WEEKLY NEWS ROUNDUP – 08/10/2021
A roundup of the week’s top property and proptech news stories in partnership with Proptech-X
- Nested pivots from iBuyer to franchiser
- What do The Pandora Papers tell us about the HMRC and super wealthy?
- Boris Johnson puts homeownership front and centre again
Nested pivots from iBuyer to franchiser
If you spend enough cash, it all comes good in the end. This is a mantra that many venture capitalists use as they invest, re-invest, and continue to invest in operations that seem to continually lose money.
Nested, formerly Nextday Property Ltd, is now throwing money at its latest incarnation as the go-to hybrid estate agent franchise, tempting would-be agents with the lure of £25,000.
For some years Nested had been an iBuyer model similar to Zillow, but it is now firmly looking to buy itself pole position as the big cheese in the hybrid agent vertical. Why? As we all know, it’s not a hugely lucrative marketplace. Many companies have failed here.
Keller Williams is a global hybrid model, so too is eXp. There are plenty others. But over 30-plus years few have survived, and even less have thrived. The brands that do survive churn players inside the company at an alarming rate.
Ultimately, good agents are good agents. If they join a hybrid scheme, they will at some point leave and be their own agent. If they are poor agents, the lack of income will make them leave the hybrid model, too. However you slice it, it’s always a stopgap.
There are only a handful of exceptions. For example, if the hybrid company had some pedigree, like Chestertons, it would make things very different.
But, at this precise moment in time, what value is there to say that you are a Nested agent? My advice before looking to gain new recruits is to get a brand specialist and get a new name. I have a few suggestions for free.
What do The Pandora Papers tell us about the HMRC and super wealthy?
The Pandora Papers have revealed that, amongst other things, a lot of ultra-high net worth individuals have been buying property assets in the UK, doing so using company structures. Given that any entity buying property, commercial or residential, has to declare the source of the capital used in the purchase, this blatant manipulation of rules brings into focus some interesting topics.
The first is that solicitors have a duty to report anything that is suspicious. They have a legal obligation to report anything that is not correct or seems in any way out of the ordinary. If they get this wrong, they face unlimited fines and or imprisonment.
In the UK, to safeguard all law-abiding citizens from the wrongdoings of individuals, we have anti-money laundering legislation underpinned by the Proceeds of Crime Act 2002, Terrorism Act, and Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. Though we’ve gone through Brexit, we are still bound to follow through on these.
Now it will be up to the legal sector to determine if anyone has fallen foul of the Proceeds of Crime Act, and it may well decide separately that setting up shell companies outside of the UK to avoid paying SDLT, like Tony and Cherie Blair’s saving of £312,000 as revealed by the Pandora Papers, is an acceptable tax loophole.
But given that the UK is facing austerity caused by Brexit and the pandemic, and we are collectively being asked to tighten our belts and pay more tax, is it not high time that HMRC was seen to be looking at any transaction over £1 million with the greatest of scrutiny?
After all, every transaction is registered at Her Majesty’s Land Registry, and it is not beyond modern software to deduce the real ownership back from a company called “Mimi Bikini” to its actual owner who may be a high-ranking member of state in some part of the globe.
Also, where do the solicitors, the agents, and the banks stand in all of this? Having £24 million passing through bank accounts means that banks are also culpable if it is a transaction based on fraudulent activity.
The HMRC seems to be turning a blind eye when the ultra-high net worth individuals are looking to buy property assets in the UK, which again does little to make me feel warm inside when disco diva Michael Gove talks of levelling up.
Maybe it is time Gove and others in the cabinet grew up and stopped cosying up to the rich, and realise that the primary function of government is to help get new laws in place that are then rigidly adhered to for the betterment of all, rather than the privileged few.
Boris Johnson puts homeownership front and centre again
The closing speech from Boris the Entertainer at the Conservative Party Conference 2021 was interspersed with jokes and revelry, but also a number of questionable facts when it came to housing.
In some ways, there was an echo of Margaret Thatcher, with homeownership as a right being championed.
As PM Boris Johnson put it: “To share the dream of homeownership…there is no happiness like taking a set of keys and knowing the place is yours.”
He also stated that the Conservative government had overseen the largest volume of new home building in the last thirty years. Yet we know that hard data shows the building of new property has flatlined.
According to NHBC, which provides for 80% of the certification for new builds, it issues about 140,000 a year, which means in total 175,000 new homes are being built, despite the rhetoric of the PM.
And this has been a constant rate for a year, with a 2% to 4% uptick annually. So with a growing population and 42% of people living in a household of one, there is simply not enough housing out there for people to buy. And the target of 300,000 homes being built annually, which was not in his speech but has been often quoted of late, will take a miracle to pull off.
Interestingly, when talking about building and infrastructure, Boris opined that parts of the country would enjoy rewilding programmes, so the otter and beaver could repopulate. So no building on the green belt areas.
His answer to where the new housing would go was that there will be “beautiful homes on brownfield sites.” He received applause for this. But brownfield sites are often developed land that is no longer in use. Oh, and it may be potentially contaminated.
So Boris has another big idea. In order to keep the electorate happy, let’s build on contaminated land which may be harmful to life. If it’s good enough for disused petrol stations, it’s good enough for our people!
Maybe it is time that Boris put away his joke book and slogans, and looked into some of the detail that he is outlining, because the cost of remediation of brownfield sites can be high too if the ground is contaminated, and developers have to weigh up the mindset of buyers.
It is far easier to sell a new home on what was once a field rather than what was once a lorry park and has been derelict for twenty years.
If you have a view – please let us all know by emailing me at [email protected] – Andrew Stanton Executive Editor – moving property and proptech forward.