The civil servant leading work to reform the house buying has revealed key areas of government thinking - with a ban on referral fees being considered.
Matt Prior, from the Ministry of Housing, Communities and Local Government, told agents at the annual conference of The Guild of Property Professionals that politicians and officials are working on a raft of areas for radical change.
Prior explained that government thinking was that the house buying process was broken, but not in need of an “immediate fix”. After all, he said, some one million households a year - often inexperienced at buying and selling - successfully negotiate transactions annually.
But to agreement from the audience he said that “very few people embark on the process with any happiness” and suggested that there was concern at how long the process would take - an average of 19 weeks (longer if a property is leasehold).
Underpinning the government’s desire for change, he says, is the key assumption that “we will make the process cheaper and reduce stress if we can shorten the time and increase the commitment between [transacting] parties.”
Areas under review by the government to achieve this end include:
Referral Fees: in response to the Call for Evidence issued by the government ion the reform of the house buying process some 77 per cent of members of the public who responded wanted action on this.
The government is committed to transparency and measures under consideration range from banning to restricting such fees. “Expect an announcement shortly” Prior told agents.
Reservation Agreements: Prior told Guild conference attendees that there was considerable momentum on obliging buyers to “have some financial skin in the game” in a bid to reduce the proportion of fall-throughs.
MHCLG figures suggest that 25 to 33 per cent of transactions fall through, costing an estimated £270m per year. “It doesn’t feel the system’s right” when that scale of fall-through is the norm, Prior explained: he says a trail reservation agreement process has been agreed with the Law Society and may be tested in a part of the market in future.
‘Log Books’: Prior was at pains to stress that there was no intention to reintroduce a version of Home Information Packs which had been widely criticised by agents and others in the property industry.
But he said it was clearly wasteful that substantial sums were spent gathering a wide range of useful information on a home during the sales process, only for it to be effectively thrown away and compiled again at additional cost by others attempting to purchase the same home. Some form of log book would be useful, he insisted.
E-conveyancing: The audience of some 400 agents heard that this was a difficult area because there were 4,100 conveyancers operating individuals or as companies, at very different levels of technology.\
Work is underway now looking bat ID verification procedures, digital signatures and other PropTech to help the conveyancing element of house moving operate more cheaply and more transparently.
‘How To Buy’: As has already been revealed by the MHCLG, there are plans to build an online guide to prospective house buyers, along the lines of the ‘How To Rent’ guide for tenants that has become a mandatory part of the new tenancy process.
Prior says this would give useful questions for prospective purchasers to ask agents, developers, auction houses or others selling property. The first version of this document is likely to appear later in 2019.
Prior, who also spoke on a conference panel of industry experts chaired by Estate Agent Today editor Graham Norwood, suggested that the scale of reform and the different procedures required by different stakeholders was such that individual measures may be announced separately, starting this year, rather than in one ‘big bang’ change.