We have all experienced the nightmare of moving home or know someone who has. Even if we think we have had a relatively smooth move, it is more than likely that there was some area of frustration along the way.
It could have been finding a dream home, only for the valuation to unearth dry rot or subsidence. Or having to call the solicitor 10 times a day to find out why the chain has not moved ‘ the list goes on.
The current process of buying and selling a home in England and Wales is one of the slowest in Europe, taking an average of eight weeks from offer to exchange, and in many cases as long as 20 weeks. But it is not all bad news ‘ it is generally still cheaper to move home in the UK than elsewhere in Europe.
Until now, this has been the accepted trade off. So is it too much to expect that the UK experience should be made smoother and speedier, without increasing the cost of moving home?
There are certainly some steps being taken by the Government to tackle this issue. The Homes Bill included considerable proposals for reforming the current buying and selling process in England and Wales. This aimed to reduce the likelihood of the chain breaking down and to speed up and streamline the process for all those involved. Although the original Bill failed to complete its passage through parliament before the 2001 General Election, the Government ‘ through the Department for Transport, Local Government and the Regions (DTLR) ‘ has made it clear it is committed to the Bill and its reintroduction as soon as parliamentary time is available. The DTLR has indicated that it is using the intervening time to develop firm proposals to be included in the Bill. So when it is eventually reintroduced, it is likely to be a much more robust piece of draft legislation, ready to be implemented possibly as early as 2005.
More trials than tribulations
The initial stage of finding and buying a home should be exciting, but it is often the beginning of much frustration. Most homebuyers are trusting souls and like to believe the seller when they say that the house is sound, that they had no problems in the past and that they will accept their offer over anyone else’s. But how can homebuyers be sure? It is usually weeks before a valuer is instructed by the mortgage company to confirm that everything is in order. It may be much later in the process that a problem is discovered in the legal work or searches that derails the purchase.
The Government’s proposed Seller’s Pack initiative is intended to reduce this uncertainty and to speed up the first stage of buying and selling, getting from offer to exchange of contracts.
The Government proposed that Seller’s Packs should include a Home Condition Report (HCR) as well as certain legal documents which must be prepared before the property is put on the market.
All that will then be required to enable the purchase to go ahead is a mortgage offer, removing a great deal of uncertainty for both the buyer and the seller. On paper this sounds like a sensible step forward and an effective proposal for all involved.
However, Seller’s Packs have not met with universal approval. In particular, significant numbers of estate agents have expressed concern about the wisdom and viability of Seller’s Packs ‘ in particular the HCR element. Further consultation is due to be carried out by the Government to iron out these concerns. In addition, they are looking at practical issues such as whether homeowners in areas of low value and low demand should be exempt from the requirement to prepare a Seller’s Pack.
Mortgages themselves are becoming quicker and easier to obtain. Many mortgage brokers now have access to systems that can provide an approval in principle (AIP) to the mortgage within a matter of seconds online. This enables the buyer to view potential properties ready prepared with an AIP putting them in a very strong negotiating position.
Sellers should also feel much more confident in dealing with prospective buyers who can demonstrate both their ability and commitment to purchase. Just as sellers are to be made more responsible in this proposed future, buyers too should be prepared to demonstrate they are serious about a transaction before entering into it.
As well as fast AIPs, mortgage applications can be completed and submitted quickly electronically, with underwriting able to begin the moment that ‘send’ is clicked. Systems have been developed for brokers that enable mortgage applications to be submitted online direct into lenders’ own back office processing systems, leading to the provision of faster mortgage offers.
So it appears we can look forward to a quicker start to the process of moving home and a faster and simpler means of obtaining mortgage offers online.
The chain gang
However, most movers are still likely to be part of a ‘chain’, frequently the most troublesome area for everyone involved. The chain is often the source of endless frustration and stress. Many fruitless and unnecessary phone calls are usually made as estate agents and solicitors attempt to keep all parties in the chain moving towards the common goal of completion. One of the main criticisms of the Seller’s Pack proposals was that they did nothing to address the chain issue.
This is where the Land Registry’s planned chain management system could really make a difference to everyone involved in moving home. The planned system will effectively make the chain transparent, so that anyone involved can see at a glance on screen the relative position of each party in it.
For instance, one of the aims is that when one party is ready to exchange contracts their solicitor can see that everyone else in the chain is also ready, or whether one link is lagging behind. As a result, a quick phone call can be made ‘ or email sent ‘ to that individual’s solicitor to establish if there is a problem and to chivvy the process along.
In the medium term, the plan is that many of the documents needed when moving home will be electronically produced and signed, so eliminating paper and cutting out the time usually lost by sending the documents in the post. The Land Registration Bill is the piece of enabling legislation here and is currently progressing through parliament.
It is intended that eventually payments will also be automatically and simultaneously made to every solicitor involved in the chain. So the days of hanging around for keys to be released to new owners late on the moving day, because somewhere down the chain money has not been sent, will be a thing of the past.
The benefits of this e-conveyancing chain management system appear to be significant and play a key part in the home buying process in the future. The Land Registry is already demonstrating a prototype of the system and will be undertaking consultation during the early part of 2002.
How long it will take before all solicitors come on board and electronify their offices is a different matter, although many believe that this is the only way they will be able to remain competitive in the future. The chain management system may be a few years off, but its impact on the way we move home will be immense.
So, could moving home one day really be a pleasant experience for all involved?
There are certainly a lot of developments in the pipeline intended to improve it. It remains to be seen whether these do actually help speed up and streamline the process as much as is needed.
What is certain is that the growing use of technology throughout the home buying and selling process is the way forward and is something that must be embraced by the whole industry. In particular, technology could improve those parts of moving home that give rise to the most stress. So, overall, there is good reason to believe that moving home in the future could well be a much less frustrating process.
It takes an average of eight weeks to progress from offer to exchange ‘ one of the slowest rates in Europe.
The Land Registry is pioneering an electronic chain management system, enabling all parties to keep abreast of case progress.
Payments will soon be automatically made to all solicitors in the chain, removing stress and delay on moving day.