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.
