Making properties tradable – part 3

Making properties tradable – part 3

“We rate ambition by what is finished, not by what is attempted.”

It is a given that property trading is almost universally not liked, is inefficient and highly frustrating. Caveat emptor is out of place and buyers can not see if a property is ready and fit to buy when they put an offer in — there is no property MOT. The property MOT process takes place after the offer has been made and accepted, even though there is nothing binding on the buyer; the deal is subject to contract.

This is wrong. Properties should be ready to buy when they go on the market and to do that the process has to be flipped on its head — with the property ‘stamped’ as ‘ready to buy’ as it goes in the shop window. Provide a Legal Condition Report (LCR).

Nods to the future

At the end of part two of these articles there was reference to nods to the future within Home Information Packs and Chain Matrix. HIPs required a seller to provide information up front — a good principle that should be retained – but it was the wrong information and effectively unintelligible to buyers. Chain Matrix did not address the fundamental issues within the process but the technology ‘learns’ have opened the way for sophisticated electronic data transfer.

The LCR needs to be provided upfront, certifying that the title has been checked and that the property title is fit for use to the bench mark of a residential dwelling, with three simple categories:

– Green — clean and good to go

– Amber — some issues, not serious, that can be insured

– Red — defects or issues that require full consideration

In the current process there is no indication of title status; it is completely hidden. Worse still, the wheel is re-invented every time.

The re-invented wheel

Every time a property is traded conveyancers check if the property is connected to the sewers, abuts a road, or if there are any planning matters to consider, etc. Every time! It is not often that a property disconnects itself from the drains or moves away from a road. This is a very inefficient process. It is time for a new wheel!

This information needs to be ‘stamped’ against a property in a central register, not checked every time a property is traded. It is static data and should be viewable, with its rating, whenever it is required. The Land Registry would be the place to hold this data. The advent of the electronic Document Registration Service (eDRS) technological platform, and Land Registry holding and managing the data in the Local Land Charges Register and CON29 forms, offers an opportunity to unlock some of the key data.

The items described above could, and should, be checked and scored prior to a property being marketed, not after. The provision of this information by the seller would be of value. Taking the principle of upfront title information to its logical conclusion would allow for all relevant information to be provided by the seller within a LCR at the time of marketing — easements, restrictions, flood data, etc, all noted and evaluated.

Conveyancers could provide this information which, could be relied upon by the seller and the buyer, as was planned for the Physical Condition Report in the failed HIPs project. There would be no need to check the work of others, no need for an adversarial approach.

Pie in the sky or possible?

It is possible, as we attempted and finished over 70 transactions with local estate agents and solicitors in the period 1998 to 2000 which proved the concept. Government came to have a look but opted for the HIP instead, which was the lowest common denominator and political window dressing at its best demonstrating action while avoiding the real (and difficult) issues.

The LCRs were ‘hand made’ but had the key features of: – Avoiding questions and answers

– Providing information buyers would want to know about – Reporting to a ‘benchmark’ standard

– Cleaning up title problems before a buyer was found (disclosure not caveat emptor)

– Being backed by no fault insurance

The concept was proved and transactions completed rapidly. Today, technologies exist that would provide automation within the LCR production process, and if we can grasp the opportunities provided by technology and get property data held and validated in accessible form in a central location, then we can completely re-engineer residential property trading.


Property trading in the future has to be based on:

– The option to sell without caveat emptor and on full and frank disclosure

– Structuring and storing property information in a central location, Land Registry, that is held against and stamps various characteristics on a property, e.g. connected to mains; stored in an easily accessible format for future use, e.g. separate registers

– Commissioning a LCR prior to, or upon, marketing of a property, that provides a property that is ready to buy to a prospective buyer and decouples title validation from the mechanics of the transaction process

Radically re-engineering the process in this way would have the following benefits:

– The right information provided at the right time

– Greater certainty of timescale, because legal hurdles have already been cleared

– Significant reduction in abortive transactions and chains

– Effective and efficient use of resources and improved cashflow

– Reduced fraud risk as transactions would take place far quicker and more securely

There would be a fluid property market, improved social mobility and significant economic benefit. We would all benefit from that.

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