October’s launch of the sellers packs initiative has been met with scepticism from the mortgage market, with many believing it will not be the panacea it was intended to be.
Under the proposals, anyone putting their house on the market will have to prepare a sellers pack that would include a house condition report based on a professional survey, a draft contract, title documents and replies to searches made by the local authorities.
Concern is currently focused on the type of survey sellers will be required to provide. Estimates suggest that fewer than 5% of sellers commission a full structural survey, while fewer than 20% opt for the less comprehensive homebuyers report. As a result there could be a possible log jam as demand for surveyors increases.
Ray Boulger, technical manager at John Charcol, said: “The fact that every seller will need a survey will mean a huge increase in work load for surveyors and so it may take as long as three to four weeks to get a property on the market.”
While the time taken between the acceptance of terms and the exchange of contracts may be reduced, it could take longer to reach this stage in the first place.
Boulger added that further problems could arise as there is no requirement for the seller to reveal how many surveys have been carried out.
He said: “There may be a temptation for a seller with an adverse survey to get another survey done and only include the more favourable one, as different surveys show different results.”
This, he said, would be more prevalent on larger properties with high asking prices as the cost of further surveying would not be so significant.
Boulger also questioned the Government’s call for customers to arrange a mortgage in principle before looking for a property.
“It makes sense for people to speak to an adviser to check their status before looking at properties, but perhaps not as far as securing an offer. By the time a property has been found the mortgage offer made may still not be the most competitive.”
At a cost of about £500, the price of sellers packs could also become a big issue.
Peter Presland, managing director at Pink Home Loans, said: “The seller will be obliged to pay a lot of upfront expenses. You could argue that this will put many obstacles in the way of people moving, reducing the number of properties on the market.”
Tony Fisher, director of marketing at Private Label, shared similar concerns: “In theory the initiative is laudable and the current situation has to change. But this is only part of the solution.”
He said responsibility for speeding up the house-buying process lies largely with lenders.
So far, seven lenders have agreed to use Private Label’s facility that enables all loans up to 85% LTV to be agreed with just four pieces of evidence – a payslip, a P60, the last mortgage statement and the last bank statement.