Homebuying may be about to become quicker, cheaper and easier thanks to government plans to revolutionise the process.
The Government has launched two consultations aimed at understanding the measures needed to improve the home buying and selling process.
The aim is to speed up sales, halve the number of failed transactions and improve the availability of material information in property listings.
The hope is also to prevent last-minute fall-throughs and drive up the standards of estate agents and conveyancers.
Under the reforms, sellers and estate agents would need to give buyers key information about a property upfront. The consultations are set to finish by the end of the year.
Homes advertised for sale are already meant to show certain details such as whether the property is leasehold or freehold, the council tax band and EPC rating.
But if the consultation is followed through on, sellers and estate agents may be required to include any legal and transactional information such as title deeds and the sellers identity.
The government has launched two consultations aimed at understanding the measures needed to improve the home buying and selling process
This could include local searches, building safety information, searches, property condition assessments, planning consents, flood risk data and chain data.
Buyers and sellers may also have the option to sign binding contracts that would end the practice of buyers and sellers pulling out during the process.
The Government will also look into making records more easily accessible via digital property logbooks.
‘Creating proper digital infrastructure to connect data across conveyancers, estate agents and the Land Registry could transform the process,’ says Paula Higgins of property advice website, Homeowners Alliance.
‘But digitising the Land Registry will be expensive – and it’s unclear who will pay for it.’
What could this mean for buyers?
If followed through with, it could be a gamechanger for buyers. Moving home can be one of life’s most stressful events. Some people describe it as up there with death and divorce.
It is a notoriously lengthy process with setbacks and delays par for the course.
The house buying process takes 41 per cent longer than most people expect, according to research from the Open Property Data Association.
In total, people are on average spending seven months to move home, according to Rightmove.
Amy Reynolds, head of sales at estate agency Antony Roberts, says: ‘Providing key information upfront will help everyone make more informed decisions, reduce fall-throughs, and restore confidence in the market.
‘Estate agents are often caught in the middle when transactions stall because of missing information or unexpected issues – so giving buyers clarity earlier will save not only time and money, but also a lot of unnecessary frustration.’
Paula Higgins of HomeOwners Alliance agrees.
‘Buyers would have more information earlier in the process, says Higgins. ‘That could reduce the risk of nasty surprises and fall-throughs later on.’
Paula Higgins of property advice website, Homeowners Alliance
However, Peter Stimson, director of mortgages at the lender MPowered says buyers may still feel cautious about proceeding without doing their own due diligence.
‘If estate agents – who don’t forget work for sellers, not buyers – are the ones compiling the rebooted HIPs, will buyers trust the reports they produce?,’ asks Stimson.
‘Sensible buyers will still insist on commissioning an impartial survey before committing to what’s likely to be the biggest purchase they ever make.’
Jeremy Leaf, north London estate agent and a former Rics residential chairman thinks there is a danger of buyers committing before they are fully ready to do so.
‘Will buyers be obliged to enter into binding contracts before taking legal advice which may result in subsequent title, leasehold or lender issues?’ asks Leaf.
‘The legal profession will need to become conversant with any new arrangements asap.
‘For instance, what are ‘reasonable’ grounds for withdrawal to avoid gazumping and gazundering as well as ensure the smoothest possible post-consultation delivery?’
No more gazumping and gazundering?
One issue that haunts many buyers and sellers is the practice of gazumping and gazundering.
Gazumping is when a buyer who had agreed a deal with a seller is then outbid by another buyer – sometimes after they have already spent money towards legal costs or a survey.
Gazundering works the other way. It’s when a buyer lowers their offer – often at the eleventh hour – reneging on the previous deal struck with the seller. This can often happen after a survey or before contracts are exchanged.
Around two in five buyers have seen it happen, according to research by the HomeOwners Alliance.
‘This can be a particularly negative experience,’ says James Caldwell, director of Clifton Private Finance. ‘Particularly if you have found your dream home and had a bid accepted.
‘All those hopes and plans you may have for the property are taken away at the last second.
‘But introducing a binding contract as a point of no return on deals may only have the effect of shifting the gazumping window earlier in the process.’
What could it mean for sellers?
For sellers, time and money may have to be spent preparing all the information before they list their home on the market.
While this will hopefully speed up the process once they are on the market, it will increase their costs and effort upfront.
Andrew Groocock, chief operating officer of estate agency at Knight Frank is concerned it is putting too much onus on estate agents and sellers.
‘There is a danger that the proposals simply pass all of the accountability and costs onto the vendor and estate agent.,’ says Groocock.
‘Under the current system the time delay sits between the offer acceptance and exchange period, the government’s proposals will simply shift this delay to the period before any property can be launched to market.
‘We would encourage the government to consult with all those working at the sharp end of the industry in order to make meaningful, effective change which will benefit home buyers and sellers for the long term.’
The fear shared by some experts is that it could result in fewer homes coming to market if homeowners feel they have to part with cash upfront.
‘There’s a danger that some sellers will be put off from putting their home up for sale,’ says Peter Stimson.
‘Sellers who don’t need to move for a new job or a big life event might just press the pause button – perhaps to wait and see if the Government’s new scheme fizzles out in the same way the ill-fated HIP did.’
Peter Stimson, head of product at MPowered Mortgages
What could it cost sellers?
Combined, the upfront cost could easily reach several hundred pounds, or more for complex transactions.
The consultation estimates an additional £310 for producing the upfront information pack, covering searches and documentation.
On top of that, a homebuyer survey (Level 2) could cost between £400 and £1,000, depending on the property, according to HomeOwners Alliance.
Will it work?
There are multiple reasons why sales fall through, but preventing the sales process from dragging on for months should hopefully help.
‘The best thing going for the Government’s proposals is the potential they hold out for speeding up the maddeningly slow buying process, by increasing transparency and reducing the risk of transactions falling through,’ says Stimson.
However, there are other factors that cause sales to fall through.
A major reason sales fall through is often due to mortgage lenders’ searches and valuations, which are designed to protect them against risky buyers or properties.
‘Mortgage-related hold-ups, whether due to paperwork or approval delays based on a buyer’s individual circumstances, can still derail sales at the eleventh hour.,’ says Fergus Allen, head of bridging at Clifton Private Finance.
‘Even with new reforms to property information, many buyers are left out of pocket and under considerable stress.’
There is also the matter of whether the rules will actually be enforced.
Peter Stimson of MPowered recalls a similar scheme that failed to materialise almost two decades ago and fears there is a risk of history repeating itself.
‘The idea of sharing these costs more equitably with the seller is seductive, but there’s a depressing sense of deja-vu with the Government’s proposed reforms.
‘They bear an uncanny resemblance to the short-lived Home Information Pack (HIP), a scheme introduced by the last Labour Government in 2007.
‘HIPs were paid for by sellers, and estate agents as well a number of specialist providers made a tidy profit from creating packs that included much of the information the current Government is now talking about.
‘But in practice HIPs led to a duplication, rather than a reduction, of the costs borne by buyers.
‘In England and Wales, they were quietly killed off barely two years after launch. But a better-targeted scheme introduced the following year in Scotland, the Home Report, was successful and continues to this day.’
Many property adverts are not compliant even with current legislation, according to research by the HomeOwners Alliance, which means people are left without crucial information in the early stages of buying a home.
The HomeOwners Alliance research reviewed adverts across Rightmove, Zoopla and OntheMarket in London and Manchester and found that many agents are failing to comply with the rules.
Almost a quarter of leasehold listings did not include the number of years left on the lease.
Almost two in five listings failed to disclose service charge costs and around half excluded details of ground rent. Less than one in 10 included the date of the next ground rent review.
Lacking: Only 62% of current listings mention service charges, and less than half include ground rent, according to a study by HomeOwners Alliance
‘There are plenty of good ideas, but unless there’s political will, resources and real enforcement behind them, these reforms risk remaining just that – ideas,’ says Higgins.
‘There’s no clear timeline or prioritisation of which proposals come first, which means progress could be painfully slow.
‘Many of the suggestions, such as ‘voluntary binding contracts,’ are voluntary in name and toothless in practice.
‘We already have Codes of Practice and regulatory touchpoints, but weak enforcement means bad practice often goes unchecked.
The industry remains highly siloed, with estate agents, conveyancers and lenders all working to protect their own interests. Change will only happen if the government mandates collaboration, not just encourages it.’
Andrew Groocock of Knight Frank says: ‘While the proposals’ ambition is commendable, there needs to be a complete overhaul of the Land Registry so that the data on it is accurate to at least a month rather than three or four months delayed,’ he says.
‘The ability to provide searches needs to be significantly improved, there are boroughs in London where local authority searches consistently take over 40 working days – this needs to be digitised and instantly available, but that change sits with the government to invest in the correct solution to speed things up.’
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