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Four out of 10 property sales now fail to reach exchange thanks to problems in the antiquated conveyancing process, says a London and Home Counties buying agency.

Property search firm The Buying Agents - which has seven offices handling high-end purchasers, investors and corporate clients across London and The Home Counties - says the industry norm in recent years has been 30 per cent but this has now risen markedly in recent months.

In some cases the firm agent has found that sales have fallen through as a result of vital information being withheld by the selling agent or vendor.

In certain areas we've seen an increase of around 10 per cent in the number of properties returning to market which indicates there are still problems with this antiquated process. Now is the time to get industry leaders together to find the best possible solution for all parties says Henry Sherwood, TBA's managing director.

He says the much-hated Home Information Packs were, in theory, a solution to this problem.

Buyers should always have access to detailed information about the property before they consider making an offer. Some of the things to be aware of include details of the lease and any relevant restrictions, physical issues such as damp and subsidence as well as whether or not the property has been on the market before and if so why it returned to market he insists.

Comments

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    The only real resistance to HIP's was from estate agents who hated them, even though they generally made money from them. They thought them too much bother although their involvement was simply to order one from us.
    Sales falling through can cost buyers and sellers hundreds of pounds in aborted fees. There is a solution. Buy an indemnity policy from Pali Ltd for between 40 and 80.
    Nick.

    • 27 August 2014 08:45 AM
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    We've seen a marked increase in deals falling through.

    On the sale side, we've recently seen a spate of buyers dropping out well after we've taken property off the market because either they changed their minds or they misrepresented their financial position when they made their offer. As a result, we now don't take property off the market until the mortgage offer is confirmed, but even this offers no real certainty. We have looked at deposits too, but in reality very few buyers have enough spare capital or the will to lodge a meaningful deposit.

    On the buy side, we've seen vendors who are simply unwilling to sort out basic issues with their own title in order to achieve a sale. We've also picked up a few properties from vendors who have been caught in repetitive cycles of offers on the open market falling through again and again. They take our offers as we offer a swift, certain transation.

    The system as it stands doesn't serve either the sell-side or the buy-side well. While we wouldn't advocate a return to HIPS, the way the current market works encourages both buyers and sellers to misrepresent their positions in order to secure a 'sale', it's no wonder so many fall through. I've lost count of the number of 'cash buyers' who are nothing of the sort, intermediaries and agents who routinely over-value and solicitors who want to control the deal rather than paper it.

    Any change to the way transactions are handled that creates more transparency would be welcomed by us.

    • 27 August 2014 07:40 AM
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    Quote: [i]"a pre sale sellers survey is not the answer because they go out of date and buyers don't trust them"[/i]

    That is what everyone said pre-HIP but it is in fact simply not true, if the survey is properly undertaken by a suitably qualified person. Any survey is a snapshot on the day of inspection, subject to the surveyor's ability to flag up potential areas of future (long, medium or short term) issues. In reality, very little changes in most properties within the space of a year or so, other than deliberate action or accidental or storm damage. Risks of poor maintenance causing short term deterioration should be written into any report.
    As for trust, that's a no-brainer if anyone stops to think about it for a minute. Why is a survey not going to be trusted, simply due to the status of the person commissioning it Is the surveyor going to produce an untrustworthy report, & particularly one that is so wrong that it affects the buyer's decision If so the surveyor will get sued, be unable to get PII &probably be kicked out of their profession. Where's the motive for that
    These red herrings were all dealt with during HIPs. They are perceptions, not reality.

    It was 1966 when the Law Commission first undertook to examine the system of conveying land with a view to its modernisation & simplification. Since then there have been numerous reports & consultations which led to HIPs, after an incredible amount of debate but also apathy & neanderthal resistance. Yes, it was incredibly badly implemented but it was a significant move in the right direction & with proper industry support, reform of the process should be considered essential. The ground work has all been done. Let's not have another 10 years revisiting all the arguments against reform.

    • 27 August 2014 07:30 AM
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    There is no doubt that the current system is unnecessarily slow and complicated, however getting a pre sale sellers survey is not the answer because they go out of date and buyers don't trust them. Improvements could include, streamlining technology, imposing service standards on Solicitors, imposing penalties on Vendors who change their mind after accepting an offer and spelling out the basis for the offer more carefully in the first place. For example, the offer could be subject to the property having a good title, passing a mortgage valuation without retention and a time scale, a deposit could be forfeit if the offer terms are not adhered to. We have used this approach with success in our acquisitions business for nearly 15 years.

    • 27 August 2014 06:41 AM
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