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Wednesday, 13 November, 2002, 12:01 GMT
Home sellers' packs back on agenda
Home sellers' packs are back on the agenda, according to plans unveiled in the Queen's speech.
Under the scheme, people selling their home will have to arrange a basic survey and complete a questionnaire on the details of the property for potential buyers.
Under current rules the onus is on the buyer, not the seller, to make adequate checks.
There was speculation that the government had got cold feet over the proposals, after it ran into opposition from estate agents and MPs.
The idea was dropped from last year's legislative programme, but the government has always been committed to introducing the scheme.
Ministers believe that the packs will make gazumping - when buyers are outbid by rivals at a very late stage of the house-buying process - harder to achieve.
The main aim is to reduce the time it takes to get from the 'sale agreed' stage to exchange of contracts.
It is this time - which can sometimes be many weeks - during which gazumping can take place.
The move was welcomed by Ashley Holmes, head of Legal Affairs at the Consumers' Association.
He said: "Under the current antiquated system, buying and selling a house turns out to be extremely traumatic for too many people."
Ed Chamberlain of the Consumer Home Information Pack Support (Chips) - a business group in favour of the packs - said that making surveys compulsory for sellers would extend protection to many more homebuyers.
"Currently only around 25% of people commission a survey, mistakenly thinking that they are able to rely on a valuation," he said.
But there has been concern that sellers' packs could make it difficult for owners in poorer areas to sell up and smaller estate agents could lose out.
And the "Home Condition Report" (HCR), which is part of the pack, will not meet mortgage lender requirements, according to the Council of Mortgage Lenders. (CML).
Lenders may also need to charge sellers for a valuation on top of the pack price.
Nick Salmon, of the anti-Sellers' pack group Splinta, said: "Unfortunately the measures which are proposed by the government will do little to improve the real problems in the home buying and selling process."
There may also be concern about the cost of the packs, which is expected to be between £400 and £750.
The Council of Mortgage Lenders (CML) said it suspected the packs "potential importance is being overstated as a mechanism for speeding up the process of buying and selling homes."
It said that concerns remained about whether they would create "significant enough improvements to the market to warrant their costs."
Better living conditions
The government also plans to introduce measures aimed at improving living conditions for people in shared accommodation, such as students.
In an attempt to crackdown on unscrupulous landlords, it plans to give local authorities powers to license private landlords in certain areas.
By 2010, all social housing must meet minimum standards, including having proper windows, an inside toilet and a bathroom, the government said.
Do you believe the new packs will work? Or do you think they will be a waste of money? Maybe you would be fearful of buying a property based on information collected by the seller? Do you have a better idea about how to tackle gazumping or improving the home buying process? Please send in your comments:
Yet another ill thought idea from our "Nanny State". Why not just switch to the procedure used in Scotland, it has worked without problem for years.
Proposed sellers packs are a complete waste of time and money and will do nothing to speed up the selling process ; on the contrary, they will introduce a further layer of unnecessary bureaucracy.
It's fine to address the problem of gazumping, but will this new measure also work the other way? What about people that make frivolous offers only to withdraw them when they find something better? This costs the seller, as the property is invariably taken off the market when an offer is accepted. Surely the whole process needs to be overhauled, instead of making a half-hearted, politically motivated gesture.
Looks like boom time for survey companies. I would not buy a house on the basis of a basic survey conducted on behalf of the seller. I would still wait for my own full building survey.
They will work if there is a valuation and survey that is sufficient for all mortgage lenders, otherwise there is no point. As for the argument that it is too expensive, I suspect that the vast majority of sellers will also be buyers so they will be neutral regarding cost and even save money compared to the current scheme whereby one can fork out for a survey to find there are problems and not continue with the purchase.
How do other countries manage to avoid all the problems we have with home-buying?
It is naive to think that house buyers will rely on a sellers' pack to reassure them about a property. As the biggest investment most people make, and with "buyer beware" a central tenet in law, the majority of buyers will insist on their own detailed independent survey. This looks to me like a fumbling attempt by the government to slow down the housing market by placing yet another obstacle in the path of the house buying process.
Home sales packs!!! These will immediately raise already hot house prices! If one week somebody pays nothing to sell a property and the next costs me £600 then by the law of the market I pass on this cost to the purchaser together with everyone else in the same boat! How will this help first time buyers?? Its an utter nonsense! especially if it takes time to sell and you need an update at more expense and if the purchaser still needs a survey because nobody will trust its validity! Complete utter madness just like most of New Labour's policies, all bluster and no useful substance!!! Both the Halifax and Nationwide should now revisit next years predicted house price growth and add another 1% for this crazy idea!
I am a Legal Executive in my 30th year conveyancing. I practise in Central London. It is my experience that gazumping is rare and only gets the publicity when someone suffers it. I can't think of a single case I have had of gazumping in the last few years. The sellers pack will not end gazumping, and will place an additional cost to the seller. Buyers will still have to have mortgage valuations, as the pack will not comply with the CLC requirements, so the only people to gain out of this will be the surveyors. The time that transactions take is not really an issue, and I am sure that people would not want to move that much sooner bearing in mind the arrangements that need to be made when moving, for example, arranging a change in schools. The system of buying and selling property is probably outdated, but it would take a completely different mind set towards property ownership to introduce a different procedure, and it is doubtful whether anyone in government has the vision or ability! to produce the radical changes that would be necessary. Streamlining the existing system seems to be the way forward, not piling on additional steps or adding to the cost.
There is one way of stopping gazumping without sellers' packs. Make the offer binding, just like in Scotland, with the offer being made "subject to survey" (in case anything nasty comes up.) It also has the secondary effect of holding chains in place since everyone is legally committed.
The 'survey' inspection proposed and the searches sought for the pack will have such a short and finite life as to be totally valueless. Any survey report has a shelf life of no more than a few days, a storm the next day can radically affect the condition of a property. The longer the reliance upon old data, the greater the chance of a buyer being misinformed. The 'survey' inspection will not be even as good as a basic Housebuyers report, and will only encourage vendors to bodge necessary repairs (knowingly or unknowingly), and confuse evidence that would otherwise have been available for a surveyor acting for the purchaser in the normal manner! . This will not bode well for the proper repair and maintenance of our housing stock. The process is a complete red herring, and an expensive one at that
Not a moment too soon in my view. House buying as it stands in this country is horrendous.
In some surveys the guy doesn't even get out of his car!!
Would you buy a house that employs this as its standard of basic survey???
The way to prevent gazumping is to adopt in England & Wales the approach used in Scotland where a sale is binding as soon as an offer is accepted.
The current trend down south is for properties to stay on the market after an offer has been accepted - even in some cases where the offer was for the full asking price - and this just invites gazumping all the more.
Buyers and sellers should be forced to commit right at the start to follow through the sale to its conclusion - it's too easy at the moment to simply pull out when you feel like it. I lost a buyer for my house last year on the day we were supposed to exchange contracts because they just changed their minds. No wonder the whole system is so traumatic!!
If the seller pack places liability firmly in the lap of the seller then it is worthy of some trust - the buyer could always sue the seller for any false or misleading information. Without any liability the pack wouldn't be worth the paper it was printed on!
I would welcome the new pack as my husband and I have spent a considerable amount of money having prospective houses surveyed only to find that they needed considerable work done to them including damp proofing. I very much hope that the legislation goes through this time and disagree that it will put small estate agents out of business whilst recognising the advantages of reducing the time between making an offer and exchanging contracts. This is bound to be a positive way to tackle gazumping.
I have been trying to sell my house for three months. A Seller's pack would not help at all. I have only seen one genuine buyer in all the three months. I would suggest a deposit at an estate agent from prospective buyers - that would sort the tourists from genuine buyers. It takes two parties to make a contract after all.
We have consulted with the DTI and other bodies for the last two years to make sure the pack worked for everyone. I still think it will work, and there will always be winners and losers, but this time the winners will be the public, which makes a change in the current house buying climate, where it seems everyone involved wants vast amounts of money for not very much work. At least now the buying public will be more informed and more secure when purchasing a house. Due to the speed of selling, we hope it will bring down stress levels too!!
Boom market knee jerk reaction. The number of complaints relative to the market turnover is very small. The emotional side of buying and selling will continue to remain as stressful as divorce and bereavement. It will also create a secondary 'whisper market' where agents feel out buyers in respect of homes that may come up for sale and produce the pack at the time lawyers are involved. Gazumping will take place during that period. What about a 'cooling off' period for the mortgage arrangements?
Why go to all the hassle of Sellers packs which will still take time, just this will be the time taken before you can put your house on the market?
Why not just take a deposit from both parties & if one of them pulls out, the other party that has not pulled out gets both deposits which should cover fees incurred by that party?
Where is the advantage in getting a seller to complete (more) documentation which is not sufficient for the CML anyway ? The buyer will still need all the usual checks to satisfy the mortgage lender, the seller has added costs - where's the benefit ? I agree - adopt the Scottish model
I am the proud owner of multiple surveys from my last house move. They detail major faults that the estate agent should have been aware of but refused to disclose. A sellers pack should be very simple: a survey suitable for the property is enough; a Homebuyers Report for properties from c1900 onwards and a full structural survey for older properties. If a sellers pack is made any more complicated than this, it won't work. The surveys should be guarantee backed with easy resource to compensation if there are any major problems. It would also demonstrate a commitment to sell, rather than just a speculative check of the market.
Seller's packs will make a tremendous difference. For years they have been mandatory in New South Wales, Australia (where the housing market is very similar to the UK)and have dramatically speeded up house sales to a matter of a few weeks. People there don't put their houses on the market when they don't really want to sell and buyers don't make offers unless they want to buy because they have all the information they need up front. In other words, it's just like you buying a second-hand car which has already been inspected by an AA or RAC inspector. There will, in fact, be little or no added cost in having a seller's pack: it's just that the seller will be paying instead of the buyer - good news for first-time buyers and no difference for most of us who buy and sell at the same time. Oh, and by the way, let's stop this nonsense about the Scottish system being superior. Offers in Scotland nowadays are not immediately binding; they are in fact made subject to so many conditions that the Scots have effectively moved towards a system which in many ways is even worse than in England!
My wife and I have been attempting to buy a house recently, have made offers on four properties including surveys only for them to fall through because of chain problems. A sellers pack would have saved us a considerable amount of money
The pilot undertaken in Bristol of the proposed sellers pack system did drastically reduce both the incidence of withdrawn offers to purchase and the time taken to purchase. On the strength of this evidence I think the proposed scheme is a positive move and in time the lenders are likely to accept the condition survey and lend on the purchasers credit rating and ability to pay rather than a valuation of the property.
It amazes sometimes why we do studies on everything when we can just learn from what other countries do! What is the EU there for? In Sweden for example house buying is so simple. The seller is totally responsible for the house for 10 years if anything shows up untoward! When the offer is accepted you agree your moving date regardless of everything! There are no fees at all. Simple!
I think this new pack is a good idea. Iżve just paid £550 for a survey and am now in two minds whether to buy the property or not. I have also been gazumped recently which was down to the estate agents who told me that my offer had been accepted and then informed the vendor that someone else was offering more money.
How can this Government can suggest that it employs "joined up government" beggars belief. The pilot in Bristol involved just 180 properties, 40 of those where in fact new properties which are outside the proposals. The cost of preparing the pack was met by the DoE. The take up in the pilot is an indication has to the efficacy of the proposal. The government would be better employed concentrating on electronic conveyancing which has real potential to speed up the process. The Sellers pack does nothing to address the problem of chains, the real cause for the delays in exchange of contract.
A satisfactory home inspection (survey) is a usual condition of a home sale in the US. These surveys are very detailed and involve the inspector going all through the house (including the cellar/crawlspace and attic). They are not driven by govt regulation but by lenders who want to be sure their clients aren't buying a pig in a poke (and of course that the bank won't be stuck with a lemon if the buyer defaults). Overall the surveys are a great idea and are very good at preventing a seller from cheating(even unintentionally) a buyer.
It is interesting to see some extolling the virtues of the Scottish system. As someone who has tried (unsuccessfully) for well over a year to get into the Edinburgh market, I would suggest caution before blindly accepting its superiority. With the blind bidding system you pay for a survey for each property you bid for with absolutely no guarantee that you can buy the property.
I am a solicitor dealing mainly with conveyancing related work. Several years ago, the Law Society tried to speed up conveyancing by getting sellers to make the local search and then sell it to the buyers. It did not work because many sellers were reluctant to incur the cost and the searches rapidly became out of date. The same will happen with sellers packs including surveys.
We've been trying to purchase for about 10 months now, and two purchases have fallen through at the last moment. Each time, we've lost all the search fees etc.
The solution I see is a non returnable deposit. That would pay for things like search fees, if one side pulls out.
Most surveys are so useless that they provide no real insight. Put the onus on the estate agents to provide real information such as whether a property is freehold or leasehold and revamp the transaction process. Have buyers lodge a 5% deposit as soon as their offer is accepted which they forfeit if they withdraw and make the sellers liable to pay the buyer the same amount if they withdraw.
We'll have to wait and see the details of the changes, but I am less than happy to report that gazumping certainly is a problem, having experienced it twice in the last two months as a first time buyer. Each time has lost me the cost of a home owners survey, i.e. a total of around £1300
About time too. The process of moving house is simply too protracted at the moment, and weeks are wasted waiting for surveys and other legal reports which could be prepared beforehand.
Worse still, since not every survey leads to a purchase, many properties are surveyed several times for several potential purchasers. The average buyer therefore currently pays for more than one survey.
There is nothing worse when buying a home than waiting weeks to discover if the home of your dreams is worth the money being asked. How much better if every viewer could take that information home with them on the day of viewing!
This whole gazumping thing has always amazed me. Why not use the model as used here in Canada where once you have committed your signature (read contract) to an offer to purchase and had it accepted by the seller the deal is done. The seller can be held in breach of contract if he fails to deliver the house for the agreed price from what might be months ago. As for the seller having to state the condition of the house, well hello? Who else has the best knowledge to do that, nobody.
I lived in the US for 12 years and owned 3 houses over there during that time. We had the equivalent of sellers packs in the form of owners' disclosure and they were an aid to selling, nothing else. Of course the cost just got bundled in with the price of the house, as did closing fees, agents fees etc. My experience since being back in the UK that all the selling and buying costs are also bundled into the seller's price. I don't mind if I'm getting quality, but as the proposed packs aren't even going to meet the mortgage lenders requirements it seems they are a waste of time and money for everyone concerned, and will simply add to house price inflation.
A most welcome review of residential agency. The whole process of buying and selling property will be more transparent to all parties concerned and must ultimately be of great benefit to the public.
To reduce gazumping, I would introduce a law which says that solicitors can only charge fees for sales that progress through to exchange of contracts. But with the number of lawyers in parliament, what chance of it ever being passed?
Those people who are praising the Scottish system of house purchase have clearly never tried to buy a house up here. True, gazumping is unheard of, but the system of sealed bids means that a buyer can try to buy house after house without being successful, and each time has to have a survey carried out, incurring a substantial cost each time. If you are unfortunate enough to be unsuccessful four or five times, the costs soon mount up. Also, and this is particularly true in parts of Edinburgh, you may have to put in an offer well over 50% above the asking price to even be in with a chance of getting the house. Those of you south of the border should not be misled into thinking that the Scottish system is foolproof - far from it. I do wonder how other countries seem to manage with much less hassle than we have here.
In the US, all real estate transactions have a binding contract between buyer and seller, along with the proffering by the buyer of "earnest money", which can vary with the price of the property, but is usually at least $1,000. This deposit is to be deducted from the price of the deal, but is lost if the buyer reneges. Once the seller accepts the offer, he usually has to indicate that a "sale is pending" or "under contact". If the buyer has a "contingency" for the sale in the contract (usually two: the sale of his existing home and getting financed), he usually has a week to remove it if the seller gets another offer without it. The seller may still sell a property for a higher price, but once he has accepted a contract, is normally bound by it.
What does it matter what a house comes with? They're all still too expensive anyway !
As a retired surveyor myself I consider the proposed sellers pack survey a total irrelevance. It bumps up costs while satisfying nobody's interests. A gimmick.
Do you trust the seller of the most expensive potential purchase of your life to investigate thoroughly enough? I think many will be doubtful and cautious.
It does seem amazing that you could walk into a car showroom and buy a £60,000 car on finance within 1 hour, but if you tried to do the same with a house it would most likely take 8 weeks. The sellers pack is an intellectual cul-de-sac; we need less useless bureaucracy rather than more. What is really needed is an over-hall of the conveyancing system. Providing a vendor survey will do nothing to speed up the process as everyone will want to have their own survey - after all, no-one would buy a used car on the strength of a report prepared by the seller of the car.
Why not adopt the Canadian system. After making an offer you have about 10/14 days to arrange financing & a survey. When this is completed satisfactorily & you still wish to proceed you have to pay a 10% deposit which is non-refundable should you withdraw from the sale. At this point you have entered a legally binding contract for both parties. There is no room for gazumping.
I welcome these packs (in contrast to most respondents). As a first time buyer, I think the sellers pack will make a big difference to people when they are deciding whether to put in an offer or not. Maybe you wouldn't rely on the Sellers Pack survey, but at least it would mean you could avoid the months of expensive protracted negotiation trying to simply get enough information to decide if the property is worth buying! This would mean that buyers could choose a property they want in a more transparent way, and sellers wouldn't have to waste time with people who withdraw their offer as soon as all the details come out.
Seems like we need a compromise between the Scottish and English systems. Open, not sealed bids, firm commitment with acceptance of the offer, and "no sale no fee" to all the professionals concerned. As a buyer, personally I would not accept a sellers pack unless the surveyors employed were completely independent, subject to audit, and had to pay penalties to the buyer for giving faulty information.
Surely gazumping is caused by estate agents advertising "sold" properties in the windows? The questionnaire sounds a good idea, but if surveys go out of date in less than a week what's the point? Wouldn't outline floor plans also be useful? Aren't the necessary searches actually a far more time consuming process? Did people really think about this?
I am delighted to see the legislation is back on the front burner. We have been offering properties for sale with sellers packs for some time and can only report that the consumers (after all the they are the ones that really matter) have taken to them with great enthusiasm. We have less sales falling through, quicker transactions and happier home movers. It really does work!
When I come to sell my house I won't be paying for this. There are bound to be ways around it and I'll find one.
Another costly, useless survey! More money to be lost if the sale fall through. I totally agree with Brendan UK, the past 2 surveys undertaken on property we have purchase have failed to illustrate the most rudimentary problems!
Yet another pointless piece of bureaucracy to add to the cost of buying selling a house, let alone buying one.
Surveyors will quite happily charge a fortune to do a "detailed" survey and you can later find that they've missed some glaring faults - and then claim that you have no comeback against them.
What has this got to do with the government? And why compulsory? Yet another rule and regulation that achieves nothing; it certainly doesn't impress the mortgage lenders and will only add costs for the seller. What happens if you don't supply a pack, will you be imprisoned? I'm am absolutely fed up with being told by those of whom I have no respect how to behave, what to think and what to do; I have more ethics in one finger than the entire House of Commons combined! By the way, I'm not planning to sell my home, so I have no axe to grind!!!
As a first time buyer, the idea of the seller shouldering the cost of survey, searches etc is at first tempting, but further inspections shows that we would still want a full building survey ourselves, thus the pack becomes irrelevant, plus the price would be added to the cost of the house.
As Gareth says the Scottish systems is not the perfect solution. £200 for a survey then put in bid and don't get the place. I know people who have given up trying to get onto the property ladder as they have spent thousands for nothing.
I'm about to complete on a house. I paid for a full survey which showed up a possible problem with the current owner denied existed. (needless to say the mortgage valuation didn't find it). In the end all it needed was some paperwork to sort it out, but I wouldnżt trust an inch anything that comes from any seller or estate agent. If I had walked away, I would have been a grand out of pocket. Buying a house is a massive investment and you must take all care. The fact that some people buy a house with only a mortgage survey beggars belief.
As an estate agent and Chartered Surveyor I cannot see the point in this proposal. The main delay in the house buying process is the slow and inefficient way that solicitors work. The number of people able to carry out conveyancing is too restricted and restrictions as to who can carry out this work should be lifted. Without any doubt whatsoever the whole process is slowed up by unco-operative and overworked solicitors.
As for gazumping, in my experience it hardly ever happens and there is as more of a problem with unreliable purchasers
I'm not familiar with the Scottish model that other respondents are referring to, but in the U.S. the onus is on the buyer to evaluate the property. I know that on several occasions the money I spent on the inspections saved me from buying a house that appeared to be in good shape, but was actually fairly hard done by. It's also the law (at least in Ohio) that all offers once agreed upon are binding. Once the buyer and seller have agreed on the price, it would be very hard for a buyer to accept a different offer and would leave the seller open to legal action.
the Sellers Pack will only work if (1)the CML will accept the "sellers' survey" and (2) the government do something to speed up local searches so they all - by law - must be turned round by the local authority in 7 days. at the moment here in Manchester a search at Manchester Council takes 5 days but down the road at Trafford they are taking 6 weeks! (and please don't blame the solicitors - we want a less stressful life too!)
All sounds a good idea - but what doesnżt the government propose legislation to control the people who are the real problem - ESTATE AGENTS
I have just sold my house using a 'seller's pack' via the Open Book system (run by several agents round the country) My pre sale survey (carried out by an independent RICS surveyor) showed up a small amount of damp. We had quotes prepared for the work and our buyer was made aware of all this at the outset. She did not panic because she knew it was only small and the work cost £500 which we agreed to pay for. She said it helped her to know that it was not a huge problem and that the work is now done and guaranteed. We had peace of mind because she did not come back to us at a late stage and either pull out or try to knock the price down. Less Stress all round.
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