Improving the House Buying Process in England for Sellers and Buyers
Government research released in 2017 showed that 69% of sellers and 62% of buyers that experienced delays during a property sale reported some kind of stress because of the delays.
The research also found that:
- 46% of sellers had concerns about a buyer changing their mind after making an offer
- 24% of sellers would use a different estate agent if they were to go through the process again; and
- 32% of sellers and 28% of buyers were dissatisfied with the other party’s solicitor
When they released these findings, the Government invited people to submit their views about how the government could make buying and selling homes in England cheaper, faster and less stressful.
Former Housing Secretary, Sajid Javid MP, said:
“We want to help everyone have a good quality home they can afford and improving the process of buying and selling is part of delivering that. Buying a home is one of life’s largest investments, so if it goes wrong it can be costly. That’s why we’re determined to take action to make the process cheaper, faster and less stressful.
“This can help save people money and time, so they can focus on what matters – finding their dream home. I want to hear from the industry on what more we can do to tackle this issue.”
Over 1,200 people submitted their views to the Government and after reviewing the responses received they decided there were three key areas of the house buying and selling process that need improving:
- A better consumer experience
- Reducing time from offer to completion
- Reducing failed transactions
So how are they planning to achieve this?
Increase consumer knowledge of the process
Buying a home is a complicated process with lots of people involved such as the seller, buyer, estate agent, conveyancer and mortgage provider. Making it difficult to understand what should be happening and who should be doing at different point of the sale. This is especially the case if you’re a first-time buyer or haven’t moved house in a few years.
So the Government created ‘How to Buy’ and ‘How to Sell’ guides that were initially published in May 2019. These guides will help you navigate every step of the property transaction process and they’ll help you understand your responsibilities and who you should ask if you need help.
Professionalise estate agents
You may be surprised to hear that you do not need to hold a qualification or have previous property experience to start working as an estate agent.
The Government are going to consult on whether qualifications should be mandatory for estate agents and they have suggested that legislation is likely to follow.
Transparent referral fees
Did you know that if you take up a service from an estate agent’s suggested mortgage provider or conveyancer, that the agent may be getting paid a fee for making the recommendation?
In the new proposals, estate agents would need to make sure that any of these referral fees are detailed upfront to help you make an informed decision about whether these services are the right choice for you.
The National Trading Standards Estate and Lettings Agency Team (NTSELAT) have been given the task of monitoring whether estate agents are disclosing these fees. In February 2019, new guidance was released explaining that agents need to be clear and transparent about any fees they may be earning.
So, if you’re a buyer or seller and the agent is making recommendations for services don’t be afraid to ask why they are making a referral and whether they are earning any fees!
The guidance is going to be reviewed in 2020, to see whether transparency around these fees has been achieved.
Increasing enforcement of rogue agents
The Government want to strengthen the NTSELAT so they can effectively tackle the minority of rogue agents operating in the industry and make sure that all agents are complying with consumer protection laws.
Making more information available up front
To make sure properties are sale ready’ when they go to market, the Government are encouraging the sellers to provide more information up front such as any planning permissions, certificates for any work done and previous searches up.
The ‘how to sell’ guide will be used in the short term to help you understand what information you need to collect together. In the longer term, ‘property passports’ could be developed that would hold all of this information.
Speeding up local authority searches
Response times to search requests can vary considerably across the country and can add weeks into the time it takes to buy or sell a house.
The new proposals set an expectation that local authorities should respond to search requests within 10 working days and if they fail to meet the targets the Government may take action against them.
In England and Wales, it takes an average of 8 to 12 weeks to go from offer to completion and the Government want to make sure this process takes weeks instead of months.
Encourage buyers to get a Decision in Principle
A Decision in Principle is a certificate from a mortgage lender that says ‘in principle’ they will lend the buyer a certain amount of based on some basic information.
Through the ‘How to Buy’ guide, the Government will try to make it clear that if you’re not a cash buyer you should get a Decision in Principle from your mortgage lender before you start house hunting.
This will help set your budget and show the estate agent will show that you have the funds to complete the purchase.
Reducing failed transactions
One of the main areas of concern from the Government’s initial announcement was gazumping and they want to encourage the use of voluntary reservation agreements to help prevent this.
Gazumping is where a seller accepts an offer from a buyer, only to later reject it in favour of a higher offer from a new buyer before the contracts have been exchanged.
A Reservation agreement is a contract which will increase the level of commitment between a buyer and seller earlier in the process. It will help provide more certainty and reducing the risk of gazumping.
Over 65% of all buyers and sellers are worried whether they will make it to completion following an offer being accepted.
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