Who’s making the moves in conveyancing?

There is no question that, even after the ill-informed introduction of HIPs, refreshing the transactional process so it is faster and more secure is what everyone wants. And we might just be on the cusp of something good. The Home Buying and Selling Group’s (HBSG) move to a pilot and testing stage comes at the same time as Parts B and C of Material Information becoming compulsory. Both acknowledge that more upfront information should improve matters and reduce fall-through rates but what is the wider sentiment?

There are rumbles that more Material Information may disturb any equilibrium in an already fractious market, while moving agents further away from their stock-in-trade of sales and negotiation. Anti-money laundering laws have already led some agents to question whether they actually work for the National Crime Agency, while others feel like they’re doing the job of Border Force when completing Right to Rent checks. Are agents now being pushed too far into conveyancing territory?

Carl Brignell at Elite Conveyancing thinks so and is full of sympathy. “Having read through The National Trading Standards Estate and Letting Agency Team (NTSELAT) requirements, I have absolute sympathy. Trading Standards is effectively asking agents to report on technicalities for which they have no experience, and without any provision for training or a guiding regulator. This is akin to asking a dentist to report on a patient’s eyesight!”

Trading Standards is effectively asking agents to report on technicalities for which they have no experience.”

“The sad irony is that Material Information is a misguided quest and is likely to result in a significant increase in misinformation. It also raises the question of who is held liable for mistakes,” adds Carl, who believes below-average fall-through rates can be achieved with the due diligence of a proficient mortgage broker and a good agent correctly pricing a property.

The general consensus, however, is that more upfront information, together with revised expectations of what happens and when, will positively affect conveyancers, agents and movers. Peter Joseph at The Moving Hub says those involved are not being asked to produce anything new but are merely being asked to produce it earlier in the process. “If a conveyancer is competent, the Material Information required would emerge during the conveyancing process anyway. So let’s be upfront about it.”

If a conveyancer is competent, the Material Information required would emerge during the conveyancing process anyway.”

Upfront adoption is already here

Many conveyancers are already on-board with the idea of front loading. Vicky Quinn- Campbell at Simply Conveyancing recognises that the more information a vendor gives before the marketing of a property starts, the more streamlined the sales process will be. She also says that information should be digitised so it can be shared in real time.

Our clients are asked to fill in a Property Information Form early in the process which gives us important information about the sale and provides the vendor with guidance.”

Like many firms, Simply Conveyancing has already taken a stand to gather information from vendors as quickly as possible. “Our clients are asked to fill in a Property Information Form early in the process,” comments Vicky. “This gives us important information about the sale and provides the vendor with guidance on the kind of documents that will be required during the transaction.” Vicky adds that getting started early gives the vendor more time to find the warranties, guarantees and the paperwork vendors “have a habit of putting somewhere ‘safe’ and then forget where that ‘safe’ place is.”

Forget forms, think digital

Maria Harris, the Chair of the Open Property Data Association and a director of Digital Cat Consultancy Ltd, has been working closely with HBSG and shares Vicky’s views. “Ideally, everyone should stop thinking, talking and working with forms – it’s one of the biggest barriers to digitising the transactional process. To truly reform home buying and selling, everyone needs to move to a data-led and digital way of working.”

The HBSG wants to make digital property logbooks compulsory for sellers.”

The digital nirvana will be for data, such as titles, deeds, searches and EPC ratings, to be collected then stored in a FAIR (findable, accessible, interoperable, and reusable) format via the Property Data Trust Framework. This would become the global standard for data and provide the ‘real time’ access for all stakeholders that Vicky craves. On the matter of warranties, guarantees and other documents that sellers are asked to provide – the ones that are often lost, misfiled or stuffed in a kitchen drawer – the HBSG wants to make digital property logbooks (ongoing information about a property) compulsory for sellers, so information is instantly available.

The work of The Residential Logbook Association (RLBA) is admirable and is supported by the Department for Levelling Up, Housing and Communities. Described as a ‘digital property companion’, a logbook provided by a RLBA member will not only have useful, relevant information about a home in a secure and standardised way, it will also have a copy of the title deeds and any documents referred to in the title document.

The HBSG also wants a greater adoption of property packs (the collation of upfront information prior to a sale), which would see vendors complete IDV and supply BASPI/ TA6-compliant information early in the sales process to reduce duplication and doubling up.

Changing the order of events

Agents might question their role in any future information gathering, especially as they adjust to obtaining Material Information Parts A, B and C, so now is a good time to talk about timing. The idea is not to make estate agents work any harder. The HBSG’s aim is to shift the emphasis to the pre-marketing stage, involving conveyancers much earlier, and finding new time and cost efficiencies between memorandum of sales and completion.

One of the HBSG’s key recommendations is for sellers to instruct a conveyancer before they contact an agent – or at least on day one of marketing. The conveyancer would collate all the legally-required paperwork, would ask the vendors to supply mandated information and would assimilate aspects, including the BASPI, property log book and property pack, prior to an agent’s instruction.

The result would be a complete picture of a property for sale and the compilation of all the Material Information required, without the agent having to gather technical information.

Kate Faulkner OBE, the chair of the HBSG, says that when agents insist their clients complete property logbooks, fill in property packs and instruct a solicitor before they take on the property, the administrative burden is reduced and the resulting sale is speedy and secure.

“Being an agent isn’t easy and neither is making a profit,” comments Kate. “The two big problems for agents at the moment are the length of time it takes to sell a property and the 30% fall throughs. Both are costing agents dearly. One of the causes of these issues is not having enough information upfront, which can lead to overpricing.” Overpricing is one of the concerns expressed by Carl. Often a dwelling’s true value is only found out several weeks after a property has had an offer accepted, usually when something detrimental is uncovered by the searches or in the title deeds.

The two big problems for agents at the moment are the length of time it takes to sell a property and the 30% fall throughs. One of the causes is not having enough information upfront.”

Another issue that can derail a transaction further down the line – and can be avoided by having upfront information available – is a lease. “The information provided by even good agents is rarely enough or correct,” adds Kate. “Rushing to get a property to market without all the answers an agent is required to have – lease length, service charges, ground rent and sinking funds, for example – can end in disaster, especially if this information isn’t understood by the buyers.”

A new money mindset is needed

And now for the prickly point of Pounds Sterling and who will pay conveyancers for their advance work if a new way of buying and selling is adopted. We have to add into the mix that more upfront information may put buyers off and jeopardise the ‘no completion, no fee’ offering of some legal firms. Someone has to cover the conveyancing expense bearing in mind a sale may fail to materialise.

It was a question that hung over the HIP but Glynis Frew at The Property Franchise Group has an opinion on the matter. “What’s really interesting is the push-back that we get that the seller ‘will not pay’ and yet anyone wanting to rent their property pays for an EPC (approx £75), a Gas Safety Certificate (approx £150) and an electrical test report (approx £250), plus the fee to market and find a tenant. Letting agents have no qualms about telling a landlord to commission and pay for these documents.”

Now it’s more than just talking. We had a meeting recently where different protagonists in the industry exchanged examples of how they are making changes happen.”

Glynis’s thoughts tap into a wider mind shift that needs to take place – one where sellers have to be super-serious about their intent to sell. If a vendor is committed to selling, surely they will be invested enough to pay a conveyancer to start work before they instruct an agent?

Equilibrium

We’re returning to the earlier point of disturbing any equilibrium in the current market. After all, the proposals require wholesale changes across numerous industries and also a buy-in from the general public. Will upfront fees put sellers off? “

If a good conveyancer or agent explains to vendors what they are paying for before they market their home and how it will help them, it shouldn’t deter sellers,” comments Kate. She adds that those who are put off are perhaps not the clients an agent needs. “Upfront fees means agents get committed sellers.”

We only have to look to Scotland to see that upfront information can change the buying and selling process for the better. “When a Home Report became a legal requirement in Scotland, the view was people wouldn’t put their properties on the market,” says Kate. “In reality, it didn’t have any negative effects.”

On the contrary. Data obtained by HBSG found transaction times are 4 weeks quicker in Scotland, on average, and the average fall-through rates are 66% less than England and Wales. The upfront cost? RICS puts the average price of a Scottish Home Report at between £585 and £820.

It’s now, as more conveyancers, agents, lenders and providers buy into the HSBG’s recommendations that more objective – and creative – conversations around cost can take place. It’s possible that some agents will be able to absorb the expense of upfront information so it’s a carrot to dangle in front of sellers. Others may explore deferred payments options, as seen in Scotland, where the Home Report can be paid for upon completion or withdrawal. Perhaps it’s as simple as telling sellers they must pay for upfront information and the start, rather than at the end. After all, it won’t be a new expense but a cost that comes earlier.

Kate agrees that there are various ways of covering costs.” There are agents working closely with legal companies to provide the information for free – they’re finding it saves both parties enough time and hassle that it pays for itself. Other agents are buying in property packs to provide the information – they find it reduces time to sell and fall throughs, again, paying for itself.”

Time for progress, not procrastination

There is no question that those involved with the HBSG – the list is impressive and extensive – want change but there’s an elephant in the room. How can we stop the repeated discussions regarding reforms from internalising further? How can we take the discussions away from trade platforms and out into the real world? How can we draw the consumer into the conversation to such a degree that they demand a streamlined, simple conveyancing process?

“Now, it’s more than just talking,” comments Glynis. “We had a meeting recently where different protagonists in the industry exchanged examples of how they are actually making changes happen. The focus is on different agents, conveyancers and service providers working together to enact change. Once we get a swell of activity, this will provide the platform to educate the consumer on what is possible.”

The consumer is at the heart of the HBSG’s proposals. Its discussion paper repeatedly calls for consistent information to be shared with the general public, requesting the Government and the media to communicate changes and revised expectations. It’s a sensible approach as success stems from awareness and a degree of opt in.

It is suggested a leaf be taken out of the lettings book, where the ‘How to Rent’ guide has become the legislative backbone of compliant tenancies. The HBSG wants revised ‘How to Sell’ and ‘How to Buy’ guides to be mandated in the same way as their renting equivalent, and the contents to clearly state what is expected of buyers and sellers. The guides – sent to home movers at the initial point of contact with an agent –should also outline what home movers should expect from the professionals involved.

Regulating agents for mass adoption

Defining the service expected from agents goes hand-in-hand with the HBSG’s key proposal for the regulation of property agents. It feels regulation would ensure all agents make the changes required to improve the transactional process, compelling them to comply with any new legislation and issue mandated information.

With the guides issued, home movers would also be prepared for the checks and verification ahead, such as making it explicit that financial prequalification will take place before a purchaser can view properties and make an offer. There are also notes on a move towards one digital ID certificate, a greater adoption of open banking when it comes to AML, risk assessment and proof of funds, and recommendations on the release of mortgage funds so moves are concluded by 13:00 on completion day.

Everything mentioned above is possible and much of it is already taking place. Now the HBSG wants even more professionals involved in the transactional process to follow its roadmap, test, pilot and feed back its findings.

The tools are available – the BASPI, property packs, property logbooks and conveyancers who are onboard. What’s needed are more agents willing to stick their head above the parapet and only take on sellers who are committed to upfront information and who have been financially prequalified.

Collective change from within

There’s not going to be a sweeping law that alters every aspect of buying and selling. Instead, transformation will come from increasing amounts of mandated information, self-initiative, a collaborative desire for change within the industry, a willingness to adopt fresh ways of operation and a commitment to educating consumers.

In the end, the difference will be agents who can offer faster completion times and lower fall-through rates, versus those who over-promise, under-deliver and lose the trust of the home mover.