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TODAY'S OTHER NEWS

Buying reform could slash transaction time by almost 30% - claim

Reforms to the house buying process in England and Wales to bring it more into line with Scotland could slash the typical transaction time by almost 30 per cent according to new research.

A quick sale company, Property Solvers, has analysed what it claims to be the largest capture of house sales data of its kind, measuring the moment a property is listed on Rightmove until the point at which it is marked ‘sold’ at HM Land Registry. 

Residential sales across Scotland took an average of 12.57 weeks to sell compared to 16.11 weeks in England and Wales – representing a difference of over 28 per cent.

In Paisley, in the 12 months to the start of this month, it took an average of eight weeks for 251 properties to sell. 

Sellers in Glasgow and Edinburgh were waiting an average of between 13 and 14 weeks respectively from marketing their properties to completion.  

The slowest Scottish locations were Motherwell and Kirkcaldy where 732 sellers waited an average of 15 weeks. 

In England, the research pointed to a relatively small number of sales in Central London taking between 10 and 11 weeks.  

However, the majority were taking at least five weeks longer.  

In Southend-on-Sea, Torquay, North London, Watford and Southall in west London, 2,054 sellers were waiting for an average of 18 weeks.

The author of the research, Ruban Selvanayagam, says: “It’s evident that the English and Welsh conveyancing process could learn some key lessons from Scotland.

“It’s the solicitors that typically take responsibility for marketing Scottish homes up for sale as opposed to estate agents in England and Wales. Prior to getting homes on the market, by and large, Scottish sellers are required to deliver a Home Report. In addition to an energy performance certificate, a property questionnaire must also be forwarded.”  

He continues: “The seller will also supply a ‘single survey’ which the buyer can present to the lender for mortgage approval. Provided the surveying firm is on the lenders approved panel, there are usually no obstacles. This minimises an increasingly frequent issue in England and Wales of down-valuations that result in sellers pulling out or attempting to renegotiate the final purchase price.”

Selvanayagram says that although the Home Information Packs had limited success in England and Wales over a decade ago “there is a strong argument that sellers should be presenting their homes in a more transparent way.”

He states: “In a competitive market, to avoid the silly games that can often occur in the bidding process, buyers interested in properties above the asking price are invited to make sealed bids within a set timeframe.

“Once a legitimate bid is won, similar to England and Wales, the mortgage offer is confirmed and the conveyancing process starts.  However, in Scotland, although a number of conditions are often applied, the exchange of documentation earlier in the process facilitates a much smoother transaction.  In England, there is no legal commitment to the sale until contracts have been signed and exchanged.”

The research plays into current government thinking about reforming house buying.

In January the Ministry of Housing, Communities and Local Government revealed that politicians and officials were studying a ‘model’ two page reservation agreement drawn up by a law firm as a possible way of slashing fall throughs and speeding up transactions. 

An announcement is expected soon on a pilot project.

The government has also hinted that it is looking at the idea of property ‘log books’ - although it insists it has no intention of reintroducing Home Information Packs which had been widely criticised by agents and others in the property industry a decade ago. 

The government has already clamped down, via new guidelines from the National Trading Standards Estate Agency Team, on what it considers to be unfair and unreasonable referral fees during the property purchasing process.

  • Peter Ambrose

    Have I missed something here?

    Headline says 30% time saving but article says "we should do the same as Scotland and bring back HIPS."

    Is this actually news or just musings from a "quick sale company" because I am a little lost in finding any evidence of news in this story!

    Belongs to the same genre of story which says "if only buyers didn't change their mind about buying their property then we would hugely reduce the fall-through rate."

    Maybe I'm just a little fatigued by these whims of fancy when we all know what the core problem is with transaction delays ...

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    Here we go again..... For some the main issue is the sale agreed to completion time period which has got longer. Also the listing time to sale agreed time, depending on area, can be longer due to demand and market conditions. As Agents for our clients we are concerned with both ends of the transaction but we only have influence (however minimal sometimes) with the first bit - finding the buyer. Once it hits the conveyancing part well its in others hands.

    HIPS... well there's a story in itself. A relatively good idea but introduced in a rubbish market so everyone dismissed it. The concept was perfectly acceptable but should have contained a survey that ALL lenders would accept irrespective of 'Panel or otherwise'. Transaction times would reduce. Add a lock in once offer is accepted but removable if there are insurmountable problems then fall through rates may also change. Just looking at the model in Scotland isn't the only solution.

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    We need to remember that the Scottish legal system is completely different to the system in England & Wales which evolved through Common Law. The easiest way to deal with the problem is to follow what different legislatures have done in English Law countries (most of The Commonwealth - and the US persuasively) which does not include HIPS in most of the countries.

    In some Australian states, contracts are exchanged before the survey and before other inspections have been done and there is a cooling off period during which the seller cannot accept any other offers but the buyer can withdraw only if there are any adverse reports. The average time between offer accepted to completion is 42 to 46 weeks.

    In many American states, once an offer has been accepted there is a binding, written contract and between 1% to 3% of the purchase price is paid. There are certain contingencies such as awaiting receipt of the mortgage offer and having a survey carried out, but the period allowed for these contingencies is short, so many inspections are carried out before an offer is made (one of the few similarities with Scotland). The fall through rate is low and the time from offer acceptance to completion is slightly less than in Australia.

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    Manadatory HIP's, regulated by legislation, and including a Home Buyers Report are and always have been the answer to our ancient and sclerotic home moving process. All salient information required by a willing and able buyer provided up front at the cost of the seller who employs a qualified licensed estate agent to source and provide the HIP as part of the marketing process. The agent is and can remain in total control of the process right up to the point of exchange of contracts when a Notary is instructed to complete the legal property transfer and mortgage formalities. HIP's only provided to properly qualified buyers with conditional mtge offers and complete chains behind them. Whilst HIP's existed it was proved that they could be provided at relatively cheap cost and in the case of my own company on a no sale no fee basis with no caveats. The industry was not brave enough or far sighted enough to embrace the opportunity to put themselves in the driving seat and are now suffering the consequences.

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    Can we have clarity on why Property Solvers feel it is the conveyancing process that is to be entirely blamed for the time it takes to sell a property?

    The article claims they measured "the moment a property is listed on Rightmove until the point at which it is marked ‘sold’ at HM Land Registry."

    Sorry if I missed them clarify in the article, but do they mean: the time from when a property is marked 'sold stc'? Otherwise, one could blame the agent for taking a long time to find a buyer.....

  • Peter Hendry

    It's good to know that the government (despite all the other issues it has to contend with at present), is looking at ways to improve the way housing markets function across England and Wales. I would like to describe the long overdue need for this as ‘dragging the housing market into the 21st Century'.

    The article here quotes the author of the research, Ruban Selvanayagam as saying, “It’s evident that the English and Welsh conveyancing process could learn some key lessons from Scotland.”
    Well, possibly but not necessarily. EPCs, single survey reports and property log books are indeed some of the new tools which could feasibly be used for getting sales flowing once again but I say much more should be considered.

    Having let others have their say on this first, I’m having mine now by advocating a complete overhaul of the way in which houses are initially searched for, viewed and sold as well as let.

    For full details of this root and branch change you may simply Google The Hendry Solution.
    It may sound a wee bit Scots but actually what I’m proposing is nothing like their system!!

    I’d be interested in constructive comments on the website referred to, from those who may be less than happy with the current way that agents go about making sales and lettings.

    Change for the better is now overdue but it also has to be serious change, not just a small tinkering exercise. I’ve been putting forward my proposals for a while, having worked across the whole property sector spanning my 30+ years working within it. I would like to think those steeped in the workings of the estate agency industry especially ought to be able to come up with some innovative and workable suggestions too.

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