SPECIAL FEATURE: Conveyancing enters a brave new world: Protecting the consumer becomes key – Irwin Mitchell

Special Feature: Jeremy Raj from Irwin Mitchell has written an article called “Conveyancing enters a brave new world: Protecting the consumer becomes key”.

Some revolutions arrive unexpectedly with a bang, others come slowly as a direct result of concerted campaigns and a build-up of pressure. Yet others come after false starts or even reversals, creeping in while nobody is paying much attention.

The conveyancing world has had a rollercoaster time since the pandemic began, following the shutdown of the market, home working, furloughs, and the immense pressure of SDLT deadlines, with leasehold reform and building safety issues thrown in for good measure. It is hard to remember a more volatile time for agents and conveyancers within the last thirty years; not many have been focusing their attention on too much more than getting through their deals on-time and unscathed, whilst remaining profitable.

However, elsewhere others have been busy trying to lay the foundations of a better world for consumers within the home-buying and -selling process, and we are about to be launched gently into a significant change within the system, with much more forceful second and third stages to follow.

That longstanding tenet of the home-buying process, caveat emptor (let the buyer beware) is to be dealt a series of death blows, replaced with an obligation on Sellers to disclose all ‘material information’ at the outset of transactions. This is so that consumers can make much more informed decisions before making offers.

Those with longer memories will remember that we have been here before. The 1997 Labour Government came in with an ambition to revolutionise the home buying and selling process, prompted in particular, by a desire to eliminate the evils of gazumping. That practice – which in current times is rarely discussed – had been dramatically talked up in the press, somewhat excessively given that even at the height of the ‘Yuppy’ market, it affected less than one per cent of transactions.

Further studies revealed other deep flaws such as buyers being expected to commit to purchase prices via their initial offers, despite not having established crucial information regarding the property. Home Information Packs were presented as the cure-all and were enthusiastically promoted under the Housing Act 2004. The packs were intended to provide an up-front readily available sales pack including title documents, search results, EPCs and leases. However, practical issues arose, not least in relation to an unwillingness on the part of Sellers to pay for the information and reports up-front, negative press and some issues with pilot studies.

The newly-invented Home Condition Reports, which were intended to provide a user-friendly guide to consumers along the lines of a traditional survey, proved unpopular and difficult to mobilise and there were insufficient numbers of trained energy assessors, all of which contributed to a general feeling that the changes were more trouble than they were worth.

Suffice to say that by 2010, the political landscape had changed and ‘scrapping HIPs’ was a vote-winner for the new (Coalition) Government. To this day we remain in the bizarre situation that potential buyers of financial services, cars or many other products expect and receive far more detailed information up-front than home buyers do before making an offer for what is normally the most expensive purchase of their lives.

Regardless of the HIPs fiasco and somewhat under the radar, a competing set of legislation to address largely the same issue was introduced even before HIPs disappeared. In 2008 the Consumer Protection from Unfair Trading Regulations (the CPRs) were brought in as part of a Europe-wide focus on consumer protection, replacing and largely repealing the Trade Descriptions Act of 1968. Aimed squarely at protecting consumers from making decisions they might later regret, the immediate application to the home-buying and -selling process went largely unnoticed, and more importantly, unenforced.

Now though, with a recent announcement from National Trading Standards and a greater focus from the Law Society and others, all that looks set to change.

It will be a gentle start, with basic information including tenure and Council Tax required to be provided from May of this year. That will hardly raise an eyebrow with most agents, who will comfortably return to their jobs knowing they already comply. Conveyancers, generally too busy to look up from the deals in front of them, are also unlikely to sound an alarm.

However, stages two and three – implementation dates to be confirmed – will bring significantly more arduous obligations including all material information such as restrictive covenants, specific lease terms and a whole raft of information normally disclosed as part of the conveyancing process after the offer has been accepted. It is those that the industry should already be preparing itself for, and working out who will do it, when and at whose cost. The Law Society has indeed already been working on a revised up-front information form (the TA6 Part 1) and tech companies have been designated as Licensed Providers and gone through their Beta-testing. Others within the industry are also gearing up and conferences and seminars will soon follow, leading us all to the brave new world.

While it is unlikely that any will want to debate the correctness of what is being proposed, issues such as who will pay for providing the up-front information, when it will be prepared and who by as well as whether consumers will embrace the change and what the mainstream media will make of it, all remain very much to be seen. While most of what will be designated as ‘material information’ that must be provided in the next two phases is likely to be seen as uncontroversial – if cumbersome – there will also no doubt be sticking points and teething problems.

The question now is whether the conveyancing industry as a whole, estate agents and the legal profession, will embrace the change, or have to be dragged kicking and screaming into the new age. To play up to some stereotypes, my suspicion is that lawyers will largely bury their heads in the sand until forced to engage, while agents will check to see whether they can outsource the obligations and/or find a way to make some additional revenue out of it.