Glentree’s Trevor Abrahmsohn shares his latest thoughts on residential property issues…
1. We need a residential development Tsar/Ombudsman to resolve issues in this field
A government-created Ombudsman promises to referee the perpetual feud between consumers and developers. I hope that tangible resources are going to be flung at this problem, given that there have been more housing ministers over the years than Italian Prime Ministers since the War. It will be interesting to see which brave soul dons a pair of boxing gloves and enters into the fray. Maybe a free workplace uniform of rhino-hide will be part of the package?
Unfortunately, the construction business boasts more cowboys than the Wild West. Sub-standard building work is common and most buyers of new property tend to have serious gripes with the developers, whether the company is a behemoth or minnow.
Size does matter in this respect, since the smaller companies tend to be under-capitalised. However, that’s where the insurance companies for newly- built residential property, i.e. Zurich/NHBC come in – they act as the vanguard for the consumer, in case anything falls off or sinks into the ground.
Like so many ideas, it’s great on paper but whether it works in principle, is another matter. My suspicion is that it won’t be big enough or ugly enough to deal with the cacophony of problems that beset this industry.
2. Help-to-Buy property owners in arrears, facing negative equity
I’m a self-confessed fan of the Help-to-Buy initiative, since it’s been propping up the residential development market, up to circa £ 600,000, over the past few years. However, the cracks in the façade are beginning to show, as consumer mortgage arrears start to build up.
One look at the soaring shares of the UK-wide, housebuilders i.e. Persimmon, Berkeley Homes, Barratt Homes, etc. will tell you how much Help-to-Buy is helping them to flog their wares to an unsuspecting, naïve public.
Wet-behind-the-ears, first-time buyers, are so excited about purchasing their first home (albeit with a bung from the government) that they tend to pay the asking price terms without haggling. The developers can be heard laughing all the way to their banks. Nice business if you can get it!
The other problem generated by this initiative is that well-intended, vulnerable people fall behind on their mortgage payments. From there, it’s but a short stumble into the negative equity trap. These new homeowners depend on the buoyancy of the housing market, in order that their debt shrinks in relation to their equity.
However, the trickle-down effect of excessive Stamp Duty means that the constipation of sales, further up the price-chain, is having a suppressant effect on sentiment.
It would be churlish of me, in the extreme, to pick holes in Help-to-Buy when in the main, it is doing so much good. Ideally, it should spread its cheer to the consumer, property developer and the government, for that matter.
The Ombudsman should get involved in the nitty gritty of the purchasing terms to make sure that they are fair and honest, even though this may be an irritant to the developer.
And by the way…
Mustique or Mistake?
Much intrigue surrounds the identity of the benefactor who coughed up for the Prime Minister’s New Year holiday villa with girlfriend, Carrie Symonds. Was it mobile phone tycoon David Ross, or another billionaire who slipped Boris a favour for something in return that we will only find out about, further up the track?
Having heard all the superlatives about the island of Mustique and the legendary goings-on there, I visited from a private boat moored off shore. My expectations were understandably high.
I had visions of a white-bikini-clad Ursula Andress emerging from the sapphire seashore, heading towards me with only one thought on her mind (and it wasn’t the Stamp Duty Accelerator). The reality was a dreary sandpit that could have auditioned for ‘Extreme Survival’. Instead of paradisiacal vistas once frequented by Princess Margaret and her beau Colin Tennant, all I saw were sad-looking, leafless trees, interspersed with scabby lawns and very dull, uninspiring villas.
I am told that the great and the good (which apparently includes Sir Mick Jagger) adore the place because they can enjoy themselves without paparazzi stalking the palm fronds. Imagine the disappointment when I went to the famous Jimmy’s Bar. It made my local golf clubhouse seem like Las Vegas by comparison and needless to say, as I supped my Lucozade and Tia Maria Sundowner (with umbrella), I didn’t notice too many luminaries while I was there.
If one is looking for a trendy word for this place, it is probably ‘shabby chic’, with far more lashings of shabby, than chic.
This wouldn’t be an issue if the villas themselves were designed by a GaudÍ (or even a Norman Foster), but instead, it resembled an over-priced shanty-town that was spectacularly mundane.
If the Prime Minister craves privacy over the Christmas hols, he should get down with the reindeer in Lapland, or don badly-fitting sportswear and head for Macclesfield. The only outstanding feature of this Caribbean retreat is the fact most mortals can’t get there easily. It really should be rebranded ‘Mistake’ rather than Mustique. The usual apologies for Ma’am HRH Margaret.