Tales from the Front Line

HIPs to be scrapped

by Edward Heaton
on May 13, 2010 in Properties

I have just been perusing the Conservative Liberal Democrat coalition agreement and have read the excellent news that HIPs (Home Information Packs) are to be scrapped. This is great news for the property industry. Since their introduction they have created an additional layer of bureaucracy to the house moving process, often taking weeks to produce and adding unnecessary costs. At the bottom of the market they have undoubtedly deterred some would be sellers from putting their houses on the market, whilst at the top end they are treated with near contempt by most solicitors, who simply don't trust the majority of the information contained within them. The EPC (Energy Performance Certificates) will be retained, which is no bad thing.

The document is silent about the Liberal Democrat's proposed Mansion Tax and also the planned increase in stamp duty to 5% on purchases over £1 million from next April, so watch this space. However, if the news about HIPs is anything to go by, perhaps this coalition government might just bring some common sense to our national politics. We can but hope.

Mansion Tax Madness

by Edward Heaton
on April 28, 2010 in Properties

When I first heard about the Liberal Democrat proposal to introduce a Mansion Tax on all houses valued at over £2 million, I rather disregarded it as something that bore little chance of becoming a reality. However, with the recent surge in Lib Dem popularity and the real possibility of a hung parliament, I thought this deserved a little more attention.

I have now looked at the Lib Dem manifesto, which simply states that they propose “introducing a Mansion Tax at a rate of 1 per cent on properties worth over £2 million, paid on the value of the property above that level.” They expect the tax to raise £1,710 million for The Treasury.

Assuming the Mansion Tax is treated in the same way as Council Tax, then it will be payable on income that has already been taxed. So, if you own a £2 million house, the mansion tax will be £20,000, or £33,333 before tax for a 40% tax payer. A £5 million house will cost you an additional £50,000 each year.

What concerns me about all this is that if the Lib Dem’s end up in a coalition with either of the two main parties, then a Mansion Tax could be an attractive and easy means of raising some much needed extra cash, the introduction of which could be ‘blamed’ on the Lib Dem’s as part of a power sharing agreement.

Would a Mansion Tax have any effect on the top end of the property market? Absolutely, yes. We are already preparing ourselves for the increase in stamp duty to 5% on houses over £1 million from next April. This, together with a mansion tax could well be the final nail in the coffin for many house movers.

Finally, spare a thought for the lovely retired couple I met last week. They live in a crumbling Old Rectory which they have shared together for the last 50 years. Their house is worth around £3 million and it is their major asset. On paper, they are wealthy, but they are cash poor and live a relatively frugal existence. If the Mansion Tax is introduced, they will be faced with paying an additional £30,000 in tax each year, something they can ill afford to do. Is that really fair and proportionate? They are ordinary people who have worked hard all their life, who may now face the prospect of having to sell their home just to avoid paying an unfair tax.

It is not for me to suggest how anyone should vote, but one thing is for sure – a hung parliament (let alone a Lib Dem government) won’t be a good thing for anyone with an interest in prime residential property.

Aligning pay with the job

by Peter Mackie
on February 26, 2010 in Properties

With all the recent discussion about pay and bonuses, I have been considering our own small business and how the team are compensated. This must be in such a way to benefit our clients, the buyers, and encourage the team to work coherently.

Historically, in the residential property industry, there tended to be an emphasis towards a low basic salary and commission paid to the selling agent, which would be a percentage of the total commission paid by the vendor, for each transaction. However, this model could never have worked on the buying side because, if our team became, for all intents and purposes, commission salesmen it could certainly raise question marks about the quality of their advice and the motives.

Therefore, we have always gone down the route of a “proper” salary and a fully discretionary bonus. The bonus is based on achievement of personal objectives and client feedback research. This is to ensure that all employees are working hard to provide an exemplary service and making sure our clients buy the right property at the right price. This has served us well over the 27 years that Property Vision has been going.

I was therefore astonished to hear recently that a firm of buying agents, who have recently set up in competition with us, were considering paying commission to their executives on each transaction and therefore destroying their whole advisory and team basis.

Terrific Terraces…

by Nigel Hindle
on January 26, 2010 in Properties

Looking out of the window of my Paris apartment, watching the flakes of snow fall gently past the window, I was hard pressed to remember the balmy summer and autumn of only a few months ago when the possibility of sitting on the roof terrace overlooking the magnificent urban landscape dotted with the many ‘monuments historique’ was very real. A glass of chilled rose, a newspaper and a table at which to sit and enjoy the view was the perfect antidote to a busy working day. Roll on springtime…

Nonetheless there is an important point to this reverie. Private outdoor space in Paris, like any other major city, comes at a premium. Roof terraces are routinely valued at 50% or more of the value of the internal floor area which in some cases can value the terrace at 10/12,000 Euros a meter. Not exactly cheap. Unlike central London, Paris does not have an abundance of houses with private gardens, neither does it have an abundance of garden squares. The vast majority of residential property is apartments that have no outdoor space at all. Most buildings have some form of inner courtyard but these are neither private nor great places to enjoy a view. The other conundrum is that the best apartments tend to be on the second or third floors where ceiling heights and room volumes tend to be at their greatest. These apartments do not, generally speaking, have any outside space apart from the traditional ornamental balcony seen on the front of the buildings. The higher up the building you go the chance of finding a terrace improves but at the expense of ceiling heights.

So, as with most property decisions, choosing an apartment in Paris will depend on personal choice and lifestyle. If you want the ‘grand salon’ feel you will have to forego outside space and if you can live with a more loft type of apartment then you will more likely benefit from a terrace and a good view. Just make sure that if you go for a roof terrace on a higher floor that the building has a lift. Values diminish significantly without one.

With all this snow around at the moment my attention is increasingly being drawn from Paris to the Alps. Now where were those skis..?

Property Intelligence – a buying agency’s view

by Peter Mackie
on January 18, 2010 in Properties

This week Property Vision was quoted exclusively on ”property intelligence” in Graham Norwood’s Blog.