All policies have at least some unintended consequences. But it is particularly galling to see polices that are bad enough to make the original problems worse come with a double-whammy of unintended consequences. So it is with Help to Buy. We have written of its inadequacies before (we aren’t rid of our old bubble – why try and start a new one?). But The Sunday Times points out a new problem.
Usually September is pretty busy for estate agents as new houses and buyers come on the market. Not this year. It seems, says Anna Mikhailova, that both buyers and sellers are holding back while they wait for the next stage of the policy to kick off.
This bit – under which the government provides mortgage guarantees to people with only a 5% deposit – should provide buyers with more money to buy and sellers with better prices. That means it makes sense to everyone to step out of the market for a few months. The result? New instructions are down over 30% on the year, says property website Zoopla.
This is, of course, ridiculous and shows – to anyone who hadn’t yet noticed – just how mad Help to Buy, and in particular the next stage of Help to Buy, is. But what if you don’t want to wait? What if you don’t need government support and you just want a new house now? If there is a shortage of housing on the market, you need to make sure you get to the top of the viewing list.
How? Estate agents grade buyers based on how likely they are to go through with a deal fast and without complications. They then show houses to the best first. Top of the list, says Francis Long of property agents Hanslips, are developers with cash and cash buyers represented by a buying agent known to estate agents. That’s because they usually represent trusted repeat business, with the cash coming from buyers who have been pre-vetted.
Next are buyers who have sold their house already, but not completed, and who won’t need a mortgage. They are considered better than cash buyers who are renting because they are committed to leaving the property in which they live already, so they won’t back out.
Next are cash buyers who are renting. Then come those with no property to sell, and a mortgage already agreed in principle (with those using the estate agent’s in-house mortgage broker coming first). Then those with a property under offer and those with one on, but not under offer. And at the very bottom? Those who haven’t yet got their first property on the market.
The two main points here are this: first, estate agents are after easy sales, not ‘best-price’ sales. Second, if you want to buy the best houses, try to find a way to buy in cash.