We reported recently on the campaign by The Times newspaper to make house sales and purchases easier, quicker and cheaper in England and Wales.
Adoption of the system used in Scotland is often suggested as a solution to the faults in the system south of the border. The Scottish house buying process is often held up as superior to England’s, principally because any offer by a potential buyer is made on the basis that this is a binding offer, resulting in far fewer house sales falling through.
In Scotland a home report is made available to buyers as soon as a property is put on to the market, reducing the need for duplicated surveys and searches and supporting the valuation figure. With the home report available from the outset purchasers are able to make an informed offer, leading to smoother, faster transactions. The home report generally includes a survey of the property, an energy performance certificate, and a questionnaire giving details of any past issues. This avoids the need for each prospective buyer to have their own report prepared, and highlights straight away any faults and issues which might have caused them to withdraw from the purchase later on. This transparent approach to information on the property often means that contracts, known as missives north of the border, can be exchanged in under four weeks if the buyer has finance in place.
The Scottish system has genuine merits, but comes with faults too. The oft-quoted advantage that once an offer is made it becomes legally binding is actually incorrect, since an offer is only binding once missives have been exchanged. Prior to this either party can walk away.
Property purchases in Scotland do fall through, but receive much less publicity than in England. It may be that since Scotland is a smaller market property chains tend to be shorter and transactions take less time, leading to the perception that Scotland has a smoother house buying system. It is the length and complexity of the chain in England that often defines how an individual property transfer will work out. Unfortunately not everyone in a chain will be honest and open, causing buyers to pull out once misleading information is revealed, thereby disrupting the whole purchasing chain.
The obligation on sellers to provide the home report is also not without drawbacks. Not only will it cost them between £700 and £2,000 to produce, but the survey information it provides is fairly basic. Potential buyers may well choose to commission their own in-depth survey for additional peace of mind.
In a move to speed up the information available to potential buyers in England the Law Society has announced a trial to collect some of the details provided on the TA6 property information form in digital format. This would then be made available to buyers when the property is put on the market, rather than after an offer has been accepted. Data on the form includes building regulations compliance, planning applications, provision of services, flood risk, and other items such as septic tanks and Japanese knotweed. Other initiatives include the creation of online digital logbooks for properties on the market, aimed at giving upfront information to estate agents and buyers about properties of interest.
Politicians too are becoming more involved in trying to find solutions to problems in the housing market. As part of their study called A Fair Housing Market for All, published in March, an all-party group of MPs highlighted the need for “online platforms to reduce the cost of and time taken to complete transactions and reduce the number of failed sales. The Government should consider mandating better information on leases, service charges and enfranchisement for Shared-Ownership purchases.”
The UK housing market is complex and fragmented, so there is never going to be a simple solution to all our problems. The best we can hope for is that many small steps and improvements will eventually add up to a system that meets our collective needs in the years to come.
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