Collapse of the UK housing market

[funduffer]

The UK has a housing shortage in the sense that there are not enough houses at affordable prices in the right parts of the country, and the massive geographical variation in house prices means labour mobility is stifled. This is a big part of the UK's productivity problem.

In simple terms, the jobs are in the SE, and the excess labour is elsewhere, but that labour cannot afford to 'get on their bike' and go to find these jobs.

It needs some sort of government intervention to correct this - either free up space for affordable housing in the SE, or 'level up' by incentivising more jobs to be created away from the SE. At the moment, NIMBY behaviour and over-zealous planning restrictions suppress the former, and lack of regional investment suppresses the latter.

As a personal aside, I moved from the North to the SE when I was young for my first job. I moved because I was offered a council flat in a new town (Bracknell), which got me started in life. I suspect this would be a lot more difficult today.

FD

[servodude]

...as long as you don't get a choice?
As far as I'm aware you don't have enough places for prisoners let alone a functional housing market.
Can you possibly let us see your working?

Google "empty homes" and you will get plenty of information - mostly from pressure groups - but depending on definition there are between 250k and 1 million empty homes in the UK. Many of those could be brought back to provide rented accommodation if that was the focus of government, rather than a focus on new building (which they all say they will deliver but in practice it isn't the public sector that does this).

Even outside of these "empty" homes there are relatively few people living "on the streets". The issue for many people is as you say "choice". Many want to live somewhere else, in a bigger place, somewhere that costs less etc. Choices like that can't (and shouldn't?) be easy, like most things in life.

So you accept that you don't really get a choice where?
I mean geographically - I doubt many would argue there's plenty of housing in places that don't need it in the timescales that we talk about wrt people's lives (they could e.g. buy a cheap house in Detroit... but it's a helluva commute to Sheffield)

For example I watched large parts of south Dunfermline be turned over in to housing for jobs that never eventuated (because your subsidy for building a plant was cashed before you open for business .... we bought a lot of the hardware from Motorola for a song that way)

And yes, it could count as a home, probably, for this kind of fungible comparison if you were capable of building stuff like decent connecting infrastructure to make it viable; how are things like trainline building coming along?

I suppose I'm saying that I don't think having empty properties in some places in the country equates to having enough viable housing stock - unless you're taking a particularly pedantic and pathological view of it (which I can see might be politically expedient for some )

[Nimrod103]

The UK has a housing shortage in the sense that there are not enough houses at affordable prices in the right parts of the country,

If the houses are not affordable, they would be hanging around in the market unsold, and would gradually build up and become noticeable. Estate agents windows would be crowded with pictures of unsold properties.

I have not seen that (yet).

Edit to add, my recollection of returning to the UK in 1994, having rented out our house while working overseas, was the letting agent sitting me down and saying 'Don't even think of selling, you will not get a buyer'. We are not at that situation yet, but more interest rate rises will set us off in that direction.

[Lanark]

Google "empty homes" and you will get plenty of information - mostly from pressure groups

There are always going to be some empty homes and the proportion has remained remarkably constant over the decades.

New houses which havent been sold off-plan.
Estate sales where the house remains empty for the 6 months it takes to sell
Rental void periods between tenants
Houses which have been vacated for renovations
Houses which have been vacated prior to demolition

Now some of those could be brought back into use a bit quicker if we found a way to speed up the glacially slow house buying process, but I'm not holding my breath.

[Nimrod103]

Now some of those could be brought back into use a bit quicker if we found a way to speed up the glacially slow house buying process, but I'm not holding my breath.

What changes would you suggest?

[servodude]

Now some of those could be brought back into use a bit quicker if we found a way to speed up the glacially slow house buying process, but I'm not holding my breath.

What changes would you suggest?

10% non refundable deposit required at acceptance of offer
- that should stop chains getting broken?

[Nimrod103]

What changes would you suggest?

10% non refundable deposit required at acceptance of offer
- that should stop chains getting broken?

IME all offers are made subject to various caveats, such as a satisfactory survey, satisfactory searches, finance being available etc.
What happens if the survey shows up something dodgy? What if the dodginess was disputed? It would probably all end up in court because the deposited cash would be at stake.

Edit to add, it would just mean that the 'offer' stage would replace the 'exchange of contract' stage. So what happens before offers are put in? How would the seller know whether a party was interested, because they could not put in an offer until somebody has offered on their place, and so on. The whole market would grind to a halt very quickly.

[Lootman]

Google "empty homes" and you will get plenty of information - mostly from pressure groups

There are always going to be some empty homes and the proportion has remained remarkably constant over the decades.

New houses which havent been sold off-plan.
Estate sales where the house remains empty for the 6 months it takes to sell
Rental void periods between tenants
Houses which have been vacated for renovations
Houses which have been vacated prior to demolition

Plus rental units where the landlord keeps the unit vacant to avoid punitive regulations, and perhaps does Airbnb or other short-term lets to avoid the hassle and risk of long-term tenants.

[CliffEdge]

There are at least 2 million empty houses. It would be nice if a few where I am were demolished and some nice parks established. There is no evidence of a shortage of houses in the UK. It is just another bunch of grifters spreading lies.

[CliffEdge]

What changes would you suggest?

10% non refundable deposit required at acceptance of offer
- that should stop chains getting broken?

What rubbish.

[Lootman]

10% non refundable deposit required at acceptance of offer
- that should stop chains getting broken?

What rubbish.

In the US the buyer plays a 3% deposit upon acceptance of their offer. It is non-refundable except for any contingencies cited in the offer letter, such as the granting of a mortgage.

This ensures that a buyer can pull out for a good reason, but not for a bad reason. And the more contingencies cited in the offer, the less competitive that offer will be seen as.

[Nimrod103]

What rubbish.

In the US the buyer plays a 3% deposit upon acceptance of their offer. It is non-refundable except for any contingencies cited in the offer letter, such as the granting of a mortgage.

This ensures that a buyer can pull out for a good reason, but not for a bad reason. And the more contingencies cited in the offer, the less competitive that offer will be seen as.

How does the housing chain work in the USA? ISTM, the main problem in the UK is that a chain is formed, which may be long or short, but nobody can exchange contracts until everyone is ready to exchange. So chains have a habit of falling apart. Our friends want to move, their buyer is not able to proceed because their buyer has pulled out due to rising interest rates. In the meantime, our friends really can't find somewhere they like, and almost certainly will just reluctantly stay put.
I've seen many of these US/Canada TV programs about fixing up/redecorating a property for sale. In the final scene, the property is sold. None of the sales are ever held up in a chain. Realistic?

[Lootman]

In the US the buyer plays a 3% deposit upon acceptance of their offer. It is non-refundable except for any contingencies cited in the offer letter, such as the granting of a mortgage.

This ensures that a buyer can pull out for a good reason, but not for a bad reason. And the more contingencies cited in the offer, the less competitive that offer will be seen as.

How does the housing chain work in the USA? ISTM, the main problem in the UK is that a chain is formed, which may be long or short, but nobody can exchange contracts until everyone is ready to exchange. So chains have a habit of falling apart. Our friends want to move, their buyer is not able to proceed because their buyer has pulled out due to rising interest rates. In the meantime, our friends really can't find somewhere they like, and almost certainly will just reluctantly stay put.
I've seen many of these US/Canada TV programs about fixing up/redecorating a property for sale. In the final scene, the property is sold. None of the sales are ever held up in a chain. Realistic?

There is not a chain unless an accepted offer lists a contingency of the sale of an existing property, and such an offer may not be seen as attractive. Otherwise an accepted offer is contractual, meaning that you pay $nnn,nnn on the stated closing date regardless of whether you sell your existing home. In that case you would need a bridging loan, or else be in breach of the contract, lose your deposit and possibly more.

So there are no chains like in the UK. An accepted offer binds both sides to the deal, except for the listed contingencies. It follows that there is no gazumping or gazundering as well.

[Nimrod103]

How does the housing chain work in the USA? ISTM, the main problem in the UK is that a chain is formed, which may be long or short, but nobody can exchange contracts until everyone is ready to exchange. So chains have a habit of falling apart. Our friends want to move, their buyer is not able to proceed because their buyer has pulled out due to rising interest rates. In the meantime, our friends really can't find somewhere they like, and almost certainly will just reluctantly stay put.
I've seen many of these US/Canada TV programs about fixing up/redecorating a property for sale. In the final scene, the property is sold. None of the sales are ever held up in a chain. Realistic?

There is not a chain unless an accepted offer lists a contingency of the sale of an existing property, and such an offer may not be seen as attractive. Otherwise an accepted offer is contractual, meaning that you pay $nnn,nnn on the stated closing date regardless of whether you sell your existing home. In that case you would need a bridging loan, or else be in breach of the contract, lose your deposit and possibly more.

So there are no chains like in the UK. An accepted offer binds both sides to the deal, except for the listed contingencies. It follows that there is no gazumping or gazundering as well.

So if a successful buyer cannot sell their house, they will be left with 2 houses, one mortgage, and a 'bridging loan' for the value of their second house. Could work out crippingly expensive.

[Lootman]

There is not a chain unless an accepted offer lists a contingency of the sale of an existing property, and such an offer may not be seen as attractive. Otherwise an accepted offer is contractual, meaning that you pay $nnn,nnn on the stated closing date regardless of whether you sell your existing home. In that case you would need a bridging loan, or else be in breach of the contract, lose your deposit and possibly more.

So there are no chains like in the UK. An accepted offer binds both sides to the deal, except for the listed contingencies. It follows that there is no gazumping or gazundering as well.

So if a successful buyer cannot sell their house, they will be left with 2 houses, one mortgage, and a 'bridging loan' for the value of their second house. Could work out crippingly expensive.

And two lots of property tax and insurance. It deters frivolous offers. Buyers who are nervous can always sell first, rent a place short-term, and then buy.

[stevensfo]

What rubbish.

In the US the buyer plays a 3% deposit upon acceptance of their offer. It is non-refundable except for any contingencies cited in the offer letter, such as the granting of a mortgage.

This ensures that a buyer can pull out for a good reason, but not for a bad reason. And the more contingencies cited in the offer, the less competitive that offer will be seen as.

This is more or less the same system as in Italy. It makes everything smoother and easier.

I have heard of cases in the UK where a buyer changes their mind at the very last minute, thus causing problems for everyone else!

Provided the buyer has had a survey done and wants the property, insisting on a deposit is perfectly acceptable IMHO. Obviously, if there is a good reason for pulling out, then okay, but these reasons should be listed beforehand, understood, signed and applied correctly.


Steve.

[tjh290633]

In England, a deposit is payable when contracts are exchanged, not when an offer is accepted. It does happen from time to time that exchange and completion are simultaneous. What happened to me is that the vendor delayed completion because his next house was still under construction. I have also had a buyer withdraw at a late stage, but fortunately the estate agent found a new buyer the same day.

My experience has been that delays often come upstream (i.e. from the vendor) rather than downstream (i.e. from the buyer).

TJH

[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

[Nimrod103]

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.

[servodude]

10% non refundable deposit required at acceptance of offer
- that should stop chains getting broken?

What rubbish.

Why?
I'll wait...