‘The conveyancing solutions are there, we just need to grasp them’ – Rudolf

‘The conveyancing solutions are there, we just need to grasp them’ – Rudolf

 

As we move ever closer towards this next stamp duty holiday deadline at the end of June, the level of interest in conveyancers and conveyancing has perhaps never been so great.

There has been a steady stream of journalist enquiries, understandably fuelled by a growing number of consumers who, with just a few weeks to go, are wondering if they will be able to complete in time to secure the saving.

At the same moment, that leads to ongoing interest in just how much work conveyancers have, how they are coping, the fees they are charging, their ability to complete the work before the 30 June, and a whole host of questions around their resources, where the hold-ups might be and, following the end of this month, how will the next stage of the housing market play out?

Will there be the much speculated about ‘cliff edge’ for transactions? Has the threat of that outcome been dissipated by the introduction of the partial stamp duty holiday up until the end of September? Just how much more demand is there to be fulfilled? And so on.

All absolutely relevant questions but I’m afraid some of the answers just can’t be known at this moment – I wish I did know as I’m sure there’s a bet to be won somewhere.

 

An A for effort

However, what we can focus on is pretty much the here and now. Advisers will no doubt be dealing with clients waiting for their transaction to complete and I think I’m in a very safe position to say conveyancers are doing absolutely everything they can to secure that completion by the end of the month.

Yet let’s also be aware of what the circumstances are currently like – not just in terms of the vast majority of the conveyancing profession still working remotely or from home – but the fact that early mornings and late nights are a normal part of the working day for all conveyancing staff at the moment. And, if you consider how busy you’ve been over the last six to eight months, then you’ll understand what conveyancers are also going through as well.

 

Fees

Which might lead you to understand why some firms have put their fees up recently or may have turned away business which was requested to complete before the end of June, because it is against the regulations conveyancers work under to take on work they cannot deliver. In other words, they had no choice but to decline this work.

And yes, there are also a number of log-jams to be worked through currently which do not help in terms of getting the timescale to completion down. In case you’re wondering, the average transaction now takes over 20 weeks.

It is no-one’s fault, but some lenders currently have hold times of two hours, and some valuers are not able to respond to post-valuation queries, which makes the time to get to completion lengthier.

Which might lead you to say that it would be best to get this period over with before we once again look at the ways we can improve the process. But that’s really not necessary – some agents and conveyancers are already securing all the required information upfront, when the property is marketed, and that is having good results in getting completion times down. There are opportunities to use digital ID, digital signatures, property log books, AI, blockchain, and the like, to move us forward right now.

So, while this period is difficult, while it is stressful – and we should all bear in mind the impact on our mental health because of this stress – there are promising solutions to improve the whole process. We just need to grasp them.

 

The upfront effort of changing processes will be recouped by time saved – Rudolf

The upfront effort of changing processes will be recouped by time saved – Rudolf

 

Given that one of the Conveyancing Association’s major workstreams – you might argue it’s our prevailing workstream – is how we can speed up the home buying and selling process, then this seemed a good session to be on.  

Particularly, to get a view on how lenders see the current situation and what technology could be used in order to speed it up, and, importantly, make the whole thing far less stressful for consumers, who often can’t believe just how long it takes, what it requires and takes out of them, and why it doesn’t resemble so many other transactions in their lives.  

The conference looked at a number of technology enablers which could, and perhaps should, be used to deliver a smoother journey.  

These included as you might expect: digital ID and verifying a customer electronically, use of e-signatures, using Open Banking to verify income, open and smart data to help pre-verify the customer and the property, Optical Character Recognition, which can automatically scan and extract data, Robotic Process Automation, which automates people-intensive and/ or complex processes, and Blockchain to prove, trace or speed up securing evidence of asset ownership. 

Attendees were then polled on what they thought would make the biggest difference for customers. 

Perhaps unsurprisingly, given this was predominantly a lender-focused audience, the two most popular were Open Banking and Smart Data.

No doubt fuelled by its growing use within the lending community to assess a client’s ability to afford the mortgage far more quickly and earlier in the process.  

Yet, what was interesting was not so much the client data, of which it seems lenders are getting lots through the likes of Open Banking, but the data they don’t have which pertains to the property itself.  

A similar approach to property-based data to produce a much earlier assessment of whether it is suitable to lend on would be most welcome by lenders.  

Not so far behind Open Banking and Smart Data, and perhaps more interesting for a wider property market stakeholder perspective, were digital ID and e-signatures.  

 

One source of truth 

Anyone active in this process will know the resource currently involved in verifying a customer’s ID, and the somewhat crazy thing is we all do it, at every step of the way, whether we’re the agent, adviser, lender, conveyancer, developer, you name it.  

We talk a lot about having one source of truth, but this would make such a difference if we could all rely on one source when assessing whether the person in front of us is actually who they say they are.  

Similarly, consumers are no doubt baffled by our sector’s archaic need to have wet signatures on documents, especially when they will be providing e-signatures across so many other aspects of their personal and professional lives.  

The good news is that, as can be clearly seen, those enablers already exist and, if utilised, could undoubtedly speed up the whole process and make it far more consumer and trade-friendly.  

But, while in some areas, we’re getting there, in others we’re not. 

 

Perception of barriers 

Attendees at the conference were asked, why might that be? What barriers are in place to stop us getting to this brave new world?  

The top two responses were ‘cost,’ and ‘the time change takes,’ with ‘firms’ risk aversion about unknown consequences,’ being not so far behind. 

This is an interesting take because, while of course there would be upfront costs, the long-term benefits of having a much more seamless, technology-driven purchase process, particularly in terms of cutting down the time to completion, are there for all to see.  

For advisers you, can write more business, spend less time on cases, and get paid far quicker with a souped-up process. 

Similarly, the time it takes to change can be recouped by the time it can save. Once in place, that time saving is repeated again and again.  

And, finally, what are the unknown consequences? When your average housing transaction takes 26 weeks from marketing to completion, what do you have to lose in adopting technology in these areas? It’s highly unlikely to add any more time to the process. 

Grasping the nettle has therefore never been so beneficial or within the entire industry’s hands. There really are no excuses any more and as a trade body we will certainly continue to push all stakeholders in this direction.  

 

Vendor disclosure will speed up housing transactions and increase broker income – Rudolf

Vendor disclosure will speed up housing transactions and increase broker income – Rudolf

 

There is another option – perhaps you look at change as “a necessary evil”?

But what about change as “a necessary good?” Because I suspect there will be no housing or mortgage market stakeholder who wouldn’t think change is required in the home buying and selling process in order to make it more efficient and to greatly speed it up.

That momentum for change, and for the acceptance of it, appears to be growing right across the board.

The last 12 months has presented a unique set of challenges to overcome but no-one in their right mind would think that 22 weeks to complete a housing transaction was anything but overly long.

And I take on board the extreme nature of the environment in which we’ve all been working, but even before the pandemic, the number of weeks to complete wasn’t very much less.

We have a unique opportunity to bring together a variety of changes which will ultimately help us all, because the quicker we complete, the more efficient we are, the quicker we get paid, and the more clients we can work with.

You don’t need to be purely altruistic about buying into this change – it fundamentally should mean increased income for your business.

 

Upfront information

The foundation of this change has to be much better upfront information at the point of marketing. In other legal jurisdictions they already do this, which means when the buyer makes their offer, they’ve already checked the legal suitability and their financial position as they’ve been able to check the lender’s acceptance of the property.

Which means that an offer to buy can be binding with a short cooling-off period.

In those jurisdictions where they have upfront information and binding offers, chains – in the sense of a chain of transactions synchronising around exchange of contracts – effectively disappear.

Instead, there is a synchronisation on the completion dates so people can still move from one property into the next.

This is achievable because as soon as they get an offer on their property, they can check they can get a loan on the property they want to move into, and that it meets their intended use and enjoyment, as required.

Then they can accept the offer on their sale and make the offer on their purchase with the completion date agreed through the transactions.

 

Support vendor disclosure

The Law Commission is currently consulting on its 14th Programme of Law Reform and has included the home moving process and vendor disclosure within that consultation.

If enough of the industry supports vendor disclosure then the delivery of the current obligation on the estate agent to provide the material facts becomes a whole lot easier because the seller will be liable to provide the information at the point of marketing.

That would save weeks in delay immediately – instead of various stakeholders coming to this late, and everyone having to wait while they secured the necessary documents, it would all be ready from the get-go.

As you can see, this is not change for change’s sake but to deliver a better customer and industry experience, to speed up the whole process, and get us where we need to be.

It is also likely to put more money in your pocket. What’s not to like?

 

Families urged to use Covid-19 chain collapse legal safeguards to protect savings

Families urged to use Covid-19 chain collapse legal safeguards to protect savings

 

The coronavirus clauses were developed by the Ministry of Housing Communities and Local Government and the Home Buying and Selling Group to deal with the disruption caused by the pandemic, but are not widely known about.

It means that if an agreement is put in place between a buyer and seller before the exchange of contracts, should either party be unable to complete because of Covid-related issues they can avoid the substantial financial penalty that is normally payable.

But homebuyers will only know about the clauses if their conveyancer explains the new options and an agreement must be reached before contracts are exchanged.

Beth Rudolf, director of delivery at the Conveyancing Association, (pictured) said: “Home movers should ask their property lawyer about the opportunity to include in the contract clauses that deal with the issues created by Covid 19.”

Covid clauses

Under the temporary rules if a buyer or seller has exchanged contracts but is unable to complete the transaction on the completion date, then completion can be delayed or cancelled. Neither party would be liable to pay the ten per cent deposit in compensation normally due under the terms of a standard purchase agreement.

The clause can only be used under certain pandemic-related circumstances. These include the need to comply with government restrictions, being hospitalised, the withdrawal of a mortgage offer in the chain or a change in the financial position of one of the parties, which causes the chain to collapse.

Both the buyer and seller must agree for the clause to be included in the contract, before exchange takes place. If an agreement is not made, the standard rules apply.

 

Legally binding

The withdrawal of a mortgage offer post exchange is rare. But when it happens families in a property chain can legally be left penniless through no fault of their own.

Mortgage Solutions’ sister website YourMoney.com published a blog by Unbiased.co.uk that highlighted the devastating effects a mortgage offer withdrawal can have when it told the story of Abdus and his family who were in the middle of a property chain that collapsed.

The family had exchanged contracts to buy a larger home and at the same time they had exchanged with the first-time buyer purchasing their property. But before completion could take place, Santander withdrew its mortgage offer to the first-time buyer, and the whole chain collapsed.

Mortgage offers have been legally binding since 2016, when the European Mortgage Credit Directive was implemented.

However, banks still have the right to rescind an offer under certain special conditions, commonly referred to as a material change in facts, for example if the borrower loses their job. An offer can also be withdrawn if fraud is detected or if issues related to the property have arisen.

It cannot be withdrawn because the bank has changed its risk appetite and no longer wants to lend to the borrower.

Once contracts are exchanged, in standard agreements buyers (and sellers) are legally obliged to pay a ten per cent deposit to the injured party if they are not able to go through with the transaction.

The family were pursued by the vendor’s solicitor for £66,000 and were only able to collect £33,000 in compensation from their first-time buyer. They faced using their life savings to make up the difference.

Santander could not reveal the reason it withdrew its offer, but Mortgage Solutions understands the decision was not linked to the Covid-19 pandemic, nor a change in the bank’s criteria post offer, but based on the individual circumstances of the case.

Paula Higgins, chief executive of consumer group Homeowners Alliance, said: “We are concerned that lenders can withdraw offers after exchange. They should be required to honour their offers and if they wish to withdraw, to pick up any costs incurred by their client.”

A spokesperson for Santander said: “It is extremely rare for a mortgage offer to be withdrawn post-exchange, this would only be done in exceptional circumstances to comply with our legal and regulatory obligations, which extend beyond ensuring the mortgage is affordable. While we are deeply sorry for the distress caused to the parties in the chain, the decision to withdraw the offer was the correct one.”

 

Bridging finance

Nick Morrey, product technical manager, John Charcol, said bridging finance would be an option to explore if the family wanted to proceed with the purchase, but there were many factors to consider.

“The bridging lender will want to place a legal charge, like a mortgage, across both the property being purchased and their current home to make sure there is plenty of equity available to them,” he said.

“Most bridging loans have to be repaid within 12 months so families need to consider how they will pay back the debt in such a short space of time. The sale of their existing home may not be enough to clear the bridge which means they would have to remortgage their new house and release equity to hand back to the bridging lender.”

Early repayment charges linked to the mortgage on the new property may apply.

 

Calls for change

Since the family’s story was published, Nationwide upped its mortgage offer to Abdus so the family could buy the property. Although his own home is still not sold, he said the situation will soon be resolved. “Nationwide has been our angel,” said Abdus.

If Abdus had not been rescued by his lender, he would have had to part with his life savings to pay the compensation. The Covid contract clauses would not have protected him because it is understood that Santander’s decision was not related to the pandemic.

Despite being able to move home, the stress has taken its toll on Abdus and his wife and he is calling for reform.

“I know circumstances like this are rare but you can see how damaging it can be when it happens,” he said. “There should be change. Contracts should not be exchanged without confirmation from the solicitor that funds are available. You should not be able to exchange only to find out later, the money is not there to complete on.”

MHCLG said it expects buyers and seller to behave reasonably where transactions have been interrupted by the pandemic so that chains can continue.

Buyers and sellers are advised to speak to their conveyancers about how the clauses can help them to minimise disruption caused by the pandemic. The government said there were no plans to offer a compensation scheme for families who had been forced to pay the ten per cent deposit because their chain had collapsed.

Rudolf said: “It is very rare that transactions do fall through after exchange of contracts and our sympathies naturally go out to anyone caught out by a situation like this due to matters outside of their control.

“If you cannot use the Covid-19 clauses,  the best way to avoid it – if you have a house to sell to fund the purchase – is to consider ‘chain breaking’ so that your sale goes through independently and before your purchase. Many people cannot do this because it means moving out into temporary accommodation, so it is understandable they have to take the risks of a related sale and purchase.”

To find out more about protection against chain collapses post exchange because of the pandemic, contact The Home Buying and Selling Group or tell your clients to discuss the issue with a solicitor before the exchange of contracts.

Freeholders ‘shockingly’ able to hide results of EWS1 form if building not fire safe – Rudolf

Freeholders ‘shockingly’ able to hide results of EWS1 form if building not fire safe – Rudolf

 

Unfortunately getting to a point, where every single building which has potentially dangerous cladding on it, or any other potentially flammable external wall system, is made safe has been much more difficult than perhaps any of us would have thought or liked.

Complications around who is responsible for the cladding and who should pay for its removal are numerous across a large number of buildings and I have nothing but sympathy for those leaseholders who feel completely powerless and in limbo because of this situation.

 

High stress situation

The stress this is causing is obvious, not just in terms of the money required to sort out high-risk buildings but also in terms of the requirements for an External Wall System (EWS1) form.

Who can provide this, lender acceptance, and what this means for mortgage availability, pricing, not to mention service charge rates, are all critical hurdles.

We’re acutely aware of the frustration that advisers and their clients are experiencing when it comes to securing an EWS1 form, getting the freeholder to agree to one being carried out, and lender requirements to have this upfront before any lending decision can be made.

In certain areas we have already secured some common sense amendments to former rules.

For instance, owners of flats or apartments in buildings which don’t have an external wall system and the external wall is brick now don’t need an EWS1 form in order to sell or remortgage.

Given organisational and resource issues around securing an EWS1 form for those who have flats with cladding, it made no sense to require one for those that don’t and was simply another obstacle in the way for those trying to sell or remortgage.

Agreement between the Royal Institution of Chartered Surveyors (RICS), UK Finance and the Building Societies Association (BSA) should, we are led to believe, benefit over 450,000 owners who might have been impacted otherwise.

But we also know that there are hundreds of thousands of others who will not be as fortunate, and their ability to remortgage or sell their existing property is being severely compromised by the current rules and situation.

 

Hiding results

Shockingly there are only approximately 300 fire safety inspectors qualified to issue an ESW1 and perhaps.

Even more shockingly, the lease administrators can ask them not to publish the EWS1 if it realises that the system requires work, for example not being fire safe.

What the CA has tried to do is provide our member firms with practical guidance on cladding to help steer them and their clients through what they should be looking for in these cases and how they should be advising clients and their lenders.

It is not a simple task, however, and with different lenders having differing rules about what is acceptable to them, there is clearly a role for advisers in helping hold the client’s hand if they are in this unenviable position.

The CA Guidance has now been issued to all our member firms but with a new building safety regulator being set up next year, there will undoubtedly be changes to the rules that will need to be reflected in updated guidance.

We would advise all stakeholders involved in these cases to take extra care – there have been changes and a degree of misinformation which often results in extreme stress and frustration being heaped upon a client who is often already feeling damaged by their situation.

 

For the home mover?

We would advise before listing the property that anyone thinking of selling should ask their lease administrator whether there is an external wall system and if so ask to see the ESW1 form.

If it is not available ask them to get one done.

For buyers, they will want to ask whether the EWS1 has been prepared and to see it to understand whether remedial works are required and the potential cost to them if they buy the property.

By working together we can help, but we’ll need to set out realistic goals about what might be achievable in the current environment, otherwise we may all end up disappointed.

 

 

 

Conveyancers lobby for staggered stamp duty deadline as firms turn down work – Rudolf

Conveyancers lobby for staggered stamp duty deadline as firms turn down work – Rudolf

 

I’m sure mortgage advisers will know it only too well and, from a conveyancing perspective, we have member firms working 12-hour days and weekends to keep on top of the volume of business.

Of course, were this any ‘normal’ year then the situation may be slightly different – a stamp duty holiday, for example, is always likely to up activity and all practitioners can work this into their strategies, processes and resources.

However, when it is off the back of a two-month lockdown, the upheaval Covid-19 has wrought, the huge demand we’ve seen, remote working and such, I’m sure you’ll understand this is a very different situation to be working within.

 

Lobbying to extend deadline

This is not meant to be an excuse but will give some idea of the background, what conveyancers have faced, and what this means in terms of the work they have and what they are attempting to do.

We know of firms, for instance, who are turning down new instructions because they want to ensure their service levels can be maintained on the work they do have.

That’s not ideal by any stretch of the imagination but needs must.

The backdrop of the stamp duty holiday also brings into sharp focus the requirements of all stakeholders who will clearly want to ensure their clients secure the savings on offer.

Conveyancing firms get this and the ticking clock that is on for all purchase cases.

I might add that we are pushing to get that deadline changed so the stamp duty saving tapers off over time rather than ends in a cliff edge.

The current approach could leave consumer confidence at a badly timed low, because it is our belief that, it is required to help the housing market overall but also, by next March we will have a significant number of purchases trying to beat the deadline and they won’t be able to do so on the current timeline.

 

Six weeks for searches

There are some practical measures all stakeholders, including advisers, can put in place to speed up the process and give your cases every chance of completing before the deadline.

I hope you’re all aware of the Home Buying & Selling Group (HBSG) pledges that set out a number of ‘To Do’ points we can all follow, and importantly urge our clients to set in train to improve the chances of getting the transaction completed.

As conveyancers it would be incredibly helpful if sellers instructed us when they list the property; in that way they can ask us to review the Title/review the property information and, by doing this, we can get ahead of any issues that are raised.

All this before they find a buyer.

There are further steps which can be taken to improve transaction speed, notably ordering the local and drainage and water searches on the property.

This is because many local authorities currently have delays, and we are told 10 per cent are taking six weeks to return searches – plot that on your client’s timetable and see where it takes you.

If the searches are only ordered after a mortgage offer is received, in order to be certain that the individual is proceedable and can afford the property, with offers taking up to 45 days and searches taking 30 days to get them.

Then again, it won’t need me to tell you where your case will sit in its ability to complete before the end of March.

 

Get ahead of the curve

We appreciate that asking the seller to pay money upfront is not a popular option, which is why seller’s property lawyers generally would not do the searches but we have been quoted Search Code compliant searches costing around £100 and, on average, an aborted transaction costs the consumer approximately £700.

The point is that the seller is definitely selling that property anyway.

Searches ordered at listing mean they are also available to the potential buyer, so they can choose the right lender, plus the valuer also has them which means post-valuation queries can be avoided, and the case progresses far quicker.

When I started in conveyancing there was a move to start including official copies of the Land Registry title at the seller’s cost in the contract pack, recognising the need to provide the title information upfront took time.

Yet the provision of all local authority information makes just as much sense when your buyer might pull out if it impacts their use and enjoyment.

Far better to have a genuine proceedable buyer rather than someone who has made an offer based on little or no information and has to pull out later because it will not work for them or their lender.

Overall, it really is about getting ahead of the curve with a transaction.

Setting in train those parts of the process which can take time means you and your client are not adding delay onto delay, especially when we have a deadline that if missed may possibly cost thousands of pounds.

Ask the question: can it be done upfront? If it can, then the answer is, do it as soon as possible. Your client will definitely thank you later.

 

Covid-19 crisis will grow demand for digital end-to-end homebuying – Rudolf

Covid-19 crisis will grow demand for digital end-to-end homebuying – Rudolf

 

However, this suggests that only in the current circumstances might we use the various solutions, systems and processes available to us.

For instance, when it comes to checking and verifying the identity of our clients, ‘needs must’ means firms will use the technology available and instigate an electronic verification system.

But the Covid-19 lockdown might reveal that this method of ID verification is actually the more sensible, digitally-driven solution that will meet all the standards and requirements for the future.

Moving to the future

There were very good reasons why firms relied on paper documentation, signatures, and witnesses.

But now, for example, that facial recognition or digital document verification is available, this has to be the start of a move into the future.

At the Conveyancing Association (CA) we’ve been working with a whole range of trade bodies, organisations and regulators to agree an electronic ID verification standard, as well as maintaining a safe environment in which our member firms can convey, and avoid any fraudulent activity.

The CA has no doubt that the call for a digital end-to-end homebuying process will only grow as a result of Covid-19, and ID verification will play a major part in this.

Preventing fraud

The added benefits to the homemover are, of course, also very attractive.

Gone are the days when they can be expected to take an official document to the Post Office to pay for each one to be copied and each copy to be certified as a ‘true likeness’ of the individual.

And I would suggest that is a very good thing, not just in terms of the customer, but also to the frustration of a fraudster who could easily fake a certification stamp.

It is far more difficult to bypass the security measures of electronic-ID verification incorporating biometric checks.

Anyone who has signed up for Airbnb or one of the new banks will be familiar with the simplicity for the user of proving their identity through an app in seconds. If these customer-centric providers can use this, why shouldn’t we?

Embrace available technology

As many have pointed out, this is not just a solution for the current predicament we all find ourselves in, but could also be a long-term benefit for all stakeholders, including advisers, agents and any other profession that needs to check ID.

A secure process for this, which does away with the need for repetitive checking and re-checking by all concerned, is a necessity.

Happily, all of the solutions are already available and acceptable to all the industry regulators.

We wish the same could be said for witnessing, which will need a change in the law of Deeds.

You may well have read recently of examples where individuals have been signing wills on car bonnets in order that they can be witnessed through the windscreens.

When we have the technology available to do this in a far more convenient and, quite frankly, less risky way, why are we persisting with these methods?

But let’s focus on the here and now and at least embrace the opportunity to eradicate identity fraud in the property industry and take a step towards a better and more secure customer journey now and for the future.

 

TSB clamps down on ground rent and estate fees

TSB clamps down on ground rent and estate fees

 

The bank joins Santander, Barclays and Nationwide on taking a tough stance against costly and sometimes hidden leasehold and freehold charges. TSB has gone a step further, however, and given brokers the parameters of its policy.

On properties built before January 2005, increasing ground rents are acceptable if they are linked to the Retail Price Index measure of inflation, or another similar index. If it is a doubling ground rent, it cannot double in less than a 20-year period. If the property was built after January 2005 it is subject to the same rules but the ground rent cost is restricted.

A maximum cap of 0.1 per cent of the market value of the property can be charged annually as ground rent for new-build houses. For new build flats and maisonettes and all second-hand properties, the cap is the higher of 0.1 per cent of market value or £250.

The same restrictions are applied to estate rent charges. The 2005 deadline is significant, said TSB, because homes built after this year are more likely to have onerous clauses.

Estate management fees or rent charges are costs paid by homeowners on a private housing estate to maintain, renew and repair the shared amenities and spaces that their local council has not adopted.

Some developers, however, are applying uncapped, escalating fees to freehold contracts, which are often sold on to a management company once the estate is finished.

TSB made the policy changes on 17 February in response to the Competition and Markets Authority’s investigation into leasehold practices in June last year. The bank said cases submitted before 17 February will be underwritten under the rules relevant to when they first applied, allowing the customer to complete their mortgage.

The bank said the changes reflected the need to protect both the borrower as well as the lender from excessive fees while pre-empting any difficulties in selling the house in the future.

 

Growing pressure on builders and agents

As more mortgage lenders impose tighter rules around ground rents and estate charges, there is mounting pressure on house builders and estate agents to be upfront with prospective buyers about the cost of leasehold and freehold fees and how they escalate.

Currently, fees are either not disclosed to would-be buyers until their solicitor requests information from the seller, or details are vague and taken on trust by estate agents.

Robert Sinclair, chief executive of Association of Mortgage Intermediaries, said: “It’s positive to see that TSB is being transparent about exactly what they will and won’t accept so that any issues can be spotted as early as possible.

“Leasehold and estate charge information should be provided before the mortgage offer is made.

“It is beholden on the estate agent or developer to grasp the nettle and be transparent from the start about what fees come with the property and how the terms are set out.”

 

Upfront about costs

By providing this information at the start of the home buying process instead of the end, borrowers can decide if they want to proceed with the purchase without spending money on broker and solicitor fees and a valuation. Furthermore, intermediaries can narrow their lender search depending on the terms and conditions of the leasehold and freehold contracts.

Beth Rudolf, director of delivery at the Conveyancing Association has been vocal in wanting to bring about change to the current system of leasehold and freehold charges.

She said: “We would encourage anyone looking to buy a property to ask the person marketing it for the material facts disclosure so that they are aware of anything which might impact their decision to buy it or their choice of lender.”

Under the Consumer Protection from Unfair Trading Regulations 2008 anyone marketing a property for sale should provide a disclosure of material facts at the point of advertising.

However, Rudolf said a survey carried out by the association in 2017 indicated that less than six per cent of people get the required information upfront. Analysis of the data indicated that this led to consumer detriment including stress and personal illness.

Mark Hayward, chief executive of the National Association of Estate Agents Property Mark, agreed that agents must tell prospective buyers about estate charges, escalating ground rent charges and also service charges.

Ideally, he said, the agent will have seen the leasehold information pack but these are difficult and expensive to obtain. Instead agents often have to rely on invoices provided by sellers and information provided on the property information questionnaire.

A spokesman for the Home Builders Federation said: “We continue to work with stakeholders to develop the process and ensure consistency in approach to how this is done.”

Earlier this month, the new housing minister Christopher Pincher said property owners will be given greater powers to challenge estate management fees charged by developers. The government is also planning to repeal legislation which could allow homes to be repossessed or have a lease placed on it for rent charge arrears.

 

Online property factfile set for pilot launch

Online property factfile set for pilot launch

 

Beth Rudolf (pictured), chair of HBSG and director of delivery at the Conveyancing Association, spoke about its development at The Council for Licensed Conveyancers’ (CLC) annual conference.

HBSG is the organisation which has developed the standard wording for reservation agreements and is working on other issues to improve the property buying process.

The Buyer and Seller Property Information (BASPI) is filled out by the property’s seller on an online portal which an estate agent can then access and share with potential buyers.

Information from Land Registry can also be pulled-in to determine the property’s ownership status. 

Rudolf said BASPI could be sent to parties at all stages of a property transaction so “everyone has one source of truth”.  

She added: “Everyone will know what the buyer has been told, what the seller believes the situation to be and if there’s input from the local authority then it shouldn’t conflict.” 

BASPI has been approved by the CLC and other property trade bodies and will be going to pilot with an aim of 500 transactions going through.

It is still waiting for approval from the Solicitors Regulation Authority, which will be discussed at the body’s meeting in February. 

Rudolf said the group was still trying to get the pilot plan together and recruit participants with an aim to launching the pilot in March.

“We will use larger estate agents so half the team can use BASPI and the other half won’t so they can establish the impact on the chains, transaction times, fall-throughs and consumer interaction.

“Once we have a plan in place to deliver a robust pilot and suitable participants recruited we can agree a pilot launch date,” Rudolf added.

 

Conveyancer confidence indicates positive outlook for advisers – Rudolf

Conveyancer confidence indicates positive outlook for advisers – Rudolf

 

That’s why confidence indices in other sectors or views on anticipated workflows read across to other practitioners, whether advisers, distributors, lenders or estate agents.  

Business passes between us and therefore it is possible to get an idea of how we’re all progressing based on such sentiment. 

Of course, there can be a noticeable difference in business confidence determined by where you come in the customer journey and what part of the market you’re involved in.  

Agents, for example, have only the current limited pool of the purchase market to draw from while advisers get to wade into the whole pool.  

If advisers are clued up and aware of all business opportunities, then it’s not only the purchase and remortgage market. It’s also in areas such as protection, general insurance and conveyancing where we’re seeing an increase in adviser-led recommendations, particularly through established broker-facing portals. 

 

Conveyancer thumbs up

Conveyancers, of course, come at the tail end of this and get to review how the market is playing across a number of product areas.  

While some stick to their knitting in mainstream residential, others have forged specialisms in sectors such as equity release or buy-to-let (BTL). The latter sector has become increasingly specialist, particularly with regard to limited company, portfolio and homes in multiple occupancy activity. 

So, how do those at the tail end feel about their own place in the sector and how their workflow might move in the next year?  

Well, it’s good news. According to the latest Annual Regulatory Return from firms regulated by the Council of Licensed Conveyancers (CLC), 45 per cent believe their workload will increase in the next year, while 42 per cent said it’s likely to say the same. Only 13 per cent feel it might contract. 

Given the ongoing political uncertainty, and how this might land in terms of the UK economy, that appears to be a strong thumbs-up — both in how they view the overall market and what might be coming down the pipes.

Of perhaps more interest to advisers is the source of conveyancers’ work. The CLC data shows 37 per cent depend on personal recommendations; a quarter rely on referrals from agents; 13 per cent win business direct; website and telephone enquiries are each a source for seven per cent; a further seven per cent comes through referrals from other source such as lenders; two per cent is from comparison websites; and finally two per cent from the category marked ‘other’.  

What the survey does not show is the number coming through advisers. I suspect this is a growing amount, given that advisers are now gearing up to make the conveyancing recommendation.  

 

Confidence in new business

The further good news here is that conveyancers do not, in any great number, anticipate a major fallback in activity. If anything, they are planning for more business. Advisers can therefore feel confident in their position and the amount of new business coming down the tracks. 

Many in the market believe there is a well of pent up activity waiting to be drawn from, when (if?) we get the political certainty we all crave.  

Understandably, there is a belief that many individuals are waiting out the current period until they know what our situation with the European Union will be and when we might actually leave 

We know there was a significant upturn in the market in March after the Brexit deadline had passed so we might expect to see a similar increase in activity following the 31 October deadline. 

The Conveyancing Association hopes this is the case. It has repeatedly called on government to engineer a housing market that functions efficiently and delivers a swifter, more certain and transparent experience for customers.   

The market certainly needs a boost. The traditional statistic reads that if you wanted to get an offer for your house by Christmas, you’d have had to have put it on the market on the 22 October. That being the case, given the current delays to the home moving process you still wouldn’t be ready to move until 5 May 2020. I don’t think any of us believe that’s acceptable.  

Perhaps if we get certainty politically, and a government willing to adopt the Home Buying and Selling Group’s proposals to improve the home moving process, the market will become more positive for all of us.