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.
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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?
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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.
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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?
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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?
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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.
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The Scottish are the most successful inventors in human history. They may not be without their own challenges and problems, but if there is going to be a change (and people are calling for it more on the legal side than the agency side) then we can definitely learn from their system and perhaps improve on it. But the hard part isn’t coming up with ideas, it’s the execution.
A lot of work has been going on since the Call for Evidence. For example discussions (and practical work) on how to improve leasehold, the better provision of (relevant) up-front information, reservation agreements, regulation of estate agents etc. I believe (my personal opinion only) that in the first quarter of next year (if not before) some of the suggestions etc will be laid out and offered up for further comment. Or in some cases, be ready for trial or implementation.
I am no expert on the Scottish system but was told a while back, by a Scottish conveyancer, we should be careful what we wish for. It is not as efficient as it used to be, partly because it now takes longer to obtain a mortgage offer than it used to. Hopefully another EAT reader or two, will correct me or enlighten us further.
I am an agent in Scotland so please allow me to enlighten you and the 'major estate agency chief who wishes to remain anonymous'.
Home Reports are not popular here and actually slow the market down. Hence why home owners et al have been trying to get them abolished for the past four years or at least have them undergo a major change and here's why.
In Scotland, you cannot legally sell a property without a Home Report. (Unless it's a private sale between two mutually agreed parties. In which case only a EPC (energy certificate) is needed as it is south of the border)
The problem being is that the owner has to purchase the Home Report upfront.
They are priced on a sliding scale so to give you an idea:
HR Costs:
£0 to £100,00 = £360
£100,001 to £200,000 = £480
£200,001 to £300,000 = £600
£300,001 to £400,000 = £720
and so on until you reach properties of £900K to £1000,000 (£1,140). Properties £1 over the magic million are subject to negotiation by the surveyors.
Now while those with high end properties may be able to afford the higher fees, the average home owners with properties in the £200K and £300K region have to fork out £600 to £720 respectively. Having to pay these amounts upfront can be a struggle for many people who have families or are being forced to sell for other reasons. (Especially if the reasons are financial)
The system also has a domino effect with certain times of the year where families have to find extra money for other things like Summer holidays, Bank holidays, Xmas and everything in between like Easter, Halloween, Bonfire Night etc.
This often results in people going off the boil as it were because as one event passes there is always another expense looming on the horizon. Therefore the seller has to be motivated and kept motivated.
In fact some of the larger estate agents occasionally offer free home reports to lure people in but claw it back with other fees like higher percentages and so on. So it's easy to see that Scottish estate agents have a lot tougher job than their English counterparts.
The Home Report system is stuck between the devil and the deep blue sea. While they are a good idea on one hand, they are far to expensive on the other. But that's not all.
For reasons unbeknownst to us, the surveyor's 'valuation' of a property often differs considerably from ours by thousands or indeed tens of thousands of pounds. Hence why I always warn people not to get upset at the HR valuation. I should add that we achieve our 'higher' prices even when negotiated down which proves our valuations are more accurate.
Some say the survyor's comparable system is outdated and stuck in the past but in all honesty I wouldn't know so I won't comment.
In fairness though, a surveyor can only price the physical structure and not other USP's such as locations or views and so on which people will indeed pay more for.
The general consensus is that while home reports are a good thing, especially the surveying part which stops people getting sold a white elephant... they are far too expensive for the average home owner. (Their words not mine)
Therefore, I can only assume that the 'major estate agency chief who wishes to remain anonymous' wants to protect his identity because he's either trying to stir up a hornets nest to annoy people for his own amusement or unfortunately like some people in the property sector is engaging his mouth before his brain.
If one thing is for sure, he has been talking to surveyors, not field agents who have direct communication with home owners. And I will wager he has definitely not communicated with the latter who are the most important.
To my English counterparts I say this. Do not let this 'jobs for the boys' Home Report system manifest into reality. At least not in it's current form.
Should you ignore attempts to establish it... you will see the English and Welsh markets come to an almost grinding halt because the majority of people who need to sell their houses simply will not be able to afford to sell. Sales will plummet along with your salaries... (You can take that one to the bank)
So if you want to be a super agent in England, do a year up in Scotland. Because if you can persuade people to fork out hundreds of pounds upfront, getting prospects in England will be a doddle.
Oh yes, one more thing I forgot to mention. Scottish Estate Agents do not see any commission from home reports either which is a tad greedy in my opinion. Seeing as we are the ones who have to explain and overcome this unwanted obstacle to selling properties.
In conclusion, I will make another prediction for you all and of course the anonymous gentlemen who may or may not be trying to instigate disruption of some kind.
Any thoughts or attempts to introduce the Scottish Home Report system in England is already dead in the water.
You see my friends, before it even gets a foothold, things will have already been radically changed in Scotland. It will have been either been replaced with a more user friendly system or abolished entirely... Trust me on that one because it is indeed a sales killer.
I'm a home report provider covering all of Scotland. The average turnaround time for a home report being produced is 2.5 days. Obviously if you live in a remote area of Scotland that changes considerably. Many agents will meet the surveyor at the property when the agent is there to produce the photographs etc for the schedules, therefore it is incorrect to make a general statement that the home report holds things up. I concede it can happen occasionally... usually by the seller not completing their part as the process has not been explained to them.
There is a faction within the industry would like to see the end of home reports, but that's just life in general with any product. The facts are that home reports are now well bedded into the buying and selling of property in Scotland. We collect payment from home sellers (approx 80-100 per day) before the reports are produced and the majority of sellers understand the process and have used reports to make their purchase so we seldom encounter any problems collecting payments or confusion/annoyance at why they need a report.
Some agents can, and do, make money from home reports.
Valuation has always been a bone of contention between agents, sellers and surveyors. Massive discrepancies in valuation between agent and surveyor is not the norm but does happen occasionally. Most agents and surveyor will discuss a property prior to the surveyor visiting.
Home Report fees have not changed in 10 years, if anything, the price of a home report has reduced slightly. There are very few industries where that is the case. Surveyors AND agents are having to work harder to make the same money.
It is not a perfect system, but home reports give the buyer an opportunity to make an informed offer on the property they are buying, for many, the biggest purchase of their lives so far. Sellers are almost always buyers.
Of course I will defend the home report as a provider of the product, but I truly believe that it is a positive change to the buying and selling process and is now widely accepted by the home owner.
More bunkum. Lesley, maybe you should get out into the field instead of number crunching averages. If you do indeed provide Home Reports for 'all' of Scotland then how come up here in the Highlands 7 days would be fast, up to 10 days to 2 weeks is the norm and up to 3 weeks is not unknown. (Even in none rural areas).
So please do not try defend Home Reports with Fake News just because you earn a living out of them. After all, you will only succeed in angering the people who have to wait for them before they can sell their properties... and indeed agents like me who have to wait for them before we can list.
Above all, it does not help the situation.
So you cannot speak for 'All of Scotland' and you certainly cannot control the time it takes for surveyors to complete their work or dictate their schedules. At least outside of the central belt.
As for your other outlandish comment..
"Massive discrepancies in valuation between agent and surveyor is not the norm but does happen occasionally."
I nearly choked on my coffee when I read that one.
There are discrepancies for the very reason that Home Report valuations are vastly under most agent valuations so please do your research properly before writing about something you clearly know nothing about except what you have been led to believe.
Better still, get out in the field with a few agents and watch reality sink in.
There is much talk of The Scottish system and the benefits that it might bring but the biggest benefit which is not discussed is the removal of a chain from the process and the uncertainty that a chain brings. Remove the chain from the process, I do not hear anyone arguing in its favour.
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