Government launches consultation into house buying and selling
News & LegislationNovember 17, 2017
Government launches consultation into house buying and selling
We asked our Guild agents what their thoughts and opinions were on the recent government inquiry: “Government launches consultation into house buying and selling”.
Zoe Hayle, Marshalls & Parsons “The Government consultation needs to address the whole buying process. It is most unfair that someone can agree to buy a property and can withdraw, on nothing more than a whim, right up to the day of exchange.
“The Home Information Pack was introduced to make home selling and buying quicker, however well-intended the concept, the practical application needs adjusting. A survey on a property must be acceptable to all lenders, or it is a waste of time and money for the buyer to provide it. Searches in advance of agreeing a sale would be ideal. However, they would be more effective for it to last for longer than the three months agreed on at present.”
Nicole Cox, Wye Residential “The biggest bug-bear for us is the length of time that sales take to go through. Interestingly it is not often the mortgage that is the stumbling block, but the conveyancing itself. Investing in a well-qualified and skilled conveyancers and solicitors should not be underrated. Trusting in the knowledge and experience for the legal teams involved will enable sales to go through quicker, smoother and more efficiently. In doing so, the process will become less expensive for all parties and vastly reduce the stress that is often involved with buying and selling property.
"Gazumping is a nuisance, but does tend to show that the market is buoyant. However, with effective conveyancers and solicitors involved, I believe that this would no longer be an issue as both the buyers and sellers experience a smooth and successful sale."
Alan Howick, Howick & Brooker Partnership “If every house had a MOT it would make it easier. My view is:
1.Return the Home Improvement Pack
2.Create a checklist for sellers to complete for putting their home on the market including: gas, electric and asbestos checks
3.Encouraging lawyers to work alongside estate agents will help all parties involved get to a smooth and transparent sale
4.Create a checklist for buyers: the buyer should have a proven completed chain and proof of funds in place to prevent sales falling through”
Stefan Collier, Joplings “As a selling agent and a surveyor, I regularly see the wasted time, money and emotion from all parties. This is largely down to the fact that the initial decision to purchase is based on very little information and because there is no time limit. The process is all the wrong way round; conveyancing, getting a mortgage and searches take such a long time (10-12 weeks from agreeing a sale until exchange, when 10 years ago the average was 6-8weeks), often causing buyers and sellers to get cold feet.
“To counteract this, the vendor should have a survey, valuation and legal pack before going to market to establish the legal title, searches and any problems with the property. This allows issues to come to light and be fixed before going to market. When the purchaser makes an offer based on all the relevant information, I believe that there should be a financial commitment to purchase and a set timescale to exchange.
“This will therefore be a way of ensuring that the vendor is committed to selling, as there would be an upfront cost. Additionally, only committed sellers will put their houses on the market, reducing the numbers of pull outs. Purchasers too are less likely to withdraw because they will be more knowledgeable about the property from the offset. The legal pack would speed up the time it takes solicitors to complete the conveyancing process. The financial commitment from the purchaser would further guarantee their commitment to purchase before offering.
“The above system could save everyone concerned a lot of money. Except maybe solicitors!”
Justin Flanagan , Charles Eden “The Department of Business, Energy & Industrial Strategy’s report on ‘Research on Buying and Selling Homes’ states that, 13 per cent of buyers and one per cent of sellers have experienced Gazumping leading to sales falling through. However, in my experience of gazumping is limited to none.
“If anything, gazundering is more of an issue and whilst this generally does not lead to a fall through, it does cause a lot of stress at a late stage. All transactions are subject to contract so it would be difficult to prevent this behaviour from the buyer. It is also difficult to police as they can always find some sort of reason to justify their action.
“The south of England is arguably experiencing a slowing market. This provides the perfect backdrop to highlight any pitfalls of the Home Information Pack. We found that when sellers collated information and paid for searches on the outset, this information was generally disregarded by potential buyers coming along months down the line for understandably it was seen as out of date. Likewise lenders would take this view.
“Whilst not providing a solution I thought it worth highlighting issues for consideration when discussing matters.”
Allan Carr, Pulver Carr “I believe all fees and charges, especially set by the Government should be more transparent. The Stamp Duty Charges within the M25 are a suitable example of this. If the charge was made clearer or even reduced, it could have the positive effect of encouraging people to move or buy property.
“It is currently very easy for either party, buyer or seller to withdraw from the sale. It may be more efficient to create a ‘lock in’ for both parties. They would pay a non-refundable deposit to be held by their respective solicitors, so that in the event that one party pulls out, the other party will be disappointed and inconvenienced, but they would at least not be out of pocket.
“Finally, solicitors should have the ability and the desire to speed up the conveyancing process which often causes undue delays, especially with leasehold properties.”
Simon Davies, Norman F Brown My three points of interest are:
“In my mind the Home Information Pack had the best of intentions, but didn’t carry enough weight within the industry and were too complicated. As an alternative, agents have the expertise and can work more closely with the solicitors. Agents could collect the protocol documents solicitors usually sort out when a sale has been agreed including, fixtures and fittings and property information questionnaire. We can then send this all off with the memo of sale to the solicitors.
"It is too easy for purchasers and sellers to pull out of a deal. It can genuinely change lives and cause a great deal of heart ache. To combat this, to speed things up I believe that once the survey has been conducted, whoever pulls out should be liable to pay for the fees of the other party (Including part of our fees). This will be hard to police and sometimes it is justified, but it will ensure that only serious buyers and sellers engage with the process.
"Better communication and efficiency between solicitors, conveyancers, buyers, sellers and agents will lead to quicker transactions and fewer withdrawals. I suggest that solicitors invest in interactive websites for buyers, sellers and agents to be kept updated."
Joseph Down, Debbie Fortune Estates “My two key points on this are as follows:
“The cost of moving is a huge factor that has caused many to think twice about moving at all, preferring in many cases to extend their existing homes if possible. Stamp duty is still such a significant cost for many, particularly here in the South West, where prices are very strong around the Bristol area meaning many now “average” moves are costing £20K - £30K in stamp duty, agency fees, solicitor fees etc. In my opinion I would encourage the government to look at stamp duty again, for both single property owners and investment. I do appreciate that the changes made over the past few years to stamp duty have brought the cost down for many, and made the system fairer. It is still however a very large cost to factor in, often ending a sellers’ hopes of moving.
“The lack of commitment until exchange is, in my opinion, the biggest problem in the industry. Our current system offers no compensation or security when a sale falls through. To address this, I suggest that the agreement should be more legally binding at offer stage, with some form of redress should either party pull out of the deal. Many other countries around the world offer us an insight into how we can evolve and make our system more efficient and simple – Scotland being one of them.”
Philip Jackson, Maguire Jackson “One of the lead issues is to address the falling numbers of transactions. Today the level of property sales is over 30% down on the same time ten years ago (HMRC Stats England 2016 had 1,057,750 sales, whereas 2006 1,404,710 sales).
“One explanation for this is that increased Stamp Duty makes impulsive moves more considered as do the increasing costs for private lands, which supply a large part of the private rented sector. The HMRC would maintain its revenue if the Stamp Duty levels were reduced because it would be countered by the increased volume from the market.”
Chris Sawyer, Sawyer & Co “Firstly, making the process legally binding earlier will be worthwhile for all parties by increasing trust and confidence both in the process and people involved. I suggest that we give parties the option for a delayed completion or an on or before completion date. There would be financial consequences for buyers and sellers who fail to conclude.
“Secondly, in order to speed up the process we need to get vendors legally ready for a sale. Technology could help with this by collating information online such as, land registry title information, details contained within a local authority search, management information (in the case of leasehold properties) and perhaps even a survey or building report. Together with any other relevant documents about the property, either on a government website or digital platform, this could be used by the buyer, conveyancer and lender.
“This information could also be seen by buyers before any commitment to purchase is made, and in the case of leasehold transactions, managing agents should also be made to provide information within a swift time frame and at a realistic cost."
Simon Miller, Partner at Holroyd Miller “I probably won’t be popular for saying this but bring back the Home Information Packs. A Home Information Pack is telling the buyer, the solicitor and the lender everything they need to know right at the beginning of the process, which in theory should speed up the process to exchanging contracts.
“Currently the system is too easy for people to walk away. I can appreciate a property may flag up issues later in the buying process which could force a decision to walk away, but the Home Buyers Pack would ensure that didn’t happen. A non-returnable deposit would certainly make people think through their decision with more commitment.
“There is a requirement for a universal survey that the lenders are prepared to accept. Many issues are caused by the valuation survey and often it can come as a nasty surprise. A universal survey conducted independently would solve the problem and provide buyers with clear guidance on how much their bank is prepared to mortgage.
Lynda Lewis, Town & Country Mold “In short, the law should be changed to state that an accepted offer is binding and all vendors should have survey done on their own home enabling a better understanding by the buyer of the financial commitment over and above the cost of the property purchase. The original proposition around the Home Information Pack made sense. It proposed a Property Survey, but sadly a watered down version was introduced. This would go a long way to ensuring serious home Buyers/Sellers only come to market and increase the likelihood of avoiding fall throughs and quickening of the whole process.”