If my offer on a property is accepted, shouldn’t the agent concerned take it off the market?

Some estate agents will specifically request their clients’ instructions on this matter. In most cases, however, the tacit assumption is made that once an offer has been accepted, active marketing should cease – although this does not absolve agents of their legal obligation to continue passing on any unsolicited offers which they may subsequently receive, unless specifically instructed not to do so. That said, the fact remains that a seller is perfectly within his rights to require marketing to continue right up to exchange of contracts. Indeed, some types of seller – for example, corporate clients, or lenders looking to dispose of repossessed properties – routinely do so. And even if a property has been removed from the market, there is nothing to stop a seller changing his mind at a later date. Much is made by consumer groups of the apparent unfairness of this situation. However, it’s worth pointing out that buyers are equally free to change their minds – and frequently do. That is the nature of our system. Nothing is legally binding on either party until exchange. What is the role of the estate agent in all this? Well, ultimately, of course, we are employed by the seller. We are – literally – his agent in the transaction. Nevertheless, only very rarely might we advise a client to continue marketing his property once a firm offer has been accepted – and then only if we start to have grave doubts about the current buyer’s ability to proceed. Why? Well, primarily because we would be legally obliged to inform the latter of the fact, in writing – and therefore risk losing him altogether. The old saying about a bird in the hand has rarely been as relevant as it is in the current climate! From time to time it has been suggested that England and Wales should adopt a similar system to that employed in other countries, where an offer becomes legally binding on both parties as soon as it is agreed. That would certainly address this particular issue once and for all. But then again, is it really so unreasonable that both parties to such a significant transaction should have adequate time to reflect and even reconsider, before committing themselves irrevocably? I’m not sure it is.

Q. We are looking to buy. What general advice would you give regarding making offers?

A. There are few hard and fast rules when it comes to making offers. However, it is advisable to do some research first, to see what similar properties in the area may recently have sold for. These days, there are a number of websites like www.myhouseprice.com and www.ourproperty.co.uk which can provide this kind of information, although it’s important to remember that they get their data from HM Land Registry, so it’s basically 3 months out of date. Always bear in mind that whatever offer you make, you may be outbid - even in the current market. Remember, the agent is legally bound to continue passing on any new offers to his client right up until exchange of contracts, unless instructed otherwise. So, even if and when your offer is accepted, that is by no means the end of it. By all means, offer less than the asking price – indeed, it’s practically expected! But don’t be tempted to start off with a ridiculously low offer, on the offchance that you strike lucky – even if you’re prepared to go higher later. Very occasionally, this may pay dividends – if, for example, the seller is in particularly dire straights. But generally speaking it is a very high-risk strategy. After all, if the seller’s agent has done his job properly in the first place, then the asking price should already be pretty much spot on. Besides, if the vendor thinks that your initial offer was insultingly low, then he may simply refuse to sell to you at all, no matter how high you are subsequently prepared to go. After all, no-one likes being taken for a fool – so much so, in fact, that there are plenty of cases of vendors who were even prepared to accept a slightly lower final offer from someone else, rather than end up selling to the person who tried to pull a fast one in the first place! So, my advice is simple – if you really, really like a property, don’t play around. Give it your best shot right from the start. One final word. Resist the temptation to make offers on several different properties at the same time. Admittedly, this is normally only something that happens in a sellers’ market. Still, you wouldn’t want anyone doing it to you!

Q. I heard the other day that the mortgage market may be easing. Is it?

A. The short answer – surprisingly enough, given all the doom and gloom in the media - is yes. Lenders are lending, and the really good news is that rates are starting to come down. What’s happening? Well, firstly, costs in the wholesale money markets have been falling. This trend is expected to be further reinforced by the Government’s brand new £80 billion Funding For Lending (FFL) plan, which aims to break the credit logjam by furnishing banks and other lenders with special cheap funding for both mortgages and small business loans. The second factor is growing competition between lenders – particularly for the more lucrative fixed rate business. With continuing uncertainties about the economic outlook, and the Bank of England base rate only likely to move in one direction from its historic low, borrowers are increasingly looking to lock themselves into longer-term fixes, in preference to tracker-type mortgages, which while marginally cheaper nevertheless still have the potential to go up. This growth in demand is fuelling what some market commentators are describing as a mortgage rate price war. All in all then, this is good news, with some great deals currently available, particularly for those borrowers in possession of a substantial deposit – say, a minimum of 30%. It’s still not quite so good for first-time buyers, of course – or indeed anyone looking for a high LTV deal. Nevertheless, although 95% mortgages remain pretty thin on the ground, they can be found, while the choice at 90% is significantly wider. It’s also worth pointing out that while high LTV mortgages may be a couple of percentage points dearer than for 60-70% deals, the actual rates are in many instances no higher than they were 4 or 5 years ago. Underpinning all this, of course, is the fact that lenders are now much more cautious and risk-averse than they were back in the gung-ho years. This manifests itself in the fact that they are asking for much more information upfront than they used to, including proof of identity and evidence of income. But when you think about it, that’s no bad thing. So there you are. As long as you meet lenders’ criteria, finding a mortgage to suit your needs is definitely getting easier – and cheaper!

Q. What factors do I need to take into account when buying leasehold?

A. Under English law, you can only have one freehold property on each piece of land - so leasehold was adopted as a way of getting round this problem in order to give flat-dwellers a degree of security of tenure. With a lease, you are effectively a kind of tenant, having bought rights to a property for an extended period of time. As such you are bound by the terms of the agreement, which are set out in the lease itself – subject of course to the various statutory rules and regulations. One of the key things you need to consider is the length of time still outstanding on the lease. Anything less than 80 years and you would encounter problems if you wanted to sell. You are legally entitled to have the lease extended – as long as you have already held it for a minimum of two years. However, this comes at a price, since the relevant legislation entitles the freeholder make a charge for this by way of compensation for having to wait longer to get their property back. Another reason why the 80 year mark is so important is that at this point, in addition to the afore-mentioned compensation, you also become liable to pay the freeholder so-called “Marriage Value” – i.e. 50% of the increase in the property’s perceived market value due to the lease extension. Clauses in the lease concerning repairs, and responsibility for them – also require careful study. Ditto, matters such as ground rent, service charges, insurances, maintenance schedules, rights over/responsibilities for communal areas, parking provision, the rules governing sub-letting…the list goes on. Ultimately, however, the key thing to remember about leasehold agreements is that while they all share certain basic elements, there is actually no such thing as a standard lease. Even in a modern development, they will often vary, while in the case of older leases, they can contain all manner of weird and wonderful clauses. The devil is always in the detail. So – don’t even think of trying to do your own conveyancing. Going through the terms and conditions of a lease with a fine toothcomb really is a job for the experts!

Q. Help! We need to move and don’t really want to wait till the Autumn - but we’re going to be away for much of the summer.

A. The first thing to say is “don’t panic!” Even in high summer (if you can call it that) there are buyers about; maybe not as many as in the autumn, but they are just as keen to buy. Indeed, for people like teachers, this is precisely the time that they will be actively househunting. And don’t worry about it interfering with your own holiday plans, either. When it comes to showing prospective buyers around, many estate agents actually prefer it if the seller is absent, since it allows them to concentrate on the job in hand. So, just give your agents the keys and a contact number, and let them deal with viewings and so forth while you’re away. Security is really the big issue here. Remember, 4 out of 5 burglaries take place when properties are empty – so having an estate agent visiting your property regularly is actually a big plus. Not only does it mean you’re home will get a regular airing, but it’s also good to have someone dropping by now and then, just to keep an eye on the place. In addition, of course, there are all sorts of other measures you can take – most of which are really just common sense. For example: · Avoid discussing your holiday or business trip in public, and don’t put your home address on your luggage. · As well as the agent’s visits, try to enlist a friend or neighbour to keep your house looking lived-in: for example, by opening and closing curtains, keeping the hallway clear of junk mail, etc (particularly important if your front door is glazed) - even parking their car in your driveway from time to time. Also, make sure they too have contact details for you. · Put one or two lights in different rooms on timer switches, and do the same with a radio (speech programmes rather than music). · Cancel any milk or newspaper deliveries. · If you are going to be away for a long period, arrange for someone to keep the garden looking neat and cared-for. And finally… · Try not to leave valuable items visible through the windows.

Q. There seems to be quite a discrepancy between the market value of my home and its insured value, and I’m concerned that I may not have adequate cover.

A. The market value of a property, and the value that is put on it for insurance purposes, are two very different things. Market value obviously reflects the price someone is prepared to pay for your home – which, as we all know, can go up, down or sideways, depending on a whole range of external factors. On the other hand, insured value is based on a calculation of what it would actually cost to completely rebuild your home to the same specification in the event of something like a major fire. Even in the current market, the former is almost always higher – primarily because the insured value doesn’t take into account the value of the land on which a property sits.

So, that’s where the discrepancy comes from – and in itself, it needn’t be a cause for concern.

However, whether or not the insured value is actually correct is another matter altogether. Generally speaking, insurance companies increase their valuations annually in line with inflation – but that won’t necessarily reflect the true cost of labour and materials at any given time. Besides, they may have got their sums wrong in the first place. Then again, you may have significantly extended or improved your home over the years, and unless you make a point of telling your insurers, they won’t have taken that into account.

As a general rule, I would advise you to check the insured value every 2-3 years. You can calculate this yourself by multiplying the total external size of your home (both upstairs and downstairs) by the estimated rebuilding cost per square foot or square metre, which can vary quite considerably, depending on where you live and the type of property you live in. These costs are published by the Royal Institute of Chartered Surveyors, and are available – at a price - from most qualified surveyors. Alternatively, you can check out the Association of British Insurers’ free online building insurance calculator.

Once you’ve done your calculations, compare the result with the insurer’s valuation, and if you’re not happy, ask them to make the necessary adjustment. It might mean you pay a slightly higher premium, but it’s a small price to pay for peace of mind.

Q. We are hoping to buy an old character property, but the lender’s valuer has given it the thumbs down, unless we have a structural engineer’s report...

A. Despite our sending them a copy of a full building survey which we commissioned and which says it is OK!

Not knowing the specifics of the case, I should start by saying that this is not an unusual problem, since lenders have always tended to take the word of their own valuers over any professional you might employ.

What can you do? Well, my first piece of advice would have been to send them a copy of your own survey – but you’ve already done that! So, you could start by writing to them asking for a detailed explanation of why the survey is not acceptable. You could follow that up with a further letter or report from your surveyor, setting out in detail why in his professional opinion the property is fundamentally sound - and specifically, why it should not be expected to meet modern standards and regulations, etc. After all, there are plenty of such properties around that are successfully bought and sold with mortgages every year.

Alternatively, you could always just commission an engineer’s report, as the lender asks. However, before going to that expense, you would need to have a pretty clear commitment from them that they will give you the loan you need if the report comes back positive.

Of course, I’m afraid it’s always possible that this particular lender will simply refuse to budge. After all, mortgage companies are the ones being asked to lend money, so they can basically set their own rules and decide who they are prepared to lend to – or not, as the case may be.

If this happens, then I would suggest you simply take your business elsewhere. After all, since so much depends on the personal opinion of the valuer, it would be strange if it were to prove impossible to get the loan you need from anywhere else! If you went through a mortgage broker, then I would definitely get him involved again. And if you didn’t, then I would definitely recommend you use one next time. After all, a broker won’t earn his commission if you don’t get the loan you need, so he will certainly have an incentive to try and sort things out!

Q. What is the current situation as far as Energy Performance Certificates is concerned?

A. A new consumer-friendly version of the EPC, together with new rules governing their use, came into force, bizarrely enough, on Good Friday, April 6th. By law, the new 4-page EPC must now be commissioned and made available within 7 days of a property being offered for sale or rent – with an extra 21 days allowed if any particular problems are encountered with its production.

Anyone (the owner, landlord or their agent) failing to make an EPC available, free of charge, to prospective purchasers or tenants within that time frame can be reported to local Trading Standards and may be liable to pay a fixed penalty of £200.

In addition, the front page of the EPC – the bit containing the familiar bar chart and key advice on increasing energy efficiency - must now be attached to all estate agents’ particulars. Moreover, the National EPC Register, which already contains several million certificates, has for the first time been made publicly available, with the aim of making it easier for people to compare the energy efficiency of their own homes with other, similar properties.

In announcing the changes, Communities and Local Government Minister Andrew Stunell said that the package of measures would make energy information on properties easier to understand, and help people save money on their fuel bills.

So far, so good, except for the fact that estate agents have been told by Landmark – the Daily Mail-owned private company running the EPC database – that the ability to automatically extract the front page of each report and attach it to property details (as required by the new law) won’t actually be available until June!

OK, so that is the agent’s problem, you might think – and you’d be right. However, homeowners might be rather more concerned to discover that thanks to these same changes, their full address and post code will now be publicly available on the Register. Something which, in extolling the virtues of the new arrangements, Mr Stunell somehow neglected to mention…

Ultimately, of course, the question that really matters is whether any of these changes will make EPCs more useful than they have so far proved – and so far, there is precious little evidence to suggest that buyers actually care very much about them at all.

Still, anything that saves the planet has got to be worth doing – hasn’t it?

Q. Is selling at auction worth considering?

A. Very much so. Traditionally, of course, this rather depended on what you were trying to sell. Here in the UK, auction always tended to be reserved for those properties where the normal method of sale by private treaty was less likely to produce the best price: for example, land, or properties requiring substantial renovation or remedial work, short leasehold properties, and houses suitable for conversion.

However, that is changing. There is plenty of evidence around the country that auction has moved forward quite significantly in the last twelve months, and that it is no longer seen as the exclusive preserve of the bargain-hunter or investor.

Of course, traditional lots are still selling well in the sale room. However, in recent months, there has also been a rise in the number of more “normal” properties coming up for sale at auction. This is generally happening in cases where the seller needs either speed or certainty – or both. This can be for a wide variety of reasons: in probate cases, for example, or where sellers may have a deadline to meet, such as a job move or children moving into a new school catchment area. In other words, people who do not necessarily have the luxury of hoping that a sale by private treaty will be concluded within their desired time frame.

And all this, of course, is happening against a background in which the lack of liquidity in the mortgage marketplace has seen a rise in abortive transactions, and new mortgage business is still at an historic low.

Another key factor helping to bring auctions more into the mainstream market is the growth in the number of auction houses offering new-style conditional contracts. As with traditional contracts, these still become legally binding on the fall of the auctioneer’s gavel – thereby offering that all-important certainty. However, they require a much smaller deposit from the successful bidder on the day – and instead of the standard 28 days to completion, they allow anything up to 60 days. By providing more time to secure the necessary finance, this has opened up the auction marketplace to regular buyers as well as investors.

Of course, as always, anyone looking to sell their property should take advice on the best method of sale from their chosen estate agent – but certainly, auction is increasingly becoming a viable option!

Q. Are there any rules governing estate agents’ boards and the way they are used?

A. There are indeed – courtesy of the snappily-titled Town and Country Planning (Control of Advertisements) (England) Regulations 2007! These lay down pretty stringent requirements with regard to things like size, content, and location. And while provision is made for a degree of local flexibility - in some conservation areas, for example, boards may require specific planning permission or even be banned altogether – those requirements basically apply pretty much everywhere.

In essence, the rules are founded on the principle that the primary function of a board is to advertise the property, not the agent. So, for instance, boards are only supposed to indicate that a property is for sale or that it is sold, subject to contract – on the entirely logical basis that once money has actually changed and the property concerned has a new owner, there is no longer a valid reason to advertise it at all! For the same reason, all boards must be removed within 14 days of completion.

Instead of “Sold, Subject to Contract” (or “STC”), some agents prefer to use the phrase “Sale Agreed” or even “Under Offer,” which basically mean the same thing.

In terms of size, boards must not exceed 0.5 square metres in area, and only one is permitted for each property (or two, if they are fitted back-to-back on a single pole). This applies even where the seller chooses to instruct several different agents - in which case, the first board to be erected is generally regarded as the legal one. Any seller permitting more than one board could be liable for a fine, along with the firms concerned.

The only real exception to the “one board” rule are blocks of flats, where a number of different agents may legitimately be involved in selling separate properties.

Finally, on the issue of location, agents’ boards are required to be wholly within the boundaries of the property concerned. Where this is impossible (for example, in the case of a terraced house fronting directly onto the street), then the board may be attached to the building itself, as long as it is not more than 4.6 metres above ground level, and does not project from the face of the building by more than 1 metre.

Q. What is happening with Energy Performance Certificates?

A. You may well ask! Changes to the rules governing EPCs were supposed to be implemented last July, and then in October. Both dates came and went without any sign of the changes happening – and with precious little explanation of what (if anything) was going on.

Currently, a new version of the EPC, and new rules governing their use, are meant to come into force on 6th April – Good Friday. However, at the time of writing, with only some 5 weeks left to go, the whole thing still seems to be up in the air. Detailed guidance from CLG (the Department of Communities and Local Government) is promised well in advance of the date, but there are currently no clues as to what that guidance might be. It is even rumoured that the new version of the EPC hasn’t even been approved yet!

In practical terms, this is probably more of a worry for us estate agents than it is for the general public, since one of the proposed changes is that in the case of sales, we will become legally responsible for EPCs, and face censure and even have to pay fines if the new rules governing their production and use are broken - yet we are almost completely in the dark about what’s going on!

Ultimately, however, the really big question is whether any of these changes will make EPCs more useful than they have so far proved – and on this, I suppose the fairest thing to say is that the jury is still well and truly out. The official line, of course, is that anything which increases awareness of the energy efficiency and environmental impact of a property has got to be a good idea. But so far, there is precious little evidence to suggest that buyers actually care very much. After all, there is a lot more to choosing a home than the cost of heating it. Very few buyers are showing signs of rejecting properties that they like and can afford, simply because they have a “G” energy rating.

Of course, this may change as we all become – or are forced to become – greener. However, that day is still a long way off.

Q. In his will, my late father left me a sizeable lump sum, which I want to put to work. Is buy-to-let a viable option?

A. Absolutely, yes! In fact, after a bit of a slowdown in the immediate aftermath of the credit crunch, the buy-to-let sector is booming once again.

Why? Well, the main reason is that with the continuing national shortage of housing stock, demand for rental property has soared. Research shows that with the size of deposit required by lenders forcing many young people to postpone buying their own home, the majority of newly-formed households are now more likely to be in the private rental sector.

This massive surge in demand, which shows no sign whatsoever of tailing off in the foreseeable future, has in turn driven up rental values right across the country. And this against a background of lacklustre performance by most of the more traditional investment alternatives – a factor highlighted by the turmoil in world stock markets over the last couple of years. In 2011, for example, the yields from buy-to-let property (i.e. rental income as a proportion of the purchase price) averaged 5.4% - the best since 2003. In contrast, the FTSE All-Share Index yields 3.8%, UK Government pay 2% and the Bank rate is just 0.5%!

As a result of all this, lenders have been returning to the market in a big way. A recent article in the national press reported that the average interest rate on a buy-to-let loan dropped from 5.31% to 4.79% over the last two years. During the same period, the number of deals available doubled. The typical deposit required has also fallen back from 35%-plus to 25%. There are even some deals that only ask for 20%.

At the same time, however, lenders have clearly learned some lessons. So, for instance, whereas in the bad old days you could easily secure a B2L mortgage solely on the basis of the expected rental income, lenders now typically require you to be able to prove that you have an additional source of income of at least £25,000 a year. Which, when you think about it, is no bad thing.

Finally, add in the fact that prices are currently the lowest they’ve been for years, and this is arguably the best time ever to invest in property!

Q. I’m thinking about selling. Given the state of the market, is it worth running an Open House?

A. Open Houses can be a valuable addition to your armoury, whatever the state of the property market – but probably even more so at the moment, when sellers and their agents are having to work that much harder to generate buyer interest.

And generating buyer interest is what Open Houses are very good at. Unlike the more traditional viewing procedure, where potential buyers first have to register with the agent and then book an appointment to view, they give house-hunters the opportunity to take a really good, long look at a property, both inside and out, without having either the owner or the agent constantly at their elbow. In other words, it’s a bit like visiting a stately home and taking your own time over it, rather than having to take a guided tour!

In addition, research in the USA, where Open Houses have been used for years, shows that when more than one group of buyers look at a property simultaneously, it can help to create a sense of competition – so prices achieved are often actually higher than they might otherwise have been.

Of course, the idea of throwing your home open on a particular day between set times, so that it can be viewed by a whole bunch of complete strangers, can sound a bit scary. But it needn’t be, because a good agent will help you with all the arrangements.

Those arrangements can vary according to your own preferences – so the first thing is to agree a plan of action with your agent. You may, for example, prefer to have the whole thing handled relatively discreetly. Or, you might decide to go for broke, put an “Open House” sign in the window, and hang balloons and bunting all round your front garden, so that no-one is left in any doubt about what is going on! Either way, your agent will ensure that details of the event – which for obvious reasons will normally be scheduled for a weekend - are widely advertised in advance.

Meanwhile, all you need to do is make sure your home is looking its best, and that any items of value are safely locked away. Then, it’s just a mater of waiting to see who turns up on the day, making a note of their names and contact details, and leaving them to look round at their leisure.

Of course, as with anything else, there are no cast-iron guarantees that an Open House will deliver the goods. But particularly in the current market, that extra string to your bow could just make all the difference!