House sellers will be forced to disclose problems with their homes before sale under plans by the Government to cut costs for buyers and speed up purchases.
The plans – which the Government is billing as “the biggest shakeup to the homebuying system” in England’s history – could also see buyers and sellers entering into “binding contracts” aimed at stopping sales from falling through.
At the heart of the reforms is a new requirement for sellers and estate agents to provide buyers with vital information about a property upfront such as the council tax band, EPC ratings, building safety data, standard searches, property condition assessments tailored to property age and type, planning consents, flood risk data and chain status as well as floor plans.
The Ministry of Housing, Communities and Local Government (MHCLG) says sellers and agents must publish information from searches and surveys before a property listing is published and that a listing would also need to include specific details about the leasehold costs and whether the sale would be part of a property chain.
This would allow buyers to make better decisions before making offers and help cut the number of transactions falling through.
BINDING CONTRACTS
At the same time, buyers and sellers would have the option to sign binding contracts. This could end the practice of parties pulling out of agreements months into the process, costing families heartbreak and hundreds of pounds.
The Government claims the reforms could cut the buying process by four weeks.
Reforming the UK’s broken system of property transactions is a worthy goal – and one that we’re fully behind.
Steve Reed, the Housing Secretary, is right when he says “Buying a home should be a dream, not a nightmare.” It’s great to see the Government trying to reform the system. We need to make transactions faster and more certain.
But.
The UK has a terrible track record when it comes to big technological set-pieces. Some of you will remember Tony Blair’s attempts to digitise the NHS and create a single, central electronic care record for patients across the country, connecting GPs to hospitals for secure, audited access to records.
“Initially budgeted at around £6.2 billion, it failed to deliver.”
Initially budgeted at around £6.2 billion, it failed to deliver its goals and was dismantled in 2011 after nearly a decade of issues, with total costs of £12.7 billion.
Now, that was a while ago. But if you look at what held that project back all those years ago, you’ll see why I might sound a note of caution today.
COMPLEXITY AND POOR ENGAGEMENT
Problems included the government ignoring the system’s complexity, poor engagement with stakeholders and end-users (leading to systems that didn’t meet practical needs) and a basic underestimation of risks in large-scale IT projects.
There was a great deal of rapid technological obsolescence, inadequate change management and poor contract mismanagement (including Accenture’s 2006 withdrawal with minimal penalties despite clauses allowing for £1 billion in liabilities). The Public Accounts Committee and National Audit Office called it one of the UK’s worst public-sector contracting fiascos.
“Last time the industry spent a lot of time and money preparing for HIPS – only for the rug to be pulled.”
And don’t forget we have been here before. Last time round, the industry spent a lot of time and money preparing for HIPS – only for the rug to be pulled on that initiative with no alternative in place.
So while Steve Reed’s ambition is completely laudable, you can see why I might not be entirely sure it will run without a hitch.
FUTURE PROOF
What can those brokers or agents involved in the house buying process do to future proof themselves in case the project doesn’t make it?
Well, they should embrace their own digital tools and invest in their own technology. This is certainly paying off for HouzeCheck: the average time it takes to get a report completed and delivered is between 2¾–3 days (not bad considering a building survey takes 1 day to complete).
Indeed, we have completed a valuation on the same day it was ordered. While we had to work hard to ensure the surveying process runs so smoothly, I like to think we’re doing our bit and that it’s paying off.
LOWER THE LEVEL OF UNCERTAINTY
Equally, it’s possible to lower the level of uncertainty in a transaction by locking in potential buyers – even without binding contracts. One of the benefits of buyers paying for a survey is that the sunk cost helps lock them into the deal.
Steve Reed’s reforms could transform UK homebuying, slashing delays and heartbreak with upfront disclosures and binding contracts. Yet, the shadows of previous government digitisation debacles loom large.
So, I would sound a note of caution before we put all our eggs in this digital basket. Brokers and agents shouldn’t wait for government to save the day – they should embrace tech to speed up the process and develop their own strategies to help secure deals. Let’s make the dream of homeownership a reality, not another costly nightmare.
