Faulkner: A lot of things about HIPs were right
Upfront information on properties for home buyers must be mandated to “revolutionise” the process, the chair of the Home Buying and Selling Group (HBSG) has told MPs.
The levelling up, housing and communities committee also heard calls for the regulation of reservation agreements, to stop “really sharp practices” by estate agents, such as demanding “quite substantial”, non-returnable reservation deposits.
The committee yesterday took its first oral evidence for its inquiry into buying and selling homes.
Kate Faulkner, chair of the HBSG, said its work on upfront information had identified a total of “300 things” a buyer and lender may need to know before they said yes to a property.
Not every buyer needed to know the answer to all 300 – it may be that all buyers needed to know the same 50 things, but then a different 50 for that particular property.
She said upfront information, which would include the more limited ‘material information’ now required by Trading Standards, had to be mandated to avoid a situation where, if it was a relay race, only one of the racers was disclosing the information.
“If only one person is doing the work, it makes no difference,” she said.
There have been repeated calls for mandation but the government’s current position seems set against this.
Ms Faulkner said it should also be mandatory for buyers to receive a ‘how to buy’ guide, and the HBSG was currently developing one, along the lines of other government guides. “There’s a huge amount of inconsistent information out there at the moment.”
Asked what lessons were learned from the failure of home information packs (HIPs), she said “a lot of things were right” about HIPs, but “the technology wasn’t there” and “there was not necessarily the quality of information”.
Paula Higgins, chief executive of campaign group the HomeOwners Alliance, said more information would shorten transaction times and sellers were the ones who should pay for it.
She said the fact HIPs failed did not mean they were not a “good idea”, but there were “a lot of vested interests”, such as surveyors, who were happy for the property market to stay as it was.
Ms Higgins said the challenge on upfront information was “making it happen”, with buyers often unaware of service charges they needed to pay and estate agents not really wanting to show properties “warts and all”.
She went on: “Are we going to get there? Will we be able to see anything like an auction pack? I don’t know.”
Ms Higgins said “there must be some regulation” of reservation agreements, because “we are now seeing really sharp practices”, with some estate agents “demanding reservation deposits and keeping them, and some are quite substantial”.
Another issue was online property auctions, with buyers paying non-refundable deposits of £6,500.
Reservation agreements “could be a good idea”, Ms Higgins said, but “if we don’t have good regulation, it could be abused”.
Ms Faulkner said she knew of one estate agent who had persuaded 80% of sellers to sign reservation agreements, with sellers or buyers who pulled out paying a £2,000 penalty. As a result, only 6% of their transactions fell through, against a national average of 25-30%.
She said it had been estimated that around 1,000 estate agents were using reservation agreements, and it was now “normal in the new-build market”.
On data, Maria Harris, chair of the Open Property Data Association, said the current conveyancing system did “everything in the wrong order”, instead of providing a property pack at the start.
“Everything is opaque and disjointed and people are repeatedly doing tasks which add no value.”
Ms Harris said property data still “sits in lots of different places” and the job of “digitising the data has not really started”.
Although it would be “very hard to digitise a process with no digital foundation,” she hoped it could be done within three years.
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