Betts: Process not as efficient as it should be
MPs are to probe whether consumers have the information they need to choose a conveyancer as well as the role of referral fees, it was announced yesterday.
They will be part of an inquiry on improving the home buying and selling process in England launched by the levelling up, housing and communities select committee.
It will examine the transaction process, the information available to buyers, and the role of conveyancers and estate agents.
On the latter topic, the terms of reference ask whether consumers have sufficient information to determine which conveyancer to use, and how information provision on conveyancing could be improved.
They also question what effect a mandatory professional qualification for estate agents would have and whether there should there be a single, legally enforceable code of practice for property agents.
“What impact does the practice of referral fees have, and how would a review, standardisation of practice, or ban affect transactions and consumers?” they continue.
A key topic is whether the reliance on voluntary initiatives is adequate to improve the process or if improvements should be made mandatory through legislation.
There have been repeated calls for mandation but the government’s current position seems set against this.
Among the other issues raised in the terms of reference are reservation agreements, whether sellers should have to provide set information about a property when it is marketed, and how to accelerate the digitisation of property data.
Committee chair Clive Betts said: “The process of buying and selling a home in England is often stressful for those involved. Indeed, despite there being around two million households who successfully buy or sell their home each year, consumers often find the process is not as efficient, effective, or as consumer-friendly as it could be.
“As part of this inquiry, we will look at the chief obstacles to improving the process of buying and selling a home. We will be keen to examine issues such as the time taken to complete a transaction and challenges in finding the right information.
“Topics such as a lack of transparency around conveyancing services, the payment of referral fees, and the weak regulation of estate agents will also be on our agenda in this inquiry.”
The committee has issued a call for evidence and will hold hearings in late April.
Sheila Kumar, chief executive of the Council for Licensed Conveyancers, said: “We welcome MPs recognising the very great importance of reform of the home buying and selling process. Upfront information, digitisation and streamlining of the process will all be key in ensuring smoother, faster and more secure transactions that lead to better outcomes for consumers.
“The demands of operating the housing market under pandemic restrictions played a part in moving things along, but the pace of progress needs to be maintained if we are to deliver all the potential benefits of reform to consumers and the economy.”
She said industry groups such as the Digital Property Market Steering Group and the Home Buying and Selling Group have been doing “fantastic work to focus on what is needed”, and the inquiry would provide “a useful test of the direction of travel and galvanise the huge number of organisations and individuals that will need to deliver improvement”.
Meanwhile, the Law Society has released an updated TA6 property information form that includes the material upfront information that the National Trading Standards’ estate and letting agency team says should be disclosed by estate agents on property listings.
Law Society president Nick Emmerson said: “We hope that the TA6 will help facilitate the flow of information from marketing a property by estate agents through to the legal process.
“The aim is that having better informed buyers could help reduce both the time the process takes and the number of sales that fall through.”
Updates to the form include adding the Unique Property Reference Number and council tax band of the property; the tenure and details of the costs, such as ground rent and service charges; the cost of parking permits and whether the property has electric vehicle charging; details of building safety and restrictive covenants; and information about flood risk and coastal erosion.
Solicitor Stephen Larcombe, founder of the recently formed Property Lawyers Action Group, strongly criticised the new form, saying that while it seemed to be “the Law Society’s attempt at a ‘single source of truth’, it may instead become a fruitful source of litigation”.
Among his multiple criticisms were the seller being asked to confirm legal capacity. “This is not always understood by a lay client – property in trust, or being sold under a power of attorney for example.”
The leasehold section, he said, invited the client to get hold of the lease to answer the questions. “This is just silly.” He felt similarly about the seller being asked to make a representation on building safety, and that there were no breaches of planning.
The group has been critical of National Trading Standards’ whole material information initiative, describing it as “simply a reinvention of the ill-fated [home information pack] project that was rightly scrapped in 2010”.
Rather, the group said, Trading Standards could achieve more by cracking down on inadequate disclosure of referral fees.
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