate

Hometrack has release its UK Home Price Index for August 2017, and on first reading it appears to include relatively positive news for Oxford home owners.  Nationally, the average rate of house price inflation is 3.8% which Oxford is matching exactly.  However, closer inspection shows that the National average is being dragged back by London which achieved just 1.9% year of year growth to August 2017.

Whilst Oxford is performing well in comparison to Cambridge (2.8%), Bristol (3.4%) and other major University cities such as Cardiff (3.2%), Sheffield (2.7%) and Liverpool (3.8%), overall Oxford home prices are rising more slowly than 10 other cities in the Hometrack 20 City Index.

Delving further it can be seen that cities like Oxford, that have enjoyed strong growth over recent years, and where average prices have risen strongly, are struggling relative to the best performing cities such as Manchester (7.3%), Birmingham (6.7%) and Edinburgh (6.6%).  Indeed, the 3 most expensive cities in the index London (£489,100), Cambridge (£434,500) and Oxford (£425,800) are each in the lower half of the table, with oxford out-performing both Cambridge and London.

So, is this good news or bad news for Oxford’s home owners?  Well it really depends on circumstance. 

With new build homes struggling to exceed 1% of the total transactions completed over the last 12 months, for first-time buyers, Hometrack’s statistics offer bad news.  Despite the total number of house purchase transactions being down over 20% compared to the previous 12-month period, there remains inflationary pressures, which is widening the affordability gap for first-time buyers.

For Oxford home-owners, the news is more positive.  Despite transaction volumes falling substantially, their homes continue to rise in value ahead of the general rate of inflation.  However, with the market as a whole being generally slower, those planning their next move may need to be patient to find a buyer and to find their ideal next property.

Careful research into Land Registry data for Oxford also shows that the price increments between Flats, terraced, semi-detached and detached homes are high.  Over the last 12 months’ flats have averaged £280,276, terraced houses are on average 36.7% higher (£383,104); semi-detached are just 7% higher than terraced (£410,615) but detached houses are a staggering 46.4% higher than semi-detached (£600,934).  This means that for many who own an Oxford property, it is difficult to ‘trade-up’ to larger properties.  And, the lack of new build means that for many they must either rent to live in Oxford, or live in more affordable places like Bicester, Didcot and Abingdon and commute into Oxford for work.

Oxford house prices over the last 12 months show postcode variation

Over the last month I have been asked by regular readers to help them understand what is going on with Oxford property prices, with several asking specifically ‘should I invest in Oxford right now?’.

You can be forgiven for being confused, the property news headlines can be contradictory on the same day!  Recently 3 different national newspapers use the same report to variously claim prices were recovering and recording growth, house prices were falling for the 4^th month in a row, and house price growth was sustained but weak!

The only way to get to the truth is to look at specific data for specific postcodes.  Using Rightmove data, I have looked some key Oxford postcodes to establish what is the true picture.

Overall property prices for properties sold on Rightmove over the last 12 months are 6% higher than for the prior 12-month period and 20% up since 2014.  That means anyone who has invested in Oxford property since 2014 has achieved a steady capital growth return.  So that’s great!

But, the true picture is more ‘granular’ than that.  By looking at comparable data for just 4 postcode segments (Headington; Cowley; Summertown; and, Jericho) it can be seen that the value of Oxford properties varies widely by location, as does the performance in terms of capital return.

Cowley has offered the best overall return, reflecting the performance of the City as a whole closely – prices are up 5% o the prior 12-month period and 20% up since 2014.  Cowley also continues to offer the best value for money overall.  At the other end of the spectrum is Jericho, where prices over the last 12-months are down 10% on th prior 12-month period and just 6% up on 2014.

The analysis points to markedly lower growth in property values in the expensive parts of Oxford, and relatively strong performance in those areas that offer relatively strong value for money.

For my article next week, I will expand this analysis to other postcode segments in and around Oxford, in the hope that it will further enlighten us all on where in Oxford the best returns in terms of capital value might be found.

To date, only the most expensive parts of Oxford are suffering real decreases in achieved prices, with Jericho and Summertown appearing ‘soft’ by comparison.  However, for landlords capital appreciation is just part of the story – rental yield also needs to be factored-in to calculate true return on investment.  Again, I will look to unpick this too over the coming weeks to give owner-occupiers and buy to let landlords understand the Oxford market a little better

There’s never been a better time to remortgage

The number of mortgage products is continuing to rise, with the number of deals on the market having increased by 61% in just five years, according to Moneyfacts.

Since April 2009, the number of products on the mortgage market hit an all-time low of 1,209. The volume of live deals now stands at 4,657, which is up on 3,814 products in August 2016 and almost 2,000 higher than the number of products on the market five years ago.

This month’s boost to product numbers means there have been 15 months of consecutive increases in residential mortgages, according to the Moneyfacts UK Mortgage Trends Treasury Report, which provides an in-depth monthly review of changing mortgage trends, including all the relevant facts on the UK’s residential and buy-to-let markets.

 Moneyfacts observes: “The numbers this month were boosted by several lenders entering the three-year fixed rate market, which saw the number of three-year fixed rate deals increase by 48 products to 439.

The two-year fixed rate sector has seen heavy competition, causing providers to look elsewhere. The three-year fixed rate market offers providers an opportunity that some have used to branch out.

Widespread talk of a base rate rise means that borrowers are starting to look at their options to protect themselves from a potential rise in monthly repayments. Since a five-year fixed rate can be too long for some, a three-year deal can bridge the gap for those wary of fixing for longer.

The average three-year fixed rate is 2.54% in August, so borrowers will need to decide whether the extra year’s security is worth a 0.31% premium compared to the average two-year rate of 2.23%.

Any readers who have not yet reviewed their mortgage arrangements, should do so without delay.  Too often we Brits have a misplaced sense of loyalty to our mortgage lender, instead of recognising the risk of increased costs as Bank of England rates begin to rise.  If you don’t know who to call, please email me on info@oxfordpropertyblog.co.uk and I will happily make a referral to London & Country who have access to the UK’s largest panel of lenders.  L&C offer a no-commitment telephone based assessment, which will enable you to determine your own position.  L&C can assist owner-occupiers and buy to let landlords with mortgage products to suit their needs.

Buy to let mortgage rates continue to fall

Research from independent market monitor Moneyfacts shows that the average two-year fixed BTL rate has fallen by 0.31 per cent in one year, and even though the pace of the fall has slowed in recent months, the market has now recovered from the significant drop in products that was seen at the start of this year.

The number of BTL mortgage products now available has risen from 1,408 in January this year to 1,610 now - a rise of around 15 per cent in just six months.

As regular readers will know, I have been encouraging Oxford buy to let landlords to consider re-mortgaging for several months now.  The market for BT mortgages has been improving with the range of products increasing and the level of interest rates falling.  At a time when landlord costs have been rising, and look set to continue to rise, this is a way for landlords to reduce their monthly costs and lock-in the historic low interest rates for years to come.

Too many Oxford landlords have a misplaced sense of loyalty to their current lender, instead of grasping the opportunity to look after their own interests.

For any reader interested in discussing the opportunities for re-mortgaging I would be happy to make a referral to a registered and regulated mortgage broker for a no-commitment telephone assessment to determine whether you could save money by re-mortgaging.

The Oxford Property Market, The Beatles, Sweden and 50 year mortgages

50 years ago, in 1967, the first human heart transplant was performed by Dr Christian Barnard in South Africa. In the same year, Sweden switched from driving on the left-hand side to the right-hand side of the road. The average value of an Oxford property was £6,730, interest rates were at 5.5% and The Beatles released their Sgt Peppers album.  But what the hell has that to do with the Oxford property market today? Quite a lot actually - let me explain my friends!

I have been doing some research on the current attitude of Oxford first-time buyers.  First-time buyers are so important for both landlords and homeowners. If first-time buyers aren’t buying, they still need a roof over their heads, so they rent (good news for landlords). If they buy, demand for Oxford property goes up for starter homes and that enables other Oxford homeowners to move up the property ladder.

First-time buyers are the lifeblood of the property market. They are, however the most susceptible to interest rate rises and the affordability of mortgages. With that in mind, let us see what is happening to them…

The average value of an Oxford property is currently standing at £507,468 and UK interest rates at 0.25%. As each year goes by, it appears the age of the everlasting mortgage has started to emerge, prompted by these first-time buyers, eager to get a foot on the housing ladder. I was reading a report a few days ago where some mortgage companies confessed that the battle to gain big returns from the property market has led to mortgages that will take considerably longer than the customary 25 years to pay off.

Over the last few years, it has been commonplace for first-time buyer mortgages to be 30 and 35 years in length as the ‘Bank of Mum and Dad’ have been helping with the deposit. Now, some high street banks are offering mortgage terms of 40 years. This means first-time buyers could be paying until their mid-60’s.  So, a 50-year mortgage does not seem as far-fetched now as it would have been back in the 1970’s. After all life expectancy for a male then was exactly 69 years and today its 79 years and 5 months!

Over the last ten years, Oxford property prices have continued to rise more than wages, therefore, first-time buyers are looking for bigger loans. If this development continues, the only way repayments can remain reasonable is by increasing the term of the loan.

However, some commentators have said they are worried the mortgage companies are lending money over such a long term, because they threaten leaving some first-time buyers with a generation of debt if the house price bubble bursts.  Interestingly, when I looked at what had happened to average property values in Oxford over the last 50 years, there have been bubbles. First-time buyers should take heart, since as a county we have always recovered from it a few years later.

What if interest rates rise? Well looking at historic UK interest rates, the current rate of 0.25% is at a 300-year low. Mortgages will never be cheaper. I would however, seriously consider fixing the rate to cushion any future potential interest rate rises (since they can only go in one direction when they do change). If Oxford first-time buyers see buying a home as a long-term decision, based on the last 50 years, they should feel very confident that their asset will increase in value over the term of their loan!

Commisery vs. Home sale regret – which estate agency model is best? PART TWO

This article follows last weeks, and is the second of two articles that considers the pros and cons of online and traditional estate agency business models.  This week, I will consider the true cost of each model, the relative importance of maximising the price achieved vs. reducing the costs involved; and, how agents secure a price premium.

Is the online offer as cost competitive as it appears?

On first look, the online offer looks unbelievably cheap, and hence the Purplebrick’s marketing focus on ‘comisery’.  But, is it really that much more efficient?

A good-performing traditional estate agent expects to sell around 65% of the properties it lists, and clients only pay a fee if they sell. According to a recent survey, online agents average up to 50%.  That means that half of online agent clients will pay a fee but will not achieve a sale.  Of those that don’t sell, 17% go on to appoint a traditional agent to sell their property.

Per 100 properties listed, an online agent in Oxford will receive fees on every property.  At the current average of £995 that’s £99,500 in fees.  If only 50 of the properties sell, that’s £2,000 per property sold.  For the traditional Oxford agent mentioned above with average fees of 1% of sale price, 65 properties will sell at an average fee of £4,085 per property sold. 

Based on this, the online model under-cuts the traditional model by 50% per property sold in the current market.  But that is achievable only because clients whose houses fail to sell, effectively subsidise those whose houses sell.  Great news for sellers who sell, but very bad news for those who don’t, many of whom then appoint a traditional agent anyway.

What’s more important sale price or agent fee?

Because an average Oxford property costs £408,500, each 1% extra achieved on a home’s sale price delivers around £4,000 of additional return for the seller.  That means an accepted offer at 95% of the asking price for an average Oxford property is £388,000 or £20,400 below asking price.  It seems to me entirely fair to assume that an agent whose fee is proportional to the price achieved will have more incentive to try to maximise the sale price, rather than encouraging their client to settle for a ‘good’ offer because their fee has already been paid.

An agent that negotiates hard on behalf of their client, achieving offers from multiple parties will achieve a 2 to 4% premium.  Let’s assume a 3% premium is secured on the above property resulting in a sale price of £400,000, that’s a price premium of £12,000.  Where the traditional agent fee is 1% (a typical level for Oxford) their fee will be £4,000, resulting in a net gain for the client of over £7,000 (having allowed for the online agent fee of £995).  So, despite paying a fee four times the value of the online agents, the client is over £7,000 in profit.

It is this fact which is causing questions to be asked about the online agency model.  Can a model where the fee is paid up-front, really encourage that agent to strive to achieve the 3% premium described above.

Selling an Oxford home is all about maximising the price you achieve

Homes in Oxford are expensive, securing the best possible price is THE most important factor.  When 1% of an average home equates to over £4,000, working with an agent you trust, and who will work with you in the way you want is the most important factor. 

The true premium paid for traditional estate agency is almost impossible to determine with the data that is currently available.  Increasingly we will see hybrid agency models emerging where seller will be able to personalise the approach their agent takes to reflect their own requirements.  It seems to me that every seller should focus on maximising the sale price they achieve and ensuring that a buying chain is nurtured across the line so sales complete.  That can only be done through dedicated attention to detail, by experienced agents.

Commisery vs. Home sale regret – which estate agency model is best?

Which model of estate agency is best – online or traditional, and how do they differ?  Which model serves its clients best? Does an estate agent have a fiduciary duty? (a ‘fiduciary’ being a person who holds a legal or ethical relationship of trust with one or more other parties) and, does either model undermine that duty?  Finally, which offers the best value?

I will consider these and other questions from the perspective of a property owner over the next couple of weeks.

How do the models differ?

Traditional estate agency is based on no-sale, no-fee.  If the agent fails to sell the property their client pays nothing.  If they secure an offer that proceeds to an exchange of contracts, they claim their pre-agreed fee.  Typically, that fee is quoted as a percentage of the achieved sale price. For an average Oxford home that sells for £408,500, the current average commission paid is 1% or £4,080. 

With online agents, the client pays an up-front fee which covers in advance the cost of marketing, and pays the agent its profit margin.  If the property sells both parties benefit, but if the house does not sell the client has still paid the agent’s fee.  In Oxford currently, the average paid for an online agent is c£995.

Both approaches typically advertise a property via the same online portals, but typically the online model is less comprehensive in terms of the support provided for example some online agents expect clients to conduct their own viewings, and provide only rudimentary sales progression, others offer a menu whereby the client can pay a larger fee for a fuller service.  The traditional agency model is more uniform and includes all aspects of marketing, viewing management, negotiation of offers, sale and chain progression.

Some sellers prefer to work with multiple agents, believing that competition between agents ensures that they work harder to ensure that they (as opposed to their competitor) achieve the sale.  Others prefer to select just one agent who they trust to provide them an effective service. 

Where two traditional agents work in competition only one fee will be payable by the client to whichever agent secures the sale.  Typically, the fee paid using multiple agents is higher than the fee paid to a sole agent.  Where an online agent and a traditional agent work alongside each other, two fees may be paid i.e. the online agent charges their standard up-front fee, but the 2^nd agent secures the sale, making their fee additionally apply.  It could therefore be argued that the up-front nature of online agent fees discourages the appointment of multiple agents.

Currently online agents have around a 4% market share which is growing steadily, traditional agents have a 96% market share.

What is the agent’s responsibility?

A recent Opinion, prepared for the UK PropTech Association (UKPA) by Ian Rees Phillips of 6 Pump Court, explores how the nature of up-front payment for estate agency services may create a conflict of interest between the online estate agent and property vendors.

The opinion concludes that the online agents and traditional agents owe a fiduciary duty to their home seller clients, and that there is a “significant danger that breach of fiduciary duty is baked into the online estate agent model.” 

What causes this potential conflict of interest? The fact that the fee is paid up-front, and is paid irrespective of whether the home is sold or not is the central concern.  But, there is a further concern, that once paid, the agent no longer has an incentive to put every effort into securing the best sale price for their client.

Whilst the traditional agent is typically more expensive, because it is a proportion of the sale price achieved, the agent’s financial interest is aligned its client’ interests.  Because it is only payable for success, it requires the agent to accept and manage a greater level of risk, encouraging a more realistic initial valuation or else risking incurring cost without succeeding in achieving a sale.

Is Oxford Over Crowded?

Oxford is in the clutches of a population crisis that has now started to affect the quality of life of those living in Oxford. There are simply not enough homes in Oxford to house the growing numbers of people who want to live in the city. The burden on public services is approaching a breaking point with many parents unable to send their child to their first choice of primary or secondary school and the chances of getting a decent Dentist or GP Doctor Surgery next to nil.

That’s what the papers would say anyway! But I’ve taken a look at real numbers, and in particular I’ve looked at the housing issue in Oxford. To start with, the UK has roughly 1,065 people per square mile – the second highest in Europe. The total area of Oxford itself is 12.621 square miles and there are 159,900 Oxford residents, meaning 12,669 people live in each square mile of Oxford, or 11,600 more than the national average…so it’s no wonder we appear to be bursting at the seams!

But, we all know that newspapers, politicians and property market bloggers quote big numbers to sell more newspapers, get elected or get people to read their blog (I recognise the irony!). A square mile is enormous and much bigger than is sounds, so the numbers look correspondingly large (and headline grabbing). Most people reading this will know what an ‘acre’ is, but those younger readers who don’t, it is an imperial unit of measurement for land and it is approximately 63 square metres.

In Oxford, fractionally more than 18 people live in every acre of Oxford, not as headline grabbing, but a lot more relative to everyday life, and if I am being honest, a figure that doesn’t seem that bad.

However, the issue at hand is, we need more homes to be built. In 2007, Tony Blair set a target that 240,000 homes a year needed to be built to keep up with the population growth, whilst the Tory’s new target since 2010 was a more modest 200,000 a year. However, since 2010, as a country, we have only been building between 140,000 and 150,000 homes a year. So where are we going to build them? Because we have no space! Or do we?

Well, let me tell you this fascinating piece of information - I found out recently in an official Government report that in England (which is the most densely populated country of the Union), the 20 million English homes cover only 1.1% of its land mass. That is not a typo, only one point one per cent (1.1%) of land in England is covered by residential property. In more detail, of all the land in England:

·       Residential Houses and Flats 1.1% 

·       Gardens 4.3%

·       Shops and Offices 0.7%

·       Highways (Roads and Paths) 2.3%

·       Railways 0.1%

·       Water (Rivers /Reservoirs) 2.6%

·       Industry, Military and other uses 1.4%

Which leaves 87.5% which is Open Countryside (and if you think about it, add to that the gardens, which are green spaces, and the country is 92.8% greenspace)

As a country, we have plenty of space to build more homes for the younger generation and the five million more homes needed in the next 20 years would use only around 0.25% of the country’s land. Now I am not advocating building massive housing estates and 20 storey concrete and glass apartment blocks next to local beauty spots such as Blenheim Palace or Christ Church Meadow, but with some clever planning and joined up thinking, we really do need to think outside the box when it comes to how we are going to build and house our children and our children’s children over the coming 50 years in Oxford. This should be of concern to owner occupiers and landlords alike, Oxford needs up to 32,000 more homes to buy and to rent to keep up with population growth.  Today, average house prices are 16.2 times average earnings, amongst the highest once London is excluded and growing.  If anyone has their own ideas or opinions, I would love to hear from you.

In the meantime, if you would like to read other articles about Oxford Property Market, please visit the Oxford Property Market Blog www.oxfordpropertyblog.co.uk

Guess what proportion of Oxford properties have 3 or more bedrooms?

An orthodox way of classifying property in the UK is to look at the number of bedrooms rather than its size in square metres (although now we are leaving the EU – I wonder if we can go back to feet and inches?). It seems that both homeowners and tenants are happy to pay for more space. And, typically, the more bedrooms a house or apartment has, the bigger it is likely to be, because typically properties with more bedrooms tend to have larger or more reception (living) rooms. However, if you think about it, this isn’t so astonishing given that properties with more bedrooms would typically accommodate more people and therefore require larger reception rooms. 

In today’s Oxford property market, the Oxford homeowners and Oxford landlords I talk to are always asking me which attributes and features are likely to make their property comparatively more attractive and which ones may detract from the price. Over time, buyers’ and tenants’ wants and needs have changed. In Oxford, location is still the No. 1 factor affecting the value of property, and a property in the best neighbourhoods, say Botley, Jericho or Summertown or those with proximity to a great school or major place of work can command a price 40 to 50% higher than a similar house in an ‘average’ area. However, after location, the next characteristic that has the most significant influence on the desirability, and thus price, of property is the number of bedrooms and the type (i.e. Detached/ Semi/Terraced/Flat).

In previous articles, I have analysed the Oxford housing stock into bedrooms and type of property, but never before now have I cross-referenced type against bedrooms. These figures for the Oxford City Council area make fascinating reading. It shows 76.2% of all properties in the area have 3 or more bedrooms.

I was genuinely surprised at the low numbers of one and two bed properties, especially 2 bed semis detached houses, especially as tenants like smaller one and two bed properties in Oxford. You see, it might interest the homeowners and landlords of Oxford, that there has been a change in the numbers of properties on the market and the split in bedrooms on the market over the last 12 months.

For several years Oxford buy-to-let investors have been pretty much only buyers at the lower end (starter homes) of the market, enticed by high tenant demand and attractive returns. Some Oxford landlords believe their window of opportunity has started to close with the new tax regime for landlords, whilst it already appears to be opening wider for first-time buyers. This is great news for first time buyers who can scrape together the sizable deposit needed to get in to the Oxford property market.  One final note for Oxford landlords - all is not lost - you can still pick up bargains if you are prepared to buy a property in need of work, you just need to be a increasingly savvy and do your homework to ensure the project costs plus the purchase price will allow a decent yield.  One source of such information with articles like this is the Oxford Property Blog www.OxfordPropertyBlog.co.uk