New energy rules for those selling and buying homes

The rules on the display of energy ratings (Energy Performance Certificates (EPC)) for homes have changed.

Those advertising property such as estate agents must now (as from the 6th April) :

• Include the 1st page of the EPC for all sales and lettings properties in printed and electronic property particulars.

• Have ordered an EPC prior to marketing and to produce  it within 7 days of marketing

If you are looking to market or let your property it is important for you to make sure your agent is complying with these requirements. 

Your agent must include a copy of the entire front page of the EPC document and not just the EPC graph as has currently been the case.  This includes any literature containing particulars of the property to be marketed including electronic communications such as emails.

Property particulars are defined as including at least two of the following elements:

• a photograph of the building or any room in the building,
• a floor plan of the building,
• the size of the rooms in the building,
• the measured area of the building, or,
• the proposed rent in relation to a building being rented out,.

This may therefore (depending on how the new rules are interpreted) extend to the pictures and particulars of your home that appear in the agent’s window or in the local paper.  As for rentals the new rules seem must clearer and there seems no getting away from the requirement to display in any advertisement the front page of the EPC.

Almost all lettings adverts will include a property photo and the rental price, and thus it will be hard to avoid this.

The size of the EPC extract shown in the particulars must be sufficient for the details to be read – don’t allow the agent to print it very small nor to try and circumvent the rules by simply adding a link to the EPC.

Interestingly the first page of the EPC contains the full address of the property.   Agents do not normally like to display the full address in literature as this provides marketing opportunities for competitors.   Unfortunately there now seems no way around it and the address must remain within the published first page of the EPC.

What about properties appearing on agent’s websites?  Arguably as there is a picture of the property and often other particulars such as room sizes etc the first page of the EPC ought to be reproduced possibly in full rather than through clicking on a link.  

Rightmove it is reported recently emailed all of its agent clients and made the claim as quoted below:

"Rightmove is a property advertising website and the information displayed on Rightmove by all our member agents takes the form of property adverts and not property particulars. This is clearly stated at the bottom of every page on Rightmove that displays the details which have been provided to us by the agent about a specific property and will continue to do so.

It is our view that the new regulations do not place any additional obligations on Rightmove, although you may wish to consider separately how the new regulations might affect your own company website. We do, however, understand that some of our member agents may wish to display the EPC as part of the property advert on Rightmove. Rightmove does provide the functionality for you to do this if you so wish."

I do not necessarily agree that is correct; looking at the new rules and the elements that must exist for the publication of the EPC it is difficult to see how one can in this way distinguish ‘adverts’ from publication of property particulars.  Rightmove publishes pictures and particulars of property and this is no different from details published in newspapers or in an agent’s window.

Let’s not forget the purpose that lies behind the rules, and that is those looking for a property to buy should be able when searching to have immediate access to the energy rating for that property.

The problem is that as with the fated Home Information Pack some agents are reluctant to go to the expense of ordering and paying for an EPC until they know a buyer has been found for the property.  They view these requirements as an unnecessary hurdle to the marketing of the property.

My advice to those selling and renting is to always ensure that any agreement reached with an agent to sell or rent you home includes a clause that the agent orders and pays for the EPC. If you are buying always insist on seeing the EPC before viewing a property and if the EPC’s first page does not appear in the particulars of sale wherever these might appear always ask for an explanation.

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Conveyancing process needs urgent reform

What can be done to make moving home faster and less expensive?  

This is a burning question and one that has yet to be addressed by Government despite the fact we currently face a major housing crisis and a situation where first time buyers are finding it increasing difficult and expensive to find a home.  The problem facing the first time buyer is likely to increase shortly with the withdrawal of the stamp duty concession and the forthcoming changes to how mortgages will operate in the future.

A brave Labour Government sought changes, the first since 1925, with the introduction of the doomed home information pack, but this was shot down in a blaze of glory by the Coalition Government when it came to power in May 2010.  Unfortunately in the rush to score political points no one seemed to care that by removing this attempt of reform it left the door open once again for the return of the problems associated with aborted transactions, increased costs and delay.

In fact, we are still left with an antiquated process and one that cries out for immediate reform.  The question is whether the current Government has the courage and inclination to do anything about it. 

So where do the problems lie?

Disclosure

As the law currently stands it is for the buyer to do most of the running around and to ask the seller questions because the duty to discover any problems with the property rests with the buyer.  There is no duty on the seller to volunteer adverse information about the property unless asked.  This means we have this bizarre process of having to ask the seller a series of questions hoping that all of the right questions are raised.   This is often a long and protracted process and one that could be avoided if the seller was required to bear all about the property to be sold.  This could be through thee completion of forms/questionnaires, documents that could be completed when the property is first placed on the market.  

Why not get the estate agent to ask the seller to complete the form and to make this available to prospective buyers.  At least the buyer could then decide on whether a survey would be needed.  All of this would take place before the lawyer is instructed and would save so much time.

Some may argue this is a ‘HIP”.  No it is not.  There is no added expense for the seller or the buyer. The seller simply completes a form knowing due to a change in the law that the duty to disclose rests with him or her and this forms part of the marketing process.   It would save time, it would save money as the transaction could proceed that much quicker and it would mean both seller and buyer standing far more chance of completing the transaction than they do at present.

Searches

Before the days of the HIP there were often delays in procuring searches.   Due to the shake up of Councils caused by the introduction of the HIP, most Councils have streamlined and improved service levels.   On top of this, personal search companies following the collapse of the HIP have faced a drop in demand for searches and this has led to increased competition and a vast improvement in the time it takes to deliver search results.

Search related delay is therefore uncommon.

However it is a bizarre situation that each time a property is sold a buyer is required when purchasing with a mortgage to order new searches.   This is often costly.  Often the cost of the search package is more than the fee charged by the solicitor!

In a time when the majority of the land in this Country is registered at the Land Registry would it not make sense for information on water and sewage and environmental issues to be noted on the Land Registry Title Document so that future buyers could see that at the outset and decide whether to ask the suppliers of the information whether there has been any change to the data since it was first supplied?   The cost of checking would be far cheaper than having to order a new search each time the property is transacted.

The same could apply to planning and building regulation data requiring this also to be noted on the Register the first time a property is sold and the data is disclosed.  How many times have property lawyers had to run around after planning and building regulation documents. 

On this subject if lenders could make it clear that they are not interested in planning and building documents which relate to matters of over 15 years in age this would also save time and money.  Some simple changes to the law to make it clear that no liability can arise on planning and building regulation breaches after a set period of time would put an end to this ridiculous and unnecessary paper chase.

Title defects

There will always be the occasional problem with title that needs to be addressed through insurance.  Why is it not possible that when the effect is found and insurance is taken out that there is not a requirement on the purchaser to register the insurance details at the Land Registry?  This would in terms of future due diligence save time and money and also avoid a future purchaser who may not have had the original policy passed to him or her, having to take out and pay for a fresh policy.  

Mortgages

Obtaining a mortgage offer once the mortgage is approved is no longer a reason for delay.  Most buyers receive their mortgage offer very early in the process.  The reason for this is that the lenders are issuing far less offers than they were before and therefore the paperwork of those mortgages they take on is coming through much faster.

Client Delay

Clients who sell have quiet a bit of paperwork to complete and it always amazes me that responsibility of over seeing this rests with the lawyer.  I am not sure why the selling agent could not ask the seller to complete these when the agent is engaged. It would save a lot of time and would quicken the process.

Solicitor delay

I always tell my clients that I can only be as fast as the slowest solicitor in the chain.   It is frustrating when you do as much as you can to progress a transaction only to find the solicitor acting for the other party is not responding or taking too much time to respond.

What can be done to improve this?  Very little though in a climate where lender panel membership is of importance to the survival of most conveyancers perhaps lenders will in the future take a closer look at the activity and performance of panel members and be more inclined to remove members where there is evidence of   repeated ineptness.

Conclusion

I accept a change in the law to reverse the maxim of ‘buyer beware’ would involve a radical switch, however by doing this the whole process would be far more transparent, quicker and cheaper.    It would lead to the front loading of information on a sale and if the requirement to register search data at the Land Registry along with title defect insurance was also introduced this would mean a prospective buyer would have to hand before an offer is made all the information he or she would need in making an offer and thereafter engaging a solicitor.

The cost of obtaining the title information, a cost which is already met by the seller may increase due to the extra data recorded and supplied, but this would easily be off set by the saving on not having to order full searches and reduced conveyancing fees due to a more streamlined service.

What are the chances of this happening?  Remote I would say as there is too much vested interest in the process as it presently operates and you also have a Government that says on the one hand it wishes to reduce bureaucracy and save costs, whereas on the other hand it has clearly stated it is not keen on introducing regulation that could hamper an already ailing property market.   It seems to have little appetite to interfere with the process. 

So it looks as if we may be facing another 100 years of operating a slow, costly and totally unfit for purpose  home moving process.   

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

New Survey shows withdrawal of HIPs has led to a return of problems with aborted property transactions

Home Information Packs were introduced by the Labour Government in response to a high volume of feedback from the public about concern over property transactions falling through and consequential losses.

The Coalition Government decided in May 2010 to abolish Home Information packs claiming that this would instantly lead to an increase in property activity and put more money back in the hands of the homeowners.  

The likes of Kirstie Allsopp, Grant Shapps and Eric Pickles lead what became a very personal and high profile campaign to bring Home Information Packs to an end, and were often photographed unwrapping ‘red tape’ wrapped around houses.

Twenty months on the question is what has this decision achieved – are homeowners any better off and has it led to any change in the very situation that led to the introduction of HIPs?

Recent research suggests it has not. A new survey has shown that over 500,000 house sales fell through at the end of 2011, a jump of 33% from the beginning of the year.

The study also showed that property deals in the second half of 2011 were less likely to succeed than they were to collapse.

This led to homeowners incurring unrecoverable costs, running into thousands in most cases and averaging well over £5,000.

So rather than saving money as we were all told it would, this data shows that what most conveyancers knew, that without the financial commitment shown by those selling in purchasing a HIP, together with buyers not knowing anything about the legal aspects of the property before instructing a solicitor, transactions remain at a higher risk of collapsing than they did at the time Home Information Packs were in place. 

The absence of the HIP or a suitable replacement for it ,has also slowed down the sale and purchase process, which in turn has increased scope for sellers and buyers to change their mind and pull out.

HIPs may not have been the ideal answer but at least the reform was one step in the right direction and had at its time of demise begun to make an impact on resolving the problem for which it was designed.

It’s a shame that senseless political football got in the way. Equally it’s a travesty that the main proponents of its withdrawal have just left homeowners far worse off than they have ever been without not even a hint of finding a different solution to what is proving to be a major problem. Grant, Kirstie and Eric we need answers please. 

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Lack of Building Regulations – Why is it such a problem when moving home?

Solicitors should always when a property is to be purchased ask if there has been any alteration made to a property, and whether planning permission and/or building regulations approval has been obtained.  At one time if no enforcement action in relation to building regulation was not taken within 12 months the buyer could proceed without fear of assuming the risk of liability.

However, in the case of Cottingham v Attey Bower & Jones [2000] PNLR 557, a firm of Solicitors were held negligent because they had not adequately investigated whether works had building regulation approval.  The building works required £30,000.00 worth of repairs and the buyer’s Solicitor was held responsible for the cost of this, because it was held that even though no enforcement action had been taken in 12 months it was still open to the Council to apply for an injunction at any time.

Since this case Conveyancers have always erred on the side of caution and ask for a copy of building regulations approval for any works irrespective of when they were undertaken.   The problem they often face is that Councils do not always keep a copy of the building regulation documentation for more than 4 or 5 years.

You may ask why a Council would bother to enforce say after 20 years. Realistically the chance of action is remote, but it is not inconceivable, because if the works   later raise a Health and Safety issue then the Council would probably not hesitate in taking action.

If you are a purchaser with a mortgage the situation is not going to be helped, because lenders are aware of this case, and always ask as a condition of the mortgage for confirmation the building approval has been obtained.  Sometimes a lender can allow the lack of building regulations to go through, if an indemnity policy, that is an insurance policy, is taken out to protect against possible enforcement action.

Insurance can only be obtained however if the Council has not been alerted to the fact of the absence of building regulation approval.  Interestingly therefore it is perhaps best at times for no inquiry to be made with the Council.

No all lenders however accept insurance.  It is down to the solicitor to check with the lender.

Insurance may not always be the answer because if there have been structural alterations undertaken, and there is no building regulation approval, then it is obviously important to make sure that the property is safe.  In those circumstances a structural survey is clearly essential and is likely to be requested by the lender.

So to recap if it’s found out there had been structural alterations, the first step is to ask the seller whether there has been any building approval.  If there is not, then to enquire about insurance, but to also give consideration to whether:-

-       The lender you are borrowing from is prepared to accept insurance.

-       Whether you are in fact prepared to accept this, because you could be buying a house that has structural problems.  Indeed it’s for this reason I always advise that a full survey should be obtained before contracts are exchanged.

Before paying for indemnity insurance please read this article by the same author:  Overuse of indemnity insurance 

By David Pett - davidpett@m-j-p.co.uk 

Time to change how we sell and buy property

It still amazes me how archaic the system is for conveyancing of residential property in this country.

The whole system is screaming out for reform and unfortunately the stakeholders that have interest in this market seem very reluctant to take any steps in an effort to improve the system and make it far more consumer friendly.

The following aspects of the process continue to frustrate me.

The old fashion and wholly unnecessary terminology used within conveyancing and documents and transfers. It is a wonder how anybody including lawyers can understand some of the clauses that I have come across. There is a need for these documents to be written in plain English and structured in such a way that they are easy to follow. Those working within the commercial contract sector should be brought into help to bring residential conveyancing documentation into the 21^st Century.


The significant difference in approach adopted by conveyancers spread around the country. Some belong to local protocols others belong to national protocols and we also have the Law Society protocol that is often cited. Why on earth can we not all operate under the same protocol and why has the Law Society allowed this crazy situation to continue for so long?


The same applies to Contracts. I come across so many variations for the standard conditions of sale and just do not understand why the terms and conditions cannot be the same for each transaction unless of course it is a leasehold or other common variation.


The endless pre contract enquiries that are sent out. Surely again questions about the title, about the search results could be cut down and the onus put on the seller to complete standard enquiries as part of the contract pack.

There must exist a simpler process and one that would make it far less expensive and a lot quicker for the consumer. It amazes me that the Law Society has never attempted as far as I am aware to put pressure on the government to look at this area of law and to put forward proposal for reform. It is difficult I know to set out rules when a lot of the practicalities rest on completion dates, mortgage offers etc but surely something can be done and done very quickly to uniform the documentation and make the process a lot simpler and easy to follow.

I just wonder whether solicitors have  a vested interest in creating the illusion that there is far more involved in the conveyancing transaction then there really is so as to justify their fees.

Having said that bearing in mind how low fees are now I doubt that this observation could be regarded as valid. If anything the fact that the fee scales have come down makes it even more important for the process to be simplified and made quicker.

I do not profess to have the answers but I am more than happy to be involved in finding a solution. The Labour government have the courage to introduce home information packs and although the legislation was flawed it did at least present an attempt to make the process quicker and indeed succeeded to a certain extent in speeding up the transaction.

I still find it incredible that the last set of real reform  made to the conveyancing process  happened  back in 1925.

The new Law Society Quality Conveyancing Scheme is designed as I understand to improve standards within the profession and although I still have reservations as to whether it will achieve its desired objective, it does anger me to think that so much time has been put in to putting the scheme when the resources might have been better diverted into reviewing and putting together proposals for the long overdue reform to our residential conveyancing process.

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Housing reviews announced

It’s taken the demolition of an industry, some of the worst trading conditions for decades but finally its seems our politicians are beginning to wake up and acknowledge that the housing market is in a complete mess and is in need of reform.

As to when it is likely we will see measures introduced it is not known, though with today’s announcement that Civil servants in the Communities and Local Government department are to carry out a review of the private housing market there is at least some glimmer of hope that change may happen sometime in the future.

The Coalition’s review will be led not by housing minister Grant Shapps but by Oliver Letwin a man whose ideology is unlikely to allow him to subscribe to any change that would involve the imposition of regulation.   

It is not known what areas the review will cover though there are reports in certain publications today that suggest it will cover house building and the state of the housing market.

At the same time it seems Labour will carry out its own review led by Caroline Flint, shadow CLG secretary.  It will be called ‘How do we meet families’ aspirations for good housing and a good home?’ and will last for a year.  It will cover all aspects of housing and interim results are due this summer.

Love or hate it the home information pack legislation represented a brave and progressive move on the part of the Labour Party, a move that will probably not be seen or even attempted for quite some time.

My concern is that for any change to take place and indeed survive it is essential that policy should be conceived with cross party support as without this we will inevitably witness a repeat of the shameless way the Coalition Government put ideology in front of consumer interest when it threw the conveyancing process back in time with the abolition of the home information packs. 

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Another volume conveyancer goes into administration

One of the largest players in the Home Information Pack industry, LMS, is reported  in Inside Reporter to have gone into Administration as well as being the subject of a management ‘buy out’. 

LMS had prior to and during the HIP regime become one of the largest conveyancing panel managers in the country.

Insider Media reported on Friday that:

“About 100 jobs have been secured at Ellesmere Port conveyancer LMS Holdings after the business was bought out of administration.

It is stated that LMS has experienced a “difficult trading environment which led to a financial restructuring”.

LMS Group Holdings, which is based at Cheshire Oaks Business Park, reported sales of £54m in the year to 31 March 2009 and a pre-tax loss of £3m.

Although no one is making a direct connection it seems that the sudden and wholly unnecessary complete withdrawal of  Home Information Packs in May 2010 seem to have had some bearing on the fate of this business.

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk