The Government’s pilot of ‘seller’s information packs’ in Bristol has had positive results according to the recent report published by the Department of the Environment, Transport and the Regions (DETR), but confidence in the scheme appears to be lacking among some mortgage lenders.
The trial, which was launched in late 1999, aimed to find a practical solution for speeding up the house buying process and prevent gazumping. By introducing seller’s information packs the DETR claimed that buyers would be able to agree on a price quickly without waiting for timely paperwork.
With 87% of accepted offers on properties leading to a completed transaction with a seller’s pack – a 15% increase on an earlier study by the DETR of the present process – the results suggest the scheme has been a success.
But the fact that the pilot was limited to only an affluent area of Bristol, where house prices average at £150,000, has led some lenders to doubt the realistic benefits of the scheme if applied on a nationwide scale.
Emmy Smith, media relations manager at Cheltenham and Gloucester, said: “We were involved with the project from the outset and were keen for it to work, but it was not road-tested robustly enough to place the new procedure on hundreds of thousands of homeowners. It could be a useful tool for buyers if used in conjunction with something else, but there are better ways to reduce gazumping.
“The average house price in Bristol does not represent the rest of Britain. With packs costing the vendor £700-£1,000, many people will not welcome the added cost.”
Another concern of lenders is that buyers may not feel confident accepting the essential information from the seller’s pack without gaining independent validation.
Mark Smitheringale, head of corporate communications at Skipton Building Society, said: “It would be interesting to see how many buyers went ahead and commissioned a separate survey. Without being too cynical, buyers are bound to be somewhat nervous of information supplied by the vendor.”
But with recent figures from the National Association of Estate Agents (NAEA) stating nearly two thirds of all house sales involve chains, the problem of gazumping needs an urgent solution.
Hugh Dunsmore-Hardy, chief executive of the NAEA, stated that seller’s packs could be the way forward. He said: “The NAEA backs Government moves to simplify and take the stress out of buying and selling homes. If you look at other systems operating in countries where there is more seller disclosure, there is evidence that chains are not such a dominant part of the market.”
It was announced during the Queen’s annual speech that sellers’ packs are to be included in the Homes Bill and will be brought forward in the next parliamentary session.
At the annual conference of the Council of Mortgage Lenders (CML), Michael Coogan, director general of the CML, however, warned against a rush to legislation, saying: “Our conclusion is that it is premature to legislate to make seller’s information packs mandatory, where they may disrupt the market, where they could increase the costs for consumers and where there is a better way forward.”