The government has launched a consultation this weekend calling for evidence on how to make the home buying process “cheaper, faster and less stressful for those involved.”
In a surprise announcement this morning, Communities Secretary Sajid Javid said he wants to hear from everyone with an interest in home buying including estate agents, solicitors and mortgage lenders.
“We want to ensure that we address issues across the whole sector, from ways to tackle gazumping and reduce time wasting to increase commitment to a sale” he says.
The call for evidence will run for eight weeks from today, Sunday October 22, so will close shortly before Christmas.
Views will be taken on:
Gazumping: “Buyers are concerned about gazumping, with sellers accepting a higher offer from a new buyer, we will look at ways this could be tackled” says Javid;
Building trust and confidence: He says: “Mistrust between parties is one of the biggest issues faced, we want to look at schemes including ‘lock-in agreements’. Although one million homes are bought and sold in England each year, around a quarter of sales fall through and hundreds of millions of pounds are wasted, we want to increase confidence in the housing chain”;
Informing customers: “How to provide better guidance for buyers and sellers, by encouraging them to gather more information in advance so homes are ‘sale ready’”;
Innovation: “You can now search for a home online, but the buying process is too slow, costing time and money so we’re looking for innovative digital solutions including making more data available online.”
Javid says: “We want to help everyone have a good quality home they can afford, and improving the process of buying and selling is part of delivering that. Buying a home is one of life’s largest investments, so if it goes wrong it can be costly. That’s why we’re determined to take action to make the process cheaper, faster and less stressful.
“This can help save people money and time so they can focus on what matters – finding their dream home. I want to hear from the industry on what more we can do to tackle this issue.”
The government says that today’s announcement will “build on recent proposals” such as seeking to remove abuses of leasehold, protections for renters and a crackdown on unfair managing agents. “Now we are looking at modernising the home buying process” it says.
However, mindful of publicity during the General Election campaign when Michael Gove hinted at a return of Labour’s controversial Home Information Packs, the government’s statement this morning says: “This exercise isn’t about adding extra work for buyers and sellers or seeing a return to Home Information Packs; this call for evidence will look at how we can further improve the home buying experience.”
The government has looked in particular at the house selling and buying processes in Denmark and the US.
It has also undertaken research amongst 2,000 people who have bought or sold a home recently.
Some of the key issues thrown up by this research are:
- Of those that experienced delays, 69 per cent of sellers and 62 per cent of buyers reported stress and worry as a result of the delay;
- Some 46 per cent of sellers had concerns about a buyer changing their mind after making an offer;
- 24 per cent of sellers say they would use a different estate agent if they were to go through the process again; and
- 32 per cent of sellers and 28 per cent of buyers were dissatisfied with the other party’s solicitor.
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Streamline conceyaning by forcing Solicitors to modernise and work faster. Insist that conditional sales become the norm. Force buyers and sellers to put some skin in the game. Force lenders and management companies to respond faster.
Two giants steps would be to encourage lenders to underwrite before an offer is accepted and ensure local authorities/search providers can turn around local searches within days NOT weeks.
The best change that can be made is making the transaction binding in some way at the start - so sellers and buyers are not messed around!
The legal process and local authorities will be an easier fix, once the transaction is secure then all else becomes easier
This is where modern technology should be adopted by the industry. Proptech can provide online audit trails which are tamper proof, and which will encourage buyers, but also protect all parties in the process. The clicktopurchase platform already provides a technical solution, one which has been proven. The concept is really simple - when an offer is accepted, an instant contract is formed and recorded. Conditionality can be added. Other Proptech solutions will appear. Why impose legislation when technology can solve the issue?
... and what happens to 'subject to contract'? The problem has always been time. The longer the transaction, the more precarious a sale (or chain) becomes. Shorten the Contract time and fewer sales will fall through and everyone gets to more quicker (and estate agents get paid sooner). HIPs went some way to address this, but was abused by estate agents, making a fast buck at the seller's expense, who ended up paying twice. Estate agents shot themselves in the foot!
I admire Sajid for the iniative, like many politicians he will put together views and proposals and nothing will change. Moreover, politicians always look for new models, basing them on some other country - usually America or Norway, which is not useful. Quickest sale to completion, I dealt with was in 2002, only taking three-days. Cash buyer, buying freehold detached residence. This taught me if two motivated solicitors and two sets of clients are willing, then speed of transaction is not an issue. I know there was a hand search, rather than the normal local search, but in 2017, even that could be speeded up. Perhaps a 10% deposit on acceptance of offer, non refundable from the buyer - with vendor paying 10% to buyers solicitor, also non refundable should they not sell, would definitely focus both parties, with a twist that the agent having introduced a ready, able and willing buyer gets their full fee out of the deposit, as does the solicitor. depending . Thoughts.
Spot on Andrew
I have also exchanged and completed a transaction within 48 hours. It would have been less than 24 if the sellers had had alternative accommodation lined up. Works very occasionally in a two property chain.
The devil will be in the detail Andrew, define "ready, able and willing buyer".
So many ways to speed up the process- solicitors, surveyors and lenders are all too slow to act. Too many estate agents fail to progress their sales effectively and frankly I’m not surprised given the decline in fees since online agents came about so they probably not motivated either buy the lower commissions. We should adopt the French way where you have 7 days to change your mind after offer is accepted after which point sale is legally binding nd you complete on the agreed date. Standardise fees so that vendors chose n agent on their merits rather than how cheap they are and ensure that agents are qualified to practice. If a legal pack was prepared prior to marketing sellers would be more committed to selling and the solicitors could exchange contracts on receipt of a mortgage offer. That’s how to streamline if you want to make the process cheaper get rid of stamp duty!
I have a great idea, its called The Home Information Pack, we could call it HIP. It would be a winner!
The real problem with gazumping and the reason it's so prevalent is that successive governments actively encourage this. Despite all the word this and previous governments have done nothing to address the problem even though they could have improved matters easily had they chosen to do so. How can they do this? Repeal the current legislation which forces agents to submit new offers to vendors after they have already accepted an offer and the sales memorandum has been issued. Agents should be able to refuse to accept such offers unless the current sale is under threat and the property has been formally put back on the market.
So why does the government raise the issue now? Probably to deflect attention away from their poor record on house building and providing much needed homes for its population whom it purports to serve.
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