Introduction
December is always a good time for reflecting on the year that is coming to an end and looking forward to the new year to come. As thing stand, the one thing we can be certain about is that we will have (yet another) Housing Minister in 2024 – hopefully no more than one! The purpose of this article is not to go over old ground and dwell on the past – although we might remember how fortunate we are to have such a traditional and (generally) efficient system of conveyancing practice in the UK. There is always room for improvement however. Hopefully we shall be able to build on the considerable progress that has been made this year towards reforming the UK’s home moving process.
Material Information
It has been interesting to read the comments which followed Rob Hailstone’s article on 8 December about the full Material Information Guidance issued by the National Trading Standards Estate and Letting Agency Team (NTSELAT). All debate is useful if carried out in an open and constructive manner. Just because one person believes that something is correct does not necessarily mean that there is not an equally appropriate contrary view that may be worth considering. In my opinion, we need to put Material Information and any talk of the “return of HIPS” into some sort of context however namely that it is a good thing that prospective purchasers have better information about a property which they are interested in acquiring.
When I started out in practice, solicitors routinely helped get a property “market ready” by checking title and ensuring that all necessary documents were to hand when the transaction entered into the contract (missives) stage. No one questioned this as it was, quite frankly, no more than good professional practice. Times soon changed however – not least by the increased role of estate agents and it soon became the case that prospective sellers did not routinely consult their solicitor when they were thinking of selling – although in large parts of Scotland this remained (and remains) the case given the market share of the Solicitors’ Property Centre network. Looked at objectively however, it is, without doubt the case, that most sellers do not consult a solicitor until their property is on the market. At that point, they may well appoint another solicitor if they think they can get a better deal. These are the times in which we live.
Since 2008 in Scotland, the vast majority of properties coming to market must have a Home Report. It is the responsibility of a seller (under legislation) to obtain a Home Report (consisting of a Single Survey with a valuation); a Property Questionnaire completed and signed by the seller; and an Energy Performance Certificate prior to the property being marketed for sale. A Home Report is valid until the property is sold. However, the Mortgage Valuation therein expires after 3 months so a refresh is often required. The Home Report is commissioned and paid for by the seller and the cost is not excessive. It is important to point out that this has not restricted the flow of properties for sale. Where the Home Report differs from what was proposed in the Home Information Pack (if I may dare mention these words) is that we, in Scotland, did not go to the same excessive lengths to include absolutely everything in the Home Report. The HIP had many challenges, not least the perception that in England, everything (and I mean everything) had to be included therein. It was a perfect example of paralysis by analysis! In Scotland, we concentrated on essential information which it was considered that purchasers needed to see in advance of offering for a property. The system is not perfect but it works well.
NTSELAT are to be congratulated in delivering in this important area. Their central mission is to help improve the market by creating a more level playing field. We shall see what the New Year brings with the Final Version 5 of the BASPI.
The dynamic of change
Change for the sake of change is rarely, if ever, a good idea. It was Steve Jobs who said: “Innovation is the ability to see change as an opportunity, not a threat.”
Does the home moving system in the UK need to change? Yes it does. Conveyancers have proved time and time again that they can adapt to change – as the move from paper to digitisation and beyond is proving. It is suggested that part of the reason that there is a fair amount of negativity about some of the changes to conveyancing practice which have been proposed in recent times is that they are being developed in a piecemeal or scatter gun approach. That, of itself, is not a bad thing as innovation can take many shapes and forms. We must remember however that there is a feeling that it is the conveyancer who is continually referred to as being the person who has to adapt or die. In other words, the very practice of Conveyancing has somehow become the reason for all the perceived ills and shortcomings of the home moving system. May I state unequivocally that it is not. It is certainly not perfect and it can be improved, but I suggest that the best way to do that is to ensure that conveyancers are “upfront and central” in the change process. It must be acknowledged that our conveyancing systems have been developed over a long period of time and generally have served us and society well. The challenge is how best we build on the lessons of the past to ensure a better future.
The Digital Property Market Steering Group, hosted by HM Land Registry, represents a significant advancement. Registers of Scotland are progressing in a comparable direction. It is crucial to ensure the necessary infrastructure is in place, allowing us to confidently claim the development of a fully digital conveyancing process. The railway industry’s evolution and its role in opening up continents is an apt analogy. That expansion was only possible after laying solid foundations, such as tracks and other infrastructure, which then made the world more connected and business more efficient. I propose that a similar transformation is occurring in conveyancing and the broader home moving space. A common issue seems to be the lack of structured connectivity among participants, leading to poor communication. To address this, an orchestration service or a data “backbone” is essential for achieving ubiquitous connectivity and seamless communication. This approach is evident in many other markets e.g. Financial Services where you find Financial Market Infrastructures (FMIs) that enable structured data exchange for transaction participants. Building such infrastructures using distributed ledger technology would enable multi-party data sharing with trust and provenance, ensuring data retains its original, verifiable source.
Data standards
Looking again to learn lessons from Financial Services, a key component of FMIs is data standards the best example of which being the global payments messaging standard, ISO20022, which structures the data sent between financial institutions. Although the property market lacks a similar data standard, we do have the Law Society’s Transaction (TA) forms for information sharing. Given that these forms are already widely used and trusted by solicitors, their evolution into a secure, integrated digital format seems to be the most effective way to foster change. Driving this change through Law Society leadership can ensure maximum engagement from the legal profession. Given conveyancers’ familiarity with these forms, the transition to a digital standard would likely encounter less resistance compared to introducing a new standard.
Conclusion
The digital transformation of the home moving system in general and conveyancing practice specifically will benefit all stakeholders. Solicitors, an integral part of this trusted system, play a crucial role. The regulation of the legal profession by the Law Societies and other regulatory bodies in the UK has been vital in building this trust. As we enter the New Year, let’s aim to implement lasting changes for everyone involved in this process and do this in a way that enables all stakeholders to be involved and working towards a common goal. A great starting point would be digitising the TA forms under The Law Society’s guidance.
Article written Professor Stewart Brymer of the University of Dundee and the Scottish Conveyancers Forum. He is a participant in the Home Buying & Selling Group – https://homebuyingandsellinggroup.co.uk/
The views expressed in this article are the personal views of the author.
