Housebuying and selling in England and Wales is quirky, but to interfere with the system in a fast-rising market such as today’s is to invoke censure. The government’s seller’s pack idea is agitating the market. By Paul Strohm
The DETR has proposed that, before putting a home on the market, its vendor will be legally required to put together a standard pack of information for prospective buyers. This information would normally begin to flow once a deal has been struck.
The seller’s pack (see box) will include items such as title documents, searches and replies to preliminary enquiries but, more significantly, a home condition report produced by a surveyor.
Bristol trial
Volunteers, assured of no additional costs, were sought in Bristol (see Focus, p101) and the pilot study, which started officially in January and will run to the end of the summer, has already produced results which housing minister Nick Raynsford says are encouraging – three-quarters of sellers were said to be confident that the sale will complete and nine out of ten believed that the seller’s pack would make the sale quicker than normal.
This belief appears to be borne out by events. Preliminary findings showed that the time taken from the acceptance of an offer to exchange of contracts ranges from eight to 32 days, which the DETR says compares with 62 days taken on a typical sale nationally.
But what of those whose job it is to provide the new packs? Maggs & Allen is one of the six firms nominated to undertake the “home condition inspections” which form part of the seller’s pack. So far the firm has undertaken 28 such inspections and, according to managing partner Tim Maggs: “Surveyors agree that the survey is too brief. It is fine on modern stock but all of us question if it is suitable for Victorian properties.”
And he believes that there is some increased liability for the surveyor. “At the moment, the way the report is currently formatted we are a little exposed.”
Martin Haigh of Haigh & Sons , one of 13 agents involved in the pilot, argues that most people would expect to commission their own survey anyway, but he too says changes could be in order. “If they’re relying solely on the vendor’s survey we need to provide one they can rely on,” says Haigh.
In defence of the report the DETR points out that, under the existing system, only 20% of purchasers obtain a Housebuyer’s Report or full structural survey – the remaining 80% rely on their lender’s valuation. It contends that at least the condition report is more thorough.
Time-sensitive
The Bristol experiment has taken place in a buoyant market. But Richard Harris of solicitors Richard Harris & Co and chairman of the Bristol Law Society property committee fears that, in a slower market, vendors could have to spend more money ahead of a deal. If a sale is delayed, the searches and condition report could become out of date in the time it takes to get to completion, making renewal necessary.
A related issue that Harris has taken up with the government is that each local authority charges different rates for searches resulting in a range of between £70 and £150, depending upon where in the country a house is located. “I think they should be standardised across the country and at a reasonable rate,” he adds.
The costs of the seller’s pack have to be kept at a reasonable level, says Harris. Although the government has met the additional costs to individuals participating in the Bristol pilot study, Harris expects the notional price to come down when the scheme is adopted nationally. “The cost will come down from £325 plus VAT. I can’t see that figure sticking if the thing goes live.”
And the present buoyant market has shown up limitations in the Bristol pilot. James MacKenzie of estate agent Ocean says: “People tend to go out and find a property they want and then put theirs on the market.” They are not prepared to wait while the seller’s pack is prepared.
All acknowledge that this problem will not exist if the seller’s pack becomes a universal requirement.
But the benefits are apparent. Haigh says the pack provides an obvious message that the vendor is serious while making it less likely that the purchaser will come back and try to renegotiate the price.
MacKenzie adds that, in the recent past, there have been a lot of “fickle” moves: someone decides to sell, then quickly changes their mind when the agent has already incurred costs. “The great thing with the seller’s pack is that it actually proves people want to sell.”
MacKenzie believes the pack will increase efficiency. “If you’ve got deeds in the office – or the solicitor’s office – then you know from the outset the true situation. As estate agents we can provide a far better, more efficient and understanding service.”
Lender acceptance
Acceptability to lenders will be one key to the success of the scheme. Only two lenders have been involved in the Bristol pilot – Bristol & West and C&G – although naturally buyers have been free to choose their own. A spokeswoman for Bristol & West says that the seller’s pack helps, but at the level before the building society or bank becomes involved.
However, she adds that the condition survey could help to speed things up if it is produced to a standard that is universally acceptable. “The ones done so far have been by valuers on our panel, but going forward it is possible that some may not comply if they are not on the panel of valuers. They may not have all the details.”
The seller’s pack is likely to become a fact of life. The DETR acknowledges that the Bristol pilot is an experiment and that improvement will be necessary before the scheme is rolled out nationally. There are indications that the seller’s pack could be good for business. However, Haigh says he has dealt with 14 – although the original allocation was 10 per firm – and in a number of cases vendors have approached his firm because it is involved in the scheme.
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The DETR says |
The seller’s pack is designed to speed up sales and improve confidence in the process by providing:
For leasehold properties it will also contain:
In the Bristol pilot scheme the DETR is paying for the cost of the pack beyond those costs that would normally be incurred so that there is neither financial incentive or disincentive to participating. |
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Packed in Issues that face those using the scheme In December 1998, the DETR published its consultation paper, The key to easier home buying and selling, followed in October 1999 by the announcement of a package of measures. The five main reasons behind the seller’s information pack were timing, gazumping, consumer satisfaction, the role of professionals and cost. In London, numerous estate agents still consider this governmental initiative as a direct attack on their profession and a punishment aimed at industry players so frequently criticised by consumers. Several concerns have been raised:
Despite the concerns, many can see the advantages of the proposal:
A major PR campaign is planned to take place when the Seller’s Information Pack becomes statutory in 2003, to educate consumers and professionals. Source: Moretons Property Specialists, based in London, SW1 |