How greater transparency will help prevent sales falling through
Buying and selling a property can be one of life’s most stressful and time-consuming milestones – but a new push for transparency in the housing market could speed up sales and reduce the number of abandoned transactions.
Estate and lettings agents have been ordered to improve the amount of upfront and “material information” they provide to potential buyers and renters from the end of this month. It typically takes up to six months for a sale to go through, according to the View My Chain online tool, including listing times, mortgage applications and the legal conveyancing process.
Property website Rightmove says it currently takes 145 days on average for a sale to complete once an offer is accepted, while agents say around a third of property transactions fall through per year.
A transaction can collapse for a variety of reasons, such as if concerns are raised in a survey, or if the conveyancing process brings up issues about restrictions on a property or unclear boundaries that could spook a buyer.
Speeding up and securing sales
To help address this, agents will be required from the end of the month to display a property’s tenure information – such as whether it is leasehold or freehold as well as council tax information. Sales listings must also display the price and rentals must show the monthly rent and deposit required.
Industry regulator the National Trading Standards Estate and Letting Agency Team, which has introduced and will enforce the rules, has also said that only including “price on application” in listings may breach consumer protection rules that say agents mustn’t mislead buyers.
At a later point, Trading Standards plans to introduce a requirement for agents to display utilities relevant to a property, as well as more detailed information – such as if a listing is in a high flood risk area, or if there are legal restrictions on adaptations that can be made to a property.
Paul Offley, compliance officer at estate agency network The Guild of Property Professionals, suggests providing more upfront information will reduce the number of fall-throughs and speed up transaction times, as much of the legal work and document searches will have been done.
Independent estate agent James Du Pavey says anything that can help a buyer to make an informed decision at the earliest opportunity is positive.
“The level of information provided by sellers has always been a bit of a grey area, with some agents choosing to share more than others,” he says.
“In my experience, if a buyer has questions answered at the very
initial enquiry, it paves the way for smoother transaction.”
Campaign group the HomeOwners Alliance backs the move. “It will make a big difference for sellers to get their ducks in the row,” its chief executive, Paula Higgins, says.
“For buyers, it means you have that information upfront before you invest with your heart at a viewing. Sellers may have to instruct a conveyancer earlier so any problems in a legal property title can be sorted, but it will help address issues that would have come up later.”
Back to the future
This isn’t the industry’s first attempt at upfront information. Home Information Packs (HIPs) were introduced by the then-Labour government in 2007, making it mandatory for sellers of homes with three or more bedrooms to provide documents such as an Energy Performance Certificate, title and leasehold information.
Agents complained that this held up the market as it took weeks to compile and meant buyers were reluctant to make offers if it then meant they had to prepare a pack for their own property.
HIPs were scrapped by the Conservative and Liberal Democrat coalition in 2010 – but now it is hoped that the advances in technology and wider availability of digital documents will make it easier to provide upfront material information.
Home hunters will start seeing the information on listings through agent websites as well as on popular property portals such as Zoopla, OnTheMarket and Rightmove from this month.
Serious sellers and bona fide buyers
Charlie Lamdin, founder of estate agent finder website BestAgent, said more upfront information could ensure more committed sellers. There may be downsides though, he warns, as it could deter people from testing the market, which could reduce the already low amount of property available for sale.
“If you are a committed seller who needs to move, then providing as much information upfront as possible will speed things up,” says Mr Lamdin.
“It could also be better for buyers as it will show problems sooner.”
He says council tax and leasehold material is easy to obtain and provide but other upfront information that could come later, such as revealing legal title restrictions, could be harder to find. “An agent could also help access this information but there is a question about who pays,” he adds.
“A high street agent is already doing a lot of work and will only get paid if the property sells. This is where a knowledgeable conveyancer can help and not just relying on a firm your agent refers you to.”
Bryan Mansell, of Gazeal, which provides reservation agreements that lock in offers and prevent either side from pulling out unless they pay a fee, suggests buyers should also prove their commitment in other ways, such as through a mortgage decision in principle.
He says upfront information is good but warns that extra education could be needed as a buyer may not understand the legal terms they are reading so may be needlessly put off.
“The public could misread the information or make a lower offer taking into account information they don’t understand,” he adds.
“Transparency is always a big plus but it is going to come with some confusion and a period of adjustment.”