Upfront information: additional burden or commercial opportunity? – Rudolf

That becomes particularly important when we consider the move towards more comprehensive property information being available upfront, because this is an area where there are understandable questions for conveyancers, estate agents, mortgage advisers, surveyors, valuers, lenders and, importantly, the buyers and sellers ultimately paying for the process.

Providing more information earlier sounds perfectly sensible when viewed from the perspective of reducing surprises and delays later in a transaction, but that does not mean we should overlook questions about who provides that information, who checks it, who pays for the work involved, what happens to all that information at the end of the transaction and whether we risk simply moving existing delays and costs to an earlier stage.

Moving the work or creating more of it?

For conveyancers, one of the first questions is whether upfront information represents another responsibility being added to an already considerable workload, or whether we are actually talking about work that already takes place being undertaken at a more efficient point in the transaction.

Conveyancers routinely identify title issues and other problems after an offer has been accepted, by which time a buyer may have arranged their mortgage, instructed a surveyor and incurred other costs, while an estate agent has a sale to protect and everybody in the chain has an interest in keeping the transaction together.

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Finding those issues earlier does not necessarily create the problem or the legal work required to resolve it, but it could give the conveyancer more time to deal with it and provide an opportunity for firms to charge appropriately for additional professional work, rather than absorbing it within expectations established around a standard transaction fee. Even if the seller chooses not to solve the issue, their expectations on value, cost and delay are better managed.

There is potentially a wider benefit too, because an issue resolved before it threatens a transaction means less wasted work for the estate agent, mortgage adviser and lender, as well as greater certainty for the people actually moving home.

What about the unsuccessful buyer?

However, there is another side to the argument that we should not ignore.

If prospective buyers are expected to obtain legal advice on upfront information before deciding whether to proceed, what happens when several people are interested in the same property?

We could have multiple buyers paying for professional advice on exactly the same property when ultimately only one can purchase it, leaving the unsuccessful parties with a cost but no home to show for it.

That is a legitimate concern, particularly in competitive markets, and it illustrates why reform cannot simply involve taking activity that currently happens after offer and moving all of it to the other side of that line without considering the consequences.

However, we also need to compare that potential cost with what happens now, because buyers already incur considerable expenditure on transactions that never reach completion.

An accepted offer can be followed by expenditure on legal work, searches, surveys and mortgage-related costs before information emerges that causes the buyer to withdraw, the seller pulls out or another part of the chain collapses.

If better information allows a prospective buyer to identify a significant issue before making an offer, they may incur some professional cost earlier but potentially avoid considerably greater expense, inconvenience and wasted time later.

What we need is evidence about that balance, including what we can learn from other jurisdictions where buyers have access to more property information earlier in the process, rather than simply assuming one outcome will be cheaper than the other.

Earlier information needs to be useful information

There is also little benefit in requiring more information upfront if it is incomplete, unreliable, difficult to interpret or simply has to be obtained again later in the transaction.

Mortgage advisers will understand this particularly well, because information that arrives earlier only has value if it provides greater certainty around whether a client and property can proceed, rather than becoming another administrative stage before the real work begins.

The same applies to lenders, agents and conveyancers, which is why questions around responsibility, reliance, validity and liability need to be answered as the reforms develop. Essentially, we want conveyancing-quality data that can be relied upon by the conveyancer, buyer and lender.

We should also be careful that the drive towards upfront information does not simply move the current delay from the period after offer to the period before a property can be properly marketed, because that would change the location of the problem rather than solve it.

A commercial opportunity – if we get it right

For conveyancing firms, I believe there is nevertheless a significant opportunity in becoming involved earlier, because identifying legal issues sooner creates the potential to resolve them sooner and to demonstrate more clearly the value of the professional work involved.

For advisers and lenders, greater certainty about the property at an earlier stage should mean fewer cases progressing significant distances before an issue emerges that changes the mortgage requirements or prevents the transaction proceeding, while agents should benefit if the sales they agree have a much better prospect of reaching completion.

The CA’s own research, albeit back in 2016 but still relevant today, showed that in Scotland, the Home Report reduces fall-throughs – compared to England – by 66%, and in Australia, adding in the binding offer, reduces it to under 2%.

The important qualification is that reform has to reduce inefficiency rather than redistribute it, and we should not regard transferring cost, workload or risk from one participant to another as evidence of success.

In the final article in this series, I will look at what that means for the future role of the conveyancer and why genuine collaboration between conveyancers, mortgage advisers, lenders, estate agents and technology providers will be essential if these reforms are to deliver commercial benefits across the market as well as a better process for buyers and sellers.