It seems a lifetime ago but in fact we’re approaching just the first anniversary since the government triggered its Call for Evidence, a request for views and ideas on how the home buying process can be improved in England and Wales.
At the time the then Housing Secretary Sajid Javid said “Buying a home is one of life’s largest investments, so if it goes wrong, it can be costly” adding that improvements to the process must “help save people money and time so they can focus on what matters – finding their dream home”.
One year on and Javid is Home Secretary, perhaps on his way to becoming Prime Minister, but very little has happened to suggest progress on changing how we sell and buy.
We’ve heard nothing about it from the Conservative conference while Labour again concentrated more on the lettings sector than the sales market. This weekend sees the start of this year’s Scottish National Party conference (remember - it’s Britain’s third largest political party now) so perhaps the time is ripe to look north of the border.
This coincides with one major estate agency chief - who for the moment wants to remain anonymous - suggesting that to move the process on with relatively little disruption, why not adopt the Scottish system of buying and selling in both England and Wales, too?
Many agents operating in large corporates which already work in Scotland as well as the rest of Britain may be familiar, but for those less involved in the detail, the Scottish system has a relatively small number of major differences with the English and Welsh - but they are absolutely key, and touch upon some sensitive issues for the agency industry.
1. Home Reports: This upfront bundle of information made available to prospective buyers is perhaps the most sensitive of all issues given the history of Home Information Packs in the UK back in the 1990s and early 2000s.
In Scotland, the Home Report consists of a Single Survey (an assessment by a surveyor of the condition of the home, a valuation and an accessibility audit for people with particular needs); plus an Energy Report (effectively, an EPC); and a Property Questionnaire (with information from the seller and other cost-based info that may influence a buyer).
Would we want this in England and Wales, if it contributed to fewer fall-throughs?
2. Who Sells? In Scotland, of course, many sales go through solicitors’ firms with agency teams rather than ‘pure’ estate agents - although this trend is diminishing a little.
Of course many homes in Scotland are sold straightforwardly through pure agents (around 55 per cent of sales according to one unconfirmed estimate), therefore this need not be a deterrent to a Scottish sales system being adopted south of the border.
3. Offers Over: Scotland has ‘offers over’ as part of the pricing structure with prospective buyers requested to note an interest with the vendor’s agent. This is usually the way that offers are then invited via a sealed bids system.
Would we want this in England and Wales? Would offers submitted via solicitors (as is often the case in Scotland) lead to fewer fall throughs? Should the property then be withdrawn from the market, as is the case typically north of the border?
Might it achieve higher prices than a fixed price system (as agents in Scotland sometimes suggest)? Critically, even if it did encourage higher offers, would it actually speed up the sales process?
4. Gazumping: Because properties are typically taken off the market in Scotland, once an offer has been accepted, gazumping is less common there, whatever the state of the housing market in a locality.
Solicitors also have to decline to act for the seller if they accept a later offer from another party, unless the original offer has fallen through.
Might this be good public relations for the agency industry and reduce the threat of gazumping if introduced in England and Wales?
5. Legally Binding Completion Process: In Scotland the exchange of documents between a vendor’s and a buyer’s solicitor does, eventually, lead to a point at which the transaction becomes legally binding - failure to honour it opens the way to litigation and damages.
Is this more clear cut, and avoiding fall-throughs, in a way that the current process does not in England and Wales?
Of course, many agents in Scotland see flaws in their own system (although few call for an alternative along the lines of that operating in England and Wales).
However, is it an option for the industry to consider in the absence of government action on its own pledge to reform the process?
Please let us at Estate Agent Today know your views.