The Government has recently announced some proposed sweeping reforms of the property market and how the process of buying and selling works, having stated main aims are to reduce time, cut costs and reduce the number of failed transactions.
The Government has recently announced some proposed sweeping reforms of the property market and how the process of buying and selling works, having stated main aims are to reduce time, cut costs and reduce the number of failed transactions.
Details are vague as this is currently still in consultation. However, the government plans to publish a full ‘road map’ early next year
What are the reforms?
There have been several ideas suggested by the government, perhaps the most impacting on the average person is the government’s idea that more information should be provided at the beginning of transaction by the seller and estate agents including the position in a chain of transactions, leasehold information and making it a requirement for a seller to have a survey completed. This is supposed to provide buyers, especially first-time buyers, with more confidence and reduce costs for them and make transactions more streamlined.
For those of you that have been around long enough, this may seem like the Home information Packs that were abolished in 2012 in order to reduce the amount of work needed and cost of selling a house.
The second proposed reform is conditional contracts from when an offer is granted. Currently parties are only locked into a sale or purchase when contracts have been ‘exchanged’, when your solicitors swap signed contracts, which occurs after searches have been done, enquiries raised, and your solicitor is satisfied that the property your buying is fit for your intended use and the seller has the right to sell. The government has also suggested fines, details of which haven’t been released, to punish people who break these conditional contracts and pull out.
The government has also stated a desire to move the property sector into a more digital age in order to reduce the time of a sale/purchase, including introducing digital ‘log books’ which will include current and historical information on a property and, according to the government, stop the need for buyers to be provided with ‘reams’ of papers at the end of a transaction.
There are multiple other proposed reforms such as starting to regulate estate agents, who currently operate in a largely unregulated sector, and introducing a digital service where consumers can see the track record of estate agents’ solicitors and conveyancers.
What do we think of these reforms?
We welcome any reform that increases our clients’ experience of buying or selling a property whether that be reducing the cost or decreasing the time it takes.
However, from the details currently released it is my opinion that these alone would not be enough to solve the problems the government claim it is attempting to solve.
Whilst providing more information at the beginning of a transaction speeds up the process slightly, searches will still have to be applied for to the local and water authorities and an environmental report obtained together with a check for any risk of chancel (church) repair liability which with current delays can take over a month to receive the results. Also obtaining leasehold information, particularly on apartments/flats, can take a great deal of time to obtain with substantial costs being incurred on the part of the seller without the burden of having to provide a survey. These reforms just move who incurs the burden of the costs. It would also require lenders to accept the information provided by the seller and for them to have consistent rules around this.
In respect of a seller’s survey, the benefit of survey may not pass to the buyer under the rules of privity of contract and in any event it is likely the buyer would want to choose who carries out a survey. This would then mean two surveys will have been carried out which obviously increases the costs incurred in a sale/purchase.
Digitisation is welcomed by professionals
Binding people at the outset whilst increasing certainty and putting buyers at ease in our view papers over the cracks. Yes, they are conditional so if adverse information is found, a buyer may be able to pull out of the transaction without a fine but this is unlikely to cover a lender withdrawing a mortgage offer or what about buyers who pull out because their life changes over night. Also, you simply cannot legislate people simply changing their minds and it be unfair to fine people in such circumstances.
The digitisation of the sector is welcomed by conveyancers and solicitors across the land. In fact, at Morecrofts we have been using electronic information and communications for many years and now embracing artificial intelligence to make how we deal with property matters more efficient and the vast majority of our property transaction files are paper-lite or paperless.
However, to make the reforms work, the government will have to make digitisation compulsory across the whole property sector. As to the ‘reams’ of paper, unless you are buying an unregistered house or have requested the buyer take out multiple indemnities and provide you with every guarantee you will likely just get a letter from your solicitor accompanied by a copy of the updated Land Registry showing you as the new owner.
Buying and selling a property will always have variables no one can control. Although the process of buying and selling a residential property is mainly standard, every client has different requirements. We support all steps taken to boost the public’s experience of buying or selling a house, but any reforms must also be looked at in the broader scale and how they can be implemented across the board.