Monthly Archives: July 2014

Britain’s incredible shrinking new homes

The reduction in size of new homes being built in the UK has not gone unnoticed! In a recent issue of MoneyWeek, Merryn Somerset-Webb writes that the new homes currently being built are among the smallest in the world at an average of just 76 square metres, that’s 818square feet! In comparison the average UK house, excluding new builds, is 95.7sqm – 26% larger than a new build home today. How Britain’s new homes compare in size with other countries.

OLYMPUS DIGITAL CAMERAMerryn thinks that the problem isn’t that the average size of British homes is too small… “it’s the way we share them out – too many older single people in the bigger homes and too many families in the smaller ones”  as she would like to see capital gains tax extended for residential property.  Merryn does however agree that Britain’s new homes are… “generally small and nasty” and stating that new homes are… “getting bigger everywhere else in Europe except here and in Sweden”

Matthew Lynn also in MoneyWeek,  acknowledges that new homes are small and getting smaller.  Stating over time, “products get better and cheaper, our TVs are a lot bigger than they used to be and mobile phones can now do more than a desktop PC could just five years ago.” whereas “housing gets more expensive and worse.  An Englishman’s home is meant to be his castle – but increasingly it is his rabbit hutch. Last month a survey by Building research & Information found half of all British houses failed to meet the minimum recommended living space requirement.”   In any other industry you care to look at, overtime prices come down and quality improves, or a bit of both.  A survey by insurer LV also shows UK new homes are shrinking down by 2sqm in the last 10 years.  

So why are new homes so small?  This is where I believe Matthew Lynn misses the point.  He claims that it is because Britain has…“a chronic shortage of new homes” because… “the government refuses to make enough land available for new homes.”   Meaning that in… “crowded city centres existing houses get divided up into smaller units, while in the suburbs as many new homes as possible get crammed into whatever land is made available.”    Matthew’s “solution” is to increase the amount of land for development as it would result in holding back price rises and… “more importantly, it will mean better quality homes as well”   More land will not result in larger new homes. It will not mean the quality of new homes gets better either.  All it will do is increase profits for house builders as development land get cheaper. This is  why house builders will never build enough new homes.  

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Buying a home without a full survey is a false economy.

According to The Mail on Sunday, four in every five buyers don’t bother with any home survey, let alone getting a  full survey.  This is despite the fact that if anything is found it can be used in negotiations to reduce the price.  Buying a home is undoubtedly the biggest single purchase most people make in their lifetime.  Get it wrong and it can be a mistake you could end up paying for during most of your lifetime!

Council house 2

Get a survey done before making an offer

Compared with the other costs involved with buying a home, getting a full survey done is relatively small beer when compared to legal fees, stamp duty and mortgage arrangement fees.

There are four main types of survey available.

Valuation survey

This is carried out on behalf of the mortgage lender and is not a condition survey. Do not be fooled into thinking this will give you protection and piece of mind – it won’t! A valuation survey is just that, the lender is checking the property is “valued at” actually worth the price agreed, or at the very least the amount of the mortgage. Sometimes these surveys are done by just driving past the home being bought!

Condition report

This is the most basic survey. It should highlight problems regarding structural movement, damp and woodworm, but it is not thorough. It will indicate which areas need attention but not what specific repairs are required. No professional advice is given. Typically, a condition report costs around £300.

Homebuyer report

Whilst less expensive than a full structural survey, it does provide more detailed information than a condition report. The price should include professional support or further explanations from the surveyor after the inspection. However, in some cases any specific issues noted may be advised for further investigation, leaving both buyer and seller none the wiser without further specialist investigation. A homebuyer report costs from £400 to around £650.

Full structural survey (aka Building Survey)

This is the most comprehensive survey and is strongly recommended, especially for those buying very old, listed, or period properties. It will provide a detailed, technical report regarding the condition of the property, highlight any defects and give advice on possible solutions and repairs. However the full structural survey is the most expensive and can cost around £1,000. As with anything, you get what you pay for!

Snagging inspection survey

For those buying a brand new home, a snagging survey is an absolute must. There is no need for a detailed building survey as new homes come with a 10-year warranty. However, the quality of new homes is generally poor, attention to detail is often found lacking and it can be a complete nightmare trying to get any snagging defects rectified after you have moved in.

TW Snag Light Switch

Buying a new home doesn’t mean it will be problem free!

Let’s face it, once a house builder has your money what incentive do they have to fix problems quickly? It is no good thinking, “it is a new home with a warranty”  because 96% of new homeowners experience problems of one sort or other and getting them fixed is always a hassle.  The money spent on a professional snagging inspection will always be money well spent.  Compared to other surveys, they are relatively inexpensive too, typically costing from £250 to around £450 depending on the size of the home inspected. Some of the better snagging services include liaising with house builders and support after you move in too. Advice on choosing a snagging inspector.

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Why house builders will never build enough new homes

Why we need to start building council houses again.

It is not in house builder’s interests to build the 200,000 new homes required each year.  Not only would it use up their five-year landbank supply, it would also mean new house prices would fall as would house builder’s profits.  So house builders voluntarily building more homes for motives other than increasing their profits is about as likely as a turkey looking forward to Christmas!

It is also a fact that house builders do not have sufficient skilled labour and the necessary management skills to build a combined 200,000 every year, year in, and year out.  So if, as has been the case for the last 25 years, house builders continue to drip-feed new homes on to the market what is the solution?

Council house 3

Let’s start building decent council houses for decent people.

The answer lies in a return of publicly funded council house building on a national scale. Not with Housing Associations building more social housing just for those on benefits, but by allowing councils to use their cash surpluses, currently earning little if any interest, to build council houses on their own land. It worked well in the fifties and sixties; millions of council homes were built to replace so-called slum housing. But they were not classed as ‘social’ housing – in fact they were quite the opposite. They were homes for everyone – especially for workers on middle incomes. Getting a council house was based on how long people had been on the waiting list. There was no rationing and no stigma. They were new homes on estates with genuinely mixed communities. Good, well designed quality new homes with decent sized gardens for working families. Homes where people would want to live for most of their lives. But this golden age came to an end with the advent of Right to Buy and Housing Acts in the 1980’s which prescribed who could access social housing and who could not.

So now is the time to start building council houses again

Houses built since 1950A council house building programme could be partly funded with a surcharge of say £1,000 for every new home sold by every UK house builder.  The likes of Barratt, Persimmon and Taylor Wimpey would pay in around £37 million a year between them.  They could hardly complain given that the taxpayer-funded subsidy Help To Buy has increased their profits by over 50% and more during the last twelve months. This would not increase the price of new homes as builders always price  to the maximum the market can stand anyway,  price too high and they won’t sell!

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