The businesses started by Grand Designs star Kevin McCloud that once seemed like bullet-proof investment prospects are now headed for liquidation. As a result, those who invested (some heavily) in HAB Land Finance are now facing the prospect of losing every penny.

Named after Mr. McCloud’s Happiness Architecture Beauty brand, HAB Land Finance attracted more than 280 investors and raised a collective £2.4 million at the time of its establishment. The company was founded as a property development project in Winchester and Oxford, but an announcement was made this week that the liquidators have been called in.

Investors had been promised healthy returns of up to 8%; instead, they now face the prospect of being wiped out entirely.

When the company was founded in 2017, Mr. McCloud advertised the investment prospect as having the potential to deliver “triple bottom line returns with progress on energy positivity.” Of the almost 300 investors that helped fund HAB Land Finance, none saw any return on their investment of any kind.

In August this year, a letter was issued to HAB Land Finance’s investors warning that they stand to lose up to 97% of the money they contributed to the venture.

“After final completion of the projects at both Kings Worthy and Cumnor Hill [in Oxford], the net return available to bondholders would be expected to range from £606,000 (the best case) to £69,000 (the worst case), which, in each case, is equivalent to 26 pence and 3 pence for every £1 of bond monies invested,” read an extract from the letter, a copy of which was obtained by the Guardian.

As a result of ongoing financial difficulties and a generally poor outlook, the firm’s board made the regrettable decision to call in the liquidators. One of them, James Bennett, attributed the company’s financial issues to unexpectedly high costs.

“The directors have reported that higher than anticipated design and project management costs, coupled with delays to the delivery of the sites, resulted in the companies experiencing significant liquidity issues,” said Mr. Bennett.

“This has resulted in a considerable loss to mini-bond holders, who largely financed the project,” he added.

Simon Bullock, director of HAB Land, said that the company had ‘no alternative’ than to call in the liquidators.

“With only 22% of the mini-bond holders voting for the resolution and having exhausted all other options, we were left with no alternative but to commence proceedings to put these companies into liquidation,” he said in a statement.

“With respect to the current HAB development sites in Oxfordshire and Winchester, none of the homeowners are directly impacted by this change, although the situation remains fluid and under review,” Mr. Bullock added.

“This has meant that there is, what we hope to be, a temporary pause on the remaining works on the sites.”

Local authorities have since lashed out at HAB Land, accusing the company of failing to deliver a series of promised facilities. According to Winchester City Council, the company promised to build a play area, an orchard, and allotments at Lovedon Fields, Kings Worthy, which have instead been replaced with an unfinished property development.

The story was first covered by the BBC, which reached out to Mr. McCloud directly for comment but has not yet received a reply from Mr. McCloud personally or his company.

The average property rental prices in the United Kingdom have been accelerating at a phenomenal rate over recent years. Now, the results of a new study, published by property website Zoopla, reveal the areas of the UK most affected by skyrocketing home rental prices.

The Zoopla report reveals that the biggest increases in average property rental prices of the past year occurred in Bristol, Leeds, and Nottingham. Meanwhile, the biggest annual reduction in property rental prices was noted in Aberdeen.

Specifically, Zoopla reported that tenants in Nottingham signing new tenancy agreements this year are paying around 5.4% more than they would have in 2018. Both Bristol and Leeds recorded a 4.5% annual increase in inflation that significantly outpaced average UK wage growth for the same time period.

Despite the significant rental property price hikes of recent years, Zoopla stated that it is actually becoming more affordable for tenants to rent homes in the UK. This is partially attributed to more first-time buyers getting on the property ladder, taking at least a little pressure off the property letting market.

In Aberdeen, the average property rental price decrease of 4.1% was attributed to wider economic issues affecting the area. Aberdeen’s economy is closely tied to the oil industry, which has a knock-on effect on both average house prices and monthly rent prices.

Zoopla’s report also showed that property rentals are becoming cheaper in Middlesbrough and Coventry.

London leads with the highest rental costs.

The most recent Family Resources Survey carried out by the government found that around half of 25- to 34-year-olds and three-quarters of 16- to 24-year-olds now live in privately owned rental properties in the UK. The vast majority of rental properties in the United Kingdom are located in London, which is also where average rent prices are the highest by a significant margin.

According to the report from Zoopla, most private tenants in the United Kingdom use approximately a third of their earnings to cover their rent. Private tenants in London, Oxford, Brighton, and Cambridge spend a considerably higher proportion of their earnings on rent, whereas tenants in Stoke, Bradford, and Hull rank at the opposite end of the scale.

Average property rental prices in the UK are up approximately 2% year-on-year, though this is well below the average annual wage increases for UK workers.

UK-wide rental prices are up by an average of 2% in the last year, which is about half the typical level of wage rises.

“Renting is more affordable today than the 10-year average. An increase in first-time buyers, 80% of whom exit the private renting sector to buy, has also moderated rental demand,” reported Zoopla, commenting on the findings of the study.

“Rental affordability varies widely across the country, reflecting the relative strength of local economies.

It’s not often that the everyday consumer takes on one of the world’s financial giants and actually wins. It’s the classic David vs. Goliath tale, though one in which Goliath almost always has the upper hand.

Nevertheless, a recent victory for more than half a million indebted Polish homeowners has demonstrated the importance of standing up for what’s right. Following a legal battle that’s been raging for several years, hundreds of thousands of struggling Poles have won the right to exit their over-inflated Swiss Franc mortgages.

It’s estimated that around 20% of all mortgages in Poland are held in Swiss francs. With the value of the Swiss Franc having doubled over the past decade, Polish homeowners with Swiss Franc mortgages have faced crippling and continuously rising debts. However, a ruling reached by the European Court of Justice will allow those affected to request that their loans be converted to the Polish zloty.

While the ruling was welcomed by Polish consumer groups and political activists, government officials highlighted its potential implications for the country’s banking sector. Finance Minister Jerzy Kwiecinski stated that Polish banks would likely face collective losses running into tens of billions of zlotys.

Foreign currency mortgages

Following Poland’s entry into the European Union in 2004, it’s estimated that approximately 700,000 households signed in to foreign currency mortgages. Attracted by low interest rates and heightened accessibility, foreign currency mortgages were snapped up by millions across Poland, Austria, Croatia, and Hungary.

At the time, the Polish Zloty was performing well, and the Swiss Franc mortgages on offer represented excellent value for money. However, the value of the zloty started to fall sharply as the financial crisis escalated, just as the Swiss franc was surging. Later in 2015, the Swiss Franc’s currency ceiling against the Euro was abandoned, delivering a hammer blow to hundreds of thousands of Polish borrowers.

This meant that while around half a million Polish households entered into mortgages when the value of the Swiss Franc was less than 2 pin, its value had skyrocketed to more than 5 pln. It has since fallen back to around 4 PLN, but this still equates to around double the original debt taken on by an extensive audience of borrowers across Poland.

Figures show that at one point in time, approximately half of all mortgages in Poland were held in Swiss francs. Even today, it’s estimated that around 23% of Polish mortgages are in Swiss Francs, according to the latest figures published by Erste Group.

European court intervention

It’s been a long and difficult fight, culminating in approximately 16,700 claims being lodged by borrowers demanding that their loans be converted into the national currency of Poland. Several cases have been brought before the highest courts in Poland, with the case of Kamil and Justyna having ultimately been referred to the European Court of Justice.

The basis of the couple’s complaint focused on the unfairness of the Swiss bank that provided their mortgage being able to fix the exchange rate by itself. The ECJ ruled that the couple had the right to ask the courts in Poland to convert their mortgage to the Polish zloty, paving the way for hundreds of thousands of borrowers across Poland to do the same.

Inevitably, the Polish banking sector and, indeed, the country’s wider economy are expected to take a substantial hit as a result of the ruling. Should the majority of borrowers with Swiss Franc mortgages request conversion to the Polish zloty, the estimated cost for the banking sector could be anything from 20 billion to 60 billion zlotys.

Share values for Poland’s leading bank, PKB Bank Polski, have already fallen 2% in the wake of the ECJ ruling.

Students across England are feeling neglected, let down, and angry. Having expected to move into comfortable and functional accommodation in time for the new term, hundreds are being told their student residences are not ready to be occupied.

The result of this is a growing number of students finding themselves stuck in hotels and other forms of temporary accommodation, away from the general student population. Often with no access to basic facilities, those affected are being forced to live on takeaways and use paid laundry services simply to keep their clothes clean.

According to student housing charity Unipod, at least 22 private student residences up and down the United Kingdom are facing severe delays. This equates to around a third of all the new blocks that were supposed to be ready in time for the new term.

Along with the expense, discomfort, and isolation being experienced by those affected, the National Union of Students has expressed concern about how the disruption may affect the quality of their educational experience.

The problem is particularly prolific in Portsmouth, where educators are calling for greater scrutiny over private student accommodation providers. The University of Portsmouth vice-chancellor, Graham Galbraith, stated that as the disputed developments are private, the university has no direct control over them.

“At the end of the day, those housing providers know that the universities will step in. So where does the responsibility for this lie? Because they seem to be able to walk away,” he said.

Mr Galbraith’s comments echo the sentiments of educators across the UK, who cannot understand the total lack of accountability for private student accommodation developers and building owners. He believes that as this entire arm of the industry is funded almost exclusively by maintenance loans, i.e., public money, it should be subject to the same scrutiny as any other form of public spending or investment.

He warned that, as things stand, there is no direct control whatsoever and that new student housing blocks can be built and opened with no interaction or dialogue with the university whatsoever. This is despite the fact that billions of pounds of taxpayers’ money fund these developments in the form of student maintenance loans.

A nationwide issue

Students in Portsmouth are far from alone in their plight, as the issue is spreading across the United Kingdom. In Bristol, for example, student housing delays have become so severe that some students are being temporarily housed in Wales.

According to Universities UK, the issue lies in the fact that its code of conduct is only applicable where university-owned accommodation is concerned. There is currently no specific code of conduct and no regulatory standards for private student developments, which are outside the control of the public sector.

It is therefore unclear who will make the first move or when, though educators agree that certain safeguards should be put in place for students.

Adding insult to injury, some students have been offered a mere £150 in compensation, which for many is far less than they are paying for a one-week stay at their temporary residence.

One of the private housing companies behind an unfinished development in Portsmouth has apologised unreservedly for the inconvenience, though it points the finger of blame squarely at its building contractor.

A spokesman for the housing company expressed its disappointment “to hear that the university does not consider that we have communicated effectively with them.”

“We believe that we have done everything possible to mitigate the impact for those affected in the time available.”

“We will continue to do all we can to get students into the building as an urgent priority.”

There has never been any doubt as to the extent of the severity of the UK housing crisis. However, a new report published by the National Housing Federation claims that the issue is significantly worse than previous estimates suggest.

According to the NHF, there are currently at least 8.4 million people living in England in insecure, unaffordable, or unsuitable dwellings. The report also suggests that the housing crisis is having a detrimental impact on all age groups and regions across the country.

In response to the report, government representatives once again stated that 430,000 additional affordable homes have been made available since 2010, underscoring a so-called commitment to affordable housing. Nevertheless, the figures from the NHF paint a picture of chronic overcrowding and affordability issues, resulting in millions living in entirely unfavourable conditions.

The study was carried out for the National Housing Federation by Heriot-Watt University, analysing data gathered from more than 40,000 people for the annual Understanding Society survey. The findings were reached by scaling up the figures to match the population of England, which currently sits at around 56 million.

According to the report published by the NHF:

• At least 3.6 million people in England live in overcrowded homes.
• More than 2.5 million people cannot afford their mortgage or rent payments.
• A further 2.5 million people live in properties they can’t afford to move out of, which may include living with an ex-partner, adults living with parents, unwanted house sharing, and so on.
• Approximately 1.7 million people live in housing that is not suitable for their needs, such as elderly residents in properties that cannot safely move around.
• A minimum of 1.4 million people live in homes considered ‘poor quality’ that do not satisfy their basic requirements.
• Up to 400,000 people are either homeless or face the risk of becoming homeless. A figure that incorporates people in temporary accommodation, individuals living in homeless shelters, and those who sleep rough

The report published by the National Housing Federation also highlights the fact that many of those affected by the housing crisis have more than one of the issues outlined above. For example, it is not uncommon for people to live in overcrowded homes that are not suitable for their needs and still struggle to meet their monthly rent payments.

Calls for more social housing

One of the most important findings highlighted in the report was the estimated 3.6 million people who are only able to live comfortably and within their means in social housing. This would amount to around twice the number of people currently on the social housing waiting list, according to official government figures.

On average, rents for tenants in social housing are approximately 50% cheaper than comparable properties from private landlords. Nevertheless, there is already a huge deficit in availability, as demand for social housing continues to outstrip supply. According to the NHF, the country currently needs a minimum of 340,000 new homes to be built every year, including no fewer than 145,000 social homes, to cope with demand.

“From Cornwall to Cumbria, millions of people are being pushed into debt and poverty because rent is too expensive, children can’t study because they have no space in their overcrowded homes, and many older or disabled people are struggling to move around their own home because it’s unsuitable,” commented Kate Henderson, Chief Executive at the National Housing Federation.

Meanwhile, the government reaffirmed its commitment to clamping down on illegal and unscrupulous landlords, ensuring property letting costs are brought under control, and capping deposit requirements for private property lets. A representative of the Ministry of Housing, Communities, and Local Government said that these and other efforts are currently saving private tenants a collective £240 million per year.

New figures published by the Office for National Statistics (ONS) have painted a somewhat bleak picture of the UK housing market. As Brexit uncertainty continues to affect demand, national house-price growth in Britain fell to just 0.7% for July, a significant fall from the 1.4% in June. This is the slowest recorded growth rate since 2012, according to the ONS.

Four of nine English regions experienced significant falls in average house prices, concentrated primarily in the north-east. Year-on-year, the average UK property price increased by a disappointing £2,000 to hit £233,000 in July. Average house prices remain at their lowest in the north-east, where a typical home now costs £127,000. This is also Britain’s only region where average property prices are still below those recorded before the 2008 financial crisis.

Much of the slowdown has been blamed on Brexit uncertainty, with both buyers and sellers showing reluctance to make important decisions. Some economists have stated that falling house prices could play into the hands of first-time buyers, though there is still an enormous disparity between average earnings and typical UK property prices.

Unsurprisingly, London is still the most expensive place to purchase a property in the UK, with average property prices having fallen 1.4% to hit £478,000.

Speaking on behalf of Zoopla, research and insight director Richard Donnell warned that the current trend was likely to continue well into next year.

“The reality is that buyers are simply being more cautious, and this has reduced the impetus for house price growth,” he said.

“Weaker levels of house-price growth are set to be a feature of the market for the rest of this year and the first half of 2020 at least.”

Significant declines in the south-east

Following in the footsteps of London, the south-east of England now seems to be headed for an ongoing market correction. Founder and director of independent estate agents James Pendleton, Lucy Pendleton, commented on the ‘dramatic’ situation in the region.

“Until now, it was London undergoing a bit of a reality check, but the south-east has stolen the capital’s crown as the biggest loser in dramatic fashion,” she said.

“The property market across the whole of the south of England has seen annual falls of late, and funnily, that’s a good thing.”

“It is encouraging sellers to be more realistic, particularly those who are selling in London and buying elsewhere.”

PwC economist Jamie Durham highlighted how, despite 17 consecutive months of property value declines, London’s property market remains almost completely inaccessible for most.

“Nonetheless, the capital remains the most unaffordable in the country at an average price of £478,000,” he said.

“Among other factors, the capital and surrounding areas are particularly affected by Brexit uncertainty, and price growth is likely to remain weak or negative until this uncertainty subsides.”

The Brexit effect

One of the few things on which most economists agree is the extent to which the so-called ‘Brexit effect’ is maintaining a stranglehold over the UK property market. Particularly from the buyer’s side of the equation, it’s understandable that consumers and investors simply don’t have the assurances they need to make such enormous decisions.

Irrespective of whether the UK crashes out of the European Union on October 31, experts aren’t expecting to see a radical turnaround in the near future, at least.

There’s a growing housing issue in several major UK cities, which, contrary to the usual trend, concerns supply outstripping demand. Regions with sizeable student populations are typically goldmines. For around 75% of the year, tens of thousands of properties are needed to accommodate learners. All of which adds up to a guaranteed income for building owners and landlords in normal circumstances.

Unfortunately, things appear to have taken a turn for the worse in Plymouth. This autumn, it’s estimated that up to 2,000 student bedrooms across the city could be vacant. all at a time when demand for quality student properties should be outstripping supply by a significant margin.

According to a local student letting expert, far too many flats have been built across the city at a time when student numbers are actually in a state of decline. The result of this is a crisis in the making, wherein any number of major developments risk standing vacant during peak student season.

This is a particularly severe issue for the city of Plymouth, which relies heavily on a sizeable year-round economic contribution from its student population.

 “I’m seriously concerned,” said Henry Hutchins, chief executive of Clever Student Lets.

 “I can see between 1,500 and 2,000 empty units in Plymouth.”

He also reported dealing with at least one landlord who now faces going out of business, which has been unheard of for student property owners over recent years.

The speed at which new student properties have been built across Plymouth has resulted in far more vacant inventory than the city needs. Over the past year alone, an additional 5,243 student bed spaces have appeared across Plymouth. many of which accommodate imposing skyscrapers and former commercial properties.

Far from accommodating a swelling student population, all this is happening at a time when student numbers in Plymouth are on the decline. According to official figures from the University of Plymouth, the city’s approximate student population has plummeted from 32,000 in 2010/11 to 21,000 in 2017/18.

Experts have also commented on the declining numbers of international students choosing to study in Plymouth.

Mr. Hutchins highlighted the economic impact of approximately 11,000 fewer students living and studying in the city.

 “Students are spending £300 million a year in Plymouth, so if you take out 30 per cent fewer students, that’s about £90 million less being spent in the city centre,” he said.

 “I’m worried about that spend and the effect it will have on retail and employment.”

 “The whole market is under pressure. I’ve been stating this for two years and no one has taken notice, and now it is going to have a real effect in Plymouth.”

He and other experts are predicting a slow but gradual increase in student numbers over the years to come, but they can also see a number of student flats and buildings being repurposed into conventional flats.

 “They might have to re-jig the market,” he said.

It’s therefore possible that the issue could play directly into the hands of the savvy buy-to-let investor. On one hand, it’s often true to say that purpose-built student flats aren’t of the same quality standard as more conventional city-centre flats. They also tend to be smaller and of a somewhat non-standard configuration. all of which could add up to significant redevelopment costs for investors.

At the same time, however, desperation and urgency on the part of vacant property owners could lead to significant price reductions. The money saved on the initial purpose of the property could therefore be used for renovations and/or repurposing before being let out at a profit.

There’s also talk of some vacant student inventory being acquired by social housing groups, though none have commented on the issue so far.

Here’s a fact to ruin your afternoon: The upcoming bank holiday is the only remaining bank holiday between now and Christmas! It is almost impossible to imagine, given how it feels like 2019 has only really just gotten underway.

In any case, it’s the truth: the August bank holiday arrives next Monday, and then it’s the countdown to the festive season. Prior to this, however, you might want to ensure it’s an ‘all hands on deck’ situation next Tuesday. This is because you could be in for one of the busiest days, if not the busiest day of the entire year.

Telephone Tuesday

According to Moneypenny, one of the UK’s leading outsource communication firms, call volumes to estate agents almost always increase by around 10% the day after a bank holiday. The vast majority of these additional calls come in between 9:00 a.m. and 11:00 a.m., often serving as a rude awakening for the unprepared.

Moneypenny discovered the trend by analysing data collected around several bank holidays that have come and gone, which in all instances led to a spike in call volumes the next day.

 “When people are away from the stresses of work, they’re given time and space to think about their personal lives and take care of some ‘life admin’,” commented Joanne Tatum, business relationship manager at Moneypenny.

 “As a result, it’s extremely common for the days following holidays to be used to contact professionals such as estate agents to help take care of matters like looking for their next home or putting an existing property on the market.”

According to the firm’s research, the two bank holidays in May are followed by the biggest spikes in phone calls to estate agents. Tuesday, May 3, saw a huge 34% increase in calls compared to the week before, while the later May bank holiday brought about a further 13% increase. That would account for 47% more calls on this later telephone Tuesday, compared to the week before the May 3 bank holiday.

The question is: what does this mean for telephone Tuesday in August?

Expect the unexpected.

Ms. Tatum went on to explain that the spike in telephone calls following a bank holiday is far more than just a temporary inconvenience for the estate agent. It’s also an opportunity to capitalise on a day of elevated interest in your services. Not to mention, you have the perfect chance to frustrate, irritate, and drive your customers directly into the arms of your competitors if you get it wrong.

“Poor client communication is a cause of great frustration among consumers, and businesses should do all they can to avoid this occurring,” she warned.

 

It remains to be seen if and to what extent the same trend plays out next Tuesday. Nevertheless, there’s a good chance it will, so the general advice is to expect the unexpected. Chances are, you will have a limited contingency of staff members available to answer calls during peak-demand hours. In this case, it’s worth revisiting a few basic telephone etiquette pointers for busy times.

Examples of these include:

• Be mindful of your tone of voice, ensuring you don’t make it too obvious you’re rushed off your feet and struggling to cope when you pick up the phone.
• giving each caller your full attention and not attempting to rush things in order to catch the next call.
• Where possible, take the details of non-urgent callers and return their calls at a slightly less chaotic time later on.
• We expect that some customers will be pretty irate at the time it took them to get through.
• Listening to recorded voicemail messages as quickly as possible after they are left and getting back to those who couldn’t get through as promptly as you can

Above all else, it’s worth remembering that a day of excessive demand is far better than a day of disappointing demand. Just as long as you’re prepared for it, Telephone Tuesday could be pure gold for your estate agency.