The Government has announced a set of policies billed as “the biggest shake-up to the homebuying system” in England’s history – but experts have reacted skeptically as to whether they will have the planned impact.
Changes highlighted include requiring property sellers and estate agents to provide more information when a home is listed for sale, which it says will reduce the need for buyers to carry out searches and surveys.
A listing would also need to include specific details about the condition of the home, leasehold costs and whether the sale would be part of a property chain.
At the same time, buyers and sellers would have the option to sign binding contracts that would end the practise of parties pulling out of agreements months into the sale process.
The Government claims the reforms could cut the buying process by four weeks and save first-time buyers £710 pounds on average.
It told The i Paper it arrived at the figure through a combination of reduced transaction failures, improved competition, and the costs of some responsibilities being transferred from buyers to sellers.
But here’s what experts think about whether or not the claims stack up.
Will the changes save buyers £710?
Experts have played down the Government’s £710 figure, and cast doubt on whether the changes will save first-time buyers this much money.
Emma Fildes, a buying agent at Brickweaver, told The i Paper: “I suspect it would all in all cost the buyer the same as it would have anyway once the seller has included their costs.”
Nick Mendes, a mortgage technical manager at John Charcol, said the figure was not “implausible” but “rested on quite a lot going right”.
“If fall-throughs are genuinely halved and fewer buyers pay for surveys or searches that never lead to completion, then buyers should see material savings,” he said.
But he said in practise, the size of the benefit will depend heavily on how robustly upfront information is collected, and whether binding contracts are widely adopted.
He also added that because of the responsibilities being added to sellers rather than buyers, sellers may “front-load more expense” before listing.
“Some of that may be reflected in asking prices,” he added.
Will it cut the buying process by four weeks?
Mendes said the idea that the changes could cut the buying process down were “feasible in theory”.
“Today the typical deal drifts because so much basic information only surfaces late in the process. If sellers must provide tenure details, leasehold terms, title documents, and property condition reports upfront, that does eliminate many of the bottlenecks,” he said.
He pointed out that in Scotland, where many of the changes being proposed already exist in part, property transactions are a lot quicker.
Research by Property Solvers found that it only takes the average property in Scotland 12.57 weeks to move from listing to being marked as sold by the Land Registry, compared to 16.11 in England and Wales.
But estate agents have questioned whether the extra information required to list a property may mean that the delay comes before a property is put up for sale, rather than after a sale is agreed.
“Under the current system the time delay sits between the offer acceptance and exchange period. The Government’s proposals will simply shift this delay to the period before any property can be launched to market,” said Andrew Groocock, chief operating officer at Knight Frank.
Could it gum up parts of the housing market?
Experts have warned that some of the reforms may stop some types of sellers from listing their properties.
Peter Stimson, director of mortgages at lender MPowered, explained: “The current market is tough for sellers in many parts of the country, and it’s possible that the extra costs could prompt some discretionary sellers to press the pause button.
“For example people who are downsizing, and not in a hurry to move for a new job, may decide to wait and see if the Government’s new scheme fizzles out.”
He drew comparisons with a Labour implemented scheme in 2007, known as the home information pack (HIP), which he said drew an “uncanny resemblance” to current proposals, but was eventually scrapped.
Mendes added: “Some homes may struggle to come to market if sellers are reluctant or unable to cover upfront reporting costs, particularly at the lower end or in distressed sales.”
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