The Government have recently published a summary of responses to last year’s Call for Evidence together with their response.
Published in November, the ‘Call for Evidence – Improving the Home Buying and Selling Process’ unsurprisingly sparked a variety of opinions being voiced across the industry.
Aimed at both the public and industry professionals, the Department for Communities and Local Government released the consultation to gather views and opinions on how the home moving process could be improved.
Broken down into a number of sections, the consultation looked at a range of different areas of the process, highlighting the potential issues within each. At the close of each section, it also poses questions to the reader as well as possible suggestions for reform.
As well as looking at specific aspects of the home moving process, the consultation also looks at factors which could positively impact the whole experience – for both consumers and professionals.
The response to the document has now been published by the government, bringing together a summary of the feedback received as well as how the government plans to act going forward.
The government confirmed it received 1,205 responses to the consultation, with a significant number of suggestions as to where the improvements could be made. However, as opposed to a single change, it states that a meaningful improvement to the process is more likely to be achieved through ‘smaller, incremental changes.’
It highlights three key areas for improvement as being:
- Better consumer experience
- Reducing time from offer to completion
- Reducing failed transactions
How the government plans to enhance these areas will be explored below.
Better Consumer Experience
Further regulation of estate agents, as was highlighted in a government press release over the weekend, has been proposed as a way to improve the process for consumers.
Tying in with the consultation on strengthening consumer redress, the government states that it will work with the National Trading Standards Estate Agency Team to strengthen enforcement of the existing regulatory framework for estate agents. It stresses that the focus will be on making sure that all agents comply with consumer protection regulations.
A consultation on creating a mandatory professional qualification for estate agents will also be launched. This will follow engagement with both regulators and the industry as a whole. Once this is complete, the responses will be evaluated and the government will then consider the introduction of legislation where appropriate.
The government also aim to improve transparency around referral fees to enable consumers to make a more informed choice when choosing a conveyancer or mortgage broker for example.
By working with the industry, the government set out to ‘standardise the presentation of referral fees and ensure that customers are made aware of any potential referral fee before they make a decision whether to purchase.’
The National Trading Standards Agency will be tasked to monitor the disclosure of referral fees, taking a proactive approach.
Whilst there is nothing set in stone as yet for referral fees to be banned, the response does state that the government will look more closely at the case for banning the fees, ‘particularly for new build properties and instances when buyers are being referred.’
Another key measure which aims to improve access to information on the process is the planned development and publication of ‘How to Buy’ and ‘How to Sell’ guides. How these will be distributed is a matter for further consideration.
A further proposal related to the selection of the conveyancer, with the government stating that they ‘want consumers to be able to make a more informed choice of conveyancer which considers service levels, not just price.’
In order to facilitate this, they aim to work with both consumer groups and the industry at large, setting out to develop solutions by using more quality standards, transparent data, kitemarks and standard metrics. Advice points on choosing a conveyancer will also be included in the aforementioned government guides.
Reducing time from offer to completion
Highlighting that the average time in England and Wales from offer to completion is around 8 – 12 weeks, the response acknowledges the negative impact this can have for consumers, sometimes resulting in the collapse of the whole chain.
In terms of speeding up the process, the government propose that technology is better utilised, stating that they wish to encourage digital innovators to help transform the process. Whilst that may be on a longer term basis, in the short term, they want to see further development of digital signatures as well as ways to improve the ID verification process and implement e-conveyancing.
As a way to engage users and industry partners, they plan to establish a technology working group to improve understanding of user’s digital needs and simulate innovation.
The response also states that the group will be tasked to work on digital signatures as a priority, as well as streamlining the process of ID verification and the promotion of e-conveyancing to be adopted on a wider basis.
Highlighting that the assembly of information can sometimes lead to delays in the transaction process, the government also suggests that more information should be provided up front. On a long term basis, they state that the majority of information needed should be in the form of a property passport, and made available when the property first goes on the market.
Where the short term is concerned, they encourage a state of readiness for sale, encouraging sellers to collect relevant information.
The government also draw attention to the fact that leasehold transactions can often be even longer, in part due to delays in regard to information. As a way to curtail this, they suggest ‘fixed time frames and maximum fees to the provision of leasehold information, potentially with a statutory underpinning.’ They also state that they will encourage managing agents to make this available electronically.
The government also set out an intention to standardise the leasehold information form by working with the industry.
Local Authority searches is where the focus then shifts to, with government acknowledging the variation in speed, despite the significant improvements made over recent years.
They plan to write to all local authorities, setting an expectation to respond to requests within ten working days. Where external agents are concerned, timely access will be allowed.
Where authorities fail to meet these performance levels, they also state that action will be taken.
The final proposal set out to improve consumer experience is entitled ‘Getting a Decision in Principle’ and is described as a certificate from the mortgage lender which outlines how much money will be lent to the buyer. The government states that all non-cash buyers should obtain this prior to their hunt for a new home, confirming that they will make this clear in their ‘How to Buy’ guide.
Reducing Failed Transactions
Acknowledging the significant proportion of transactions which fail, the government states that it is ‘particularly interested’ in implementing reservation agreements. It highlights that an interest in an upfront legal commitment has been expressed by a large proportion of buyers and sellers, aiming to reduce the fear of being gazumped.
The plan to introduce the agreements will begin with the development of a standardised reservation agreement, suitable for use in any transaction. Behavioural insight research will then be commissioned, aiming to consider ways in which consumers would be encouraged to adopt them.
The final step is to see them piloted, with an overarching intention to make them a standard element of the transaction process.
One of the sections within Call for Evidence focussed specifically on conveyancing, inviting professionals to share their views on how this aspect of the process could be improved.
Setting out the most common issues faced, the government then set out a number of questions as to the measures it could take to tackle these challenges. The responses, from both professionals and the government, are set out below.
What should the industry do to help consumers make more informed decisions when selecting a conveyancer?
How could government help facilitate this?
- Of the 688 responses received overall, the most common response (16%) was to improve the transparency of conveyancers, with a need to improve more service information online. This could, as was suggested, include data on staff qualifications as well as the duration of time for a transaction to complete. Further, calls for a standardised set of information, to be developed by regulators, were also made. Conveyancers would then be required to publish this on their website.
- It was also suggested that a centralised comparison platform should also be made, with respondents stating that this could enable consumers to easily compare key information on a service provider. This, it was recommended, would be hosted publicly by a trusted third party.
- Similarly in regard to access to information, just under one in ten (9%) of respondents felt that that there should be more guidance available to consumers, both in terms of selecting a service provider and the process itself. Many expressed that price should not be the only factor considered.
- Further, suggestions were also put forward for the introduction of detailed quotations, enabling consumers to compare conveyancers on a like-for-like basis. Also in terms of improving transparency, some also showed support for a kite mark or accreditation scheme, as well as the introduction of a list of recommended firms to be developed and published by regulators. Many also felt that the industry should create indicators which could be used to track and compare levels of service.
Issuing their response to the feedback, the government stated:
‘We are very clear that more needs to be done by the conveyancing industry and the relevant regulatory bodies to ensure that consumers are getting the information they need to make an informed choice. This should include standardised information which goes beyond cost and includes some element of performance data. Given that consumers have become accustomed to doing research online this type of information should be included on the websites of all conveyancers. While we expect the industry to take a lead on this, we are also keen to work with consumer groups to ensure the right information is available.
‘We would also like the industry to continue to develop, and more importantly promote, quality standards and kite marks so that consumers can feel confident that they will get a good level of service.
‘The government will also include a section on choosing a conveyancer in its ‘How to Buy’ and ‘How to Sell’ guides. This will set out some of the questions consumers should ask before they make their choice of conveyancer and will also encourage them to look at reviews.’
What improvements can be made to the process of property searches in order to speed up home buying and selling?
- Within the strong response which this question received, the government outlines that two clear themes emerged; that sellers should provide searches up front and that service level agreements for local authorities should be introduced.
- As noted in the feedback responses, there has been significant progress made in terms of improving local authority searches. However, it also acknowledged that there was a significant variation on a national basis, with 21% of respondents suggesting that the service level agreement should be set up by the government, working with local authorities to outline clear search return targets as well as penalties where they fell short.
- Of the 732 responses given, 15% suggested that searches should be provided by sellers as part of the seller’s pack. The general view was that the provision of this information at the earliest point could reduce the amount of negotiation required and speed up the transaction in general. However, organisations did not support this suggestion, expressing concerns that this could be ruled as out of date by some mortgage providers when required.
- Whilst some felt that digitisation could be a key way to improve the search process, particularly in the form of an online database, others felt that searches should be portable and should have a longer lifespan. This could be in the form of a ‘property passport’, listing key search information as well as other important data on the property.
- 7% believed that property searches didn’t constitute a problem area at all.
Issuing their response to the feedback, the government stated:
‘It is pleasing that a large number of respondents thought that the searches were not a significant source of delay given that this has been an area of concern in previous years, and we must acknowledge the role of the search agents in driving up this level of performance. We are also encouraged that a number of local authorities are able to respond to search requests in a matter of hours or days.
‘However, it is clearly not acceptable that a handful of local authorities are continuing to take weeks to respond to search requests and that in extreme cases this is causing the house sale to collapse. The government expects all local authorities to be able to respond to a search request within 10 working days, and to grant reasonable access to search agents. We will be writing to all local authorities to make this expectation clear. Where local authorities fail to meet this standard after government intervention we will take appropriate action. We will also work with HM Land Registry through their Local Land Charges programme16 and with others in coming months to improve the accessibility and discovery of this data. Separately HMLR will be undertaking a review of CON 29 searches on our behalf to help identify how they can be made more efficient.
‘As we said in the Call for Evidence, we believe that homeowners should look to provide more information up front. We would be supportive of sellers who wished to commission searches prior to a sale in order to speed up the eventual transaction, and we are aware that there are commercial companies who are developing this service for sellers. However, we also recognise that buying a home is the biggest purchase a person can make and so it is important that buyers, lenders and their lawyers satisfy themselves that they have sufficient accurate information before a purchase.
‘We also agree with those respondents who suggested that this information should be available digitally. They argued that digital information should be linked to a property so that it can be easily found when the home is next sold. The government will engage with users, industry and partners such as HM Land Registry to better understand user needs for such technology, and encourage our working group to take action to stimulate innovation in this area.’
Would there be an advantage to encouraging buyers and sellers to use the same conveyancing provider?
If so, how could it work, without creating conflict of interest problems?
- This question, much like the others in the section, also gained a strong response. Of the 754 gathered, 68% felt that this would not be an advantage to buyers and sellers.
- However, some respondents did feel that using a single provider could speed up the process, potentially reducing the delays in sending information to another firm. Despite this, the general view was that this did not outweigh the potential risk of a conflict of interest. This concern was expressed by 41%of those who responded. This was largely attributed to the Caveat Emptor concept, something which largely relies on having a conveyancer who is prioritising the interests of the consumer.
- A further worry was the potential for an increase in the risk of fraud as well as a reduction in consumer confidence and trust.
- Whilst some respondents did highlight that licensed conveyancers can and do represent both sides, this does not have a significant positive impact on speeding up the process. It was also suggested that some lenders may prohibit this.
- Aside from using the same provider, many respondents took the view that conveyancers should use the same platform for communication. This, it was felt, could help ‘develop a chain view, rather than encourage the use of a single firm.’
Issuing their response to the feedback, the government stated:
‘In light of the responses to this question, government is not minded to take steps to encourage buyers and sellers to use the same conveyancing provider, although we note that the option already exists in the market via licensed conveyancers. We agree with those respondents who suggested that conveyancers should be encouraged to move towards using a digital platform that allows them to communicate more easily and have a chain view, and will be working with industry to make this happen.’
Sharing his view on the document was CEO and Founder of Bold Legal Group, Rob Hailstone. He stated: “I have read with great interest the response document recently issued by the MHCLG, containing a summary of the responses received to last year’s Call for Evidence. Although only just over 50 pages long it contains a lot of information and suggestions, many of which will affect conveyancers. As usual, the devil will be in the detail and in any form of implementation. I am now going to obtain the views of my member firms before commenting any further. One thing is certain though, all law firms that carry our residential conveyancing need to be aware of what is being proposed and need to engage either directly or through groups like the BLG. Matt Prior of the MHCLG will be speaking at our conference in London on the 2nd May should anyone wish to attend.”
The document can be accessed here.
