A veteran PropTech figure with extensive experience of working at leading estate and sales agencies has told the government to act - and act now - on improving the house buying process.
Steve Richmond, general manager UK&I at Reapit, has led a submission by the firm to an enquiry by the Levelling Up, Housing and Communities Select Committee, urging changes to allow:
- Sellers being pre-qualified with finance and due-diligence details, to be shared digitally with agents and conveyancers by mortgage lenders;
- Lenders to guarantee mortgage offers for six months to reduce the chance of finance being withdrawn during the sale;
- Including searches and surveys when a property comes to markets, to help agents accurately value, provide more information to buyers upfront, and reduce duplication of work – which in turn would cut the number of days properties remain on the market;
- Licensing estate agents to prevent a small minority of bad ones derailing complex property chains;
- Introducing a cooling-off period to sales contracts to allow buyers to take the property off the market sooner while compensating the vendor if they subsequently withdraw an offer.
These policies are already in place in some states in Australia, where Reapit is the market leader in agency technology.
The firm says these mean agents make more sales in less time. Properties in Australia are on the market for 30 to 40 days on average before being sold. In comparison, according to Zoopla, it takes 25 weeks from listing to exchange in the UK.
Richmond comments: “There is a lot of duplication in the house buying process at the moment, with the National Trading Standards Estate and Letting Agency Team mandating agents to provide material information parts A, B and C when a property is listed. Together, the material information required covers a lot of the details included in searches and surveys.
“Rather than sellers undertaking searches and surveys to help agents satisfy material information needs, and buyers performing similar searches and surveys when they put in an offer, it would be easier for all if those documents were provided upfront to prospective buyers, as is the case in parts of Australia.
“Similarly, estate agencies and mortgage lenders both undertake know-your-customer checks (KYC) on buyers, which is a duplication. Instead, we should encourage buyers to become pre-qualified and have financing in place. Agents should then be able to rely on the KYC done to approve that loan.
“We see from the experience of our colleagues in New South Wales that the sales process is much faster when information is provided upfront. This extra detail and introducing a cooling-off period means agents can get contracts signed sooner and make more sales in less time. Given the time it takes to sell a property in England, faster sales should be the goal.”
“We’ve also seen the positive impact of licensing and qualifications across different states in Australia. Even in the UK, research in Scotland by the Chartered Institute for Housing proves this, showing that 87% of letting agents with a qualification felt it improved their professional capabilities. Meanwhile, only 16% of landlords thought there had been no impact from mandatory qualifications.
“We feel it is something agents should embrace given the high compliance burdens they face. According to Propertymark, some 150 laws, 300 regulations, and decisions made by seven government departments impact the property sector.”
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There are two key reasons holding back the market. The first is the complexity and time it takes to sell which puts off sellers who are forced to plan so far ahead. The second is stamp duty which is an ever tightening noose if you want to climb the ladder or move sideways at the top. The idea that a more fluid market would lead to it overheating is a fallacy, as is the idea that the Government would get less revenue if they reduced stamp duty at the top end. Currently under consideration is the reduction of stamp duty at the bottom which will not achieve much as you will still have a constipated top. Overall a healthy efficient property market is good for everyone, it encourages aspiration, increases moral and enlivens the economy. The only reason we have what we have is the habit of vote pandering to the masses rather than clear focused leadership. Sadly as with so many issues we face right not there is no easy solution. I also feel that while the conservatives are awful it’s obvious labour will be much worse and that many people who will vote them in know this but will do it because they want to see the plane crash, not a very good reflection on human nature but a similar thing happened with Brexit.
The Australian model in most states works very well and can be quite easily implemented over here because Australia practices English Law. (Bringing Scotland into the equation only confuses the issue because they do not practice English Law. Going over to their system would require major and unnecessary legislative changes).
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