Buying a home can be a stressful experience, but reforms announced this weekend could make the process less of a headache.
After making an offer, 65% of buyers and sellers continue to worry that they won’t make it to completion, according to research from the Department for Business, Energy & Industrial Strategy (BEIS). This indicates the depth of stress and confusion that surrounds home sales.
Earlier this week, the Ministry of Housing, Communities and Local Government (MHCLG) revealed its plans to improve the home buying and selling system following a consultation on the topic.
Here, we take a look at the key proposals that have been put forward.
1. Impose a 10-day timeline for local authority searches
While most local authorities are quick to respond to search requests, the government found some were holding up the process and causing delays.
Local authorities will now be expected to respond to all search requests within 10 working days, with the government warning it would take ‘appropriate action’ for those that fail to meet this timeframe.
- Find out more: exchange and completion: the steps to finalising a sale
2. Make voluntary reservation agreements standard
Reservation agreements combat ‘gazumping’ (where a seller accepts an offer, then sells to a different buyer instead).
Once a buyer and seller sign a reservation agreement, the buyer has the right to buy the property within a set time frame and the owner cannot sell to anyone else.
To reduce the number of failed transactions, the government hopes to develop a shorter, standardised reservation agreement that can be used for any transaction.
It will launch a pilot of these agreements with a view to making them a standard part of home selling in future.
- Find out more: making an offer on a house or flat: everything you need to know
3. Encourage decisions in principle
A ‘decision in principle’ is a letter from a mortgage lender confirming how much they are likely to lend to a buyer. You can find out more in our guide to applying for a mortgage.
The government plans to encourage the use of decisions in principle for all non-cash buyers, and will make this a recommended step within its home-buying guides.
4. Develop tools to rate conveyancers
Delays in conveyancing can hold up the entire property chain, so the government plans to work with industry to develop transparent data and standard metrics for rating conveyancers’ performance.
In the long term, the government would like to see this information made public on conveyancers’ websites.
5. Estate agents required to hold professional qualification
Currently, you don’t need any specific training to become an estate agent, despite their involvement in high-value transactions.
The prospect of a mandatory professional qualification for estate agents is currently being consulted on, and the government has indicated that legislation is likely to follow.
- Find out more: estate agents: how to register and what are your rights?
6. Disclosure of kickbacks for referrals
Some estate agents refer their clients to mortgage brokers, conveyancers or surveyors – but don’t always make it clear that they’ll receive a fee for doing so.
The National Trading Standards Estate Agency Team (NTSEAT) plans to actively monitor whether agents are disclosing these fees to buyers, while the government works on developing a standardised form to report referral fees.
The government will also consider whether to ban referral fees altogether.
7. Crackdown on rogue agents
Estate agents are regulated by the NTSEAT, which has the power to take enforcement action against rogue agencies.
The government has committed to working with NTSEAT to strengthen enforcement of the regulations and ensure agents comply with consumer protection regulations.
- Find out more: how to complain about your property agent
8. Faster information and maximum fees for leaseholders
Buying a leasehold property can take two to three weeks longer than other transactions, according to government data.
To speed up the process, it will set fixed time frames in which freeholders and managing agents need to provide information about the leasehold. It also intends to set a maximum fee that can be charged for this information.
- Find out more: Leasehold vs freehold
9. Develop digital signatures and e-conveyancing
New technology has the potential to make transactions digital, from signing the contract to releasing funds.
The government plans to establish a technology working group to better understand how technology could change the home-buying process. In particular, it wants to prioritise investigating digital signatures, improving ID verification and promoting the use of e-conveyancing.