Homing in on the cowboys

Seller's packs that include such essentials as local searches, planning permissions and structural surveys are helping to speed up the offer-to-completion process and take some of the stress out of property exchanges
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The Independent Online

Will lengthy, expensive and stressful moves finally be an unpleasant memory? The signs look hopeful as this week the Government announced that the law will change following the long-awaited findings of its seller's pack pilot study.

Will lengthy, expensive and stressful moves finally be an unpleasant memory? The signs look hopeful as this week the Government announced that the law will change following the long-awaited findings of its seller's pack pilot study.

Launched a year ago in Bristol, the scheme has given the Government the opportunity to test proposals to improve the current system of buying and selling. They offered 180 sellers the chance to sell their homes with the benefit of a Government-funded seller's information pack in an exercise which cost £325,0000.

The pilot scheme included a range of properties from the cheapest town centre flats on at £30,000 to houses in 'hot spots' such as Clifton which cost over £300,000, its main aim being to make home-buying and selling easier, quicker and less stressful and giving the consumer a better deal.

The Government also carried out research among buyers and sellers of lower value homes in Burnley and Bradford, traditionally areas of low demand. It showed the packs would benefit these areas, too.

But what does this mean for buyers and sellers of the future? By law, sellers will have to produce a pack that includes a structural survey, local searches, planning permissions and legal titles. These are currently paid for by buyers who notoriously bear the brunt of costs.

The Government hopes that seller's packs will stop gazumping, which receives much media attention, although their research study, carried out before the pilot scheme, found that gazumping, although expensive and frustrating for buyers, is not a common problem. Evidence showed that it occurs in only 1 - 2 per cent of transactions, mainly in areas of high demand.

So what were the main findings of the pilot scheme? Research, evaluated by independent consultants Martin Hamblin, showed that 6 in 10 sellers found the pack easy to understand with the right amount of information. A total of 87 per cent accepted offers on properties with a seller's pack completed, compared to 72 per cent recorded by an earlier Department of the Environment, Transport & the Regions study.

Importantly, this research reduced the average time from offer acceptance to exchange to 48 days (the national average is 62) and buyers, particularly first-timers, felt they were more in control of what can be a bewildering process. Overall more than 80 per cent of buyers were satisfied with the home-buying process compared to the earlier study which showed just 45 per cent were satisfied with the present system.

Following these optimistic results, ministers will now go ahead with compulsory seller's packs as this radical approach is proven to save time and money. It is likely to become law following the general election and compulsory by 2003, resulting in legislation that will hopefully improve a dire national picture: Britain currently lags behind most of Europe with an average selling time of 12 weeks compared to four weeks in countries such as Sweden and Denmark.

So far so good, but there have been criticisms notably from lenders and surveyors. At the launch, Harold Cleminson, managing director of Woolwich Surveying Services, questioned the value of a scheme he described as 'artificial': "I'm sure it will be successful as the Government is paying for the surveys. In the real world when you ask the public to pay it will be a different story." Surveyors too are cautious warning that fees may rise as they extend personal indemnity insurance to protect themselves from litigation from buyers and sellers.

But how will the public react to these radical changes? According to Legal & General's latest survey of 1,000 home-owners between 6 and 8 October 2000, only a quarter of home-owners are currently aware of the proposed changes to the way homes are bought and sold and L&G wants a 'targeted campaign to educate most home-owners who are likely to move' to ensure the scheme is a success. L&G claims estate agents must 'play a key role' but lenders too must scrutinise their performance as buyers will expect improvements such as greater use of mortgage Acceptances in Principle (AIPs) to help prove themselves to be demonstrably serious purchasers.

There are concerns about the lower end of the market - packs will cost around £500, and L&G warns this could affect the market: "The cost of seller's packs must be watched closely in case it is prohibitive to some sellers and prevents them from moving." Lenders are also worried that speculators should not be discouraged from testing the market. L&G's research is based upon agents' reports that these vendors form up to 40 per cent of the properties on their books: "Care should be taken not to discourage speculative sellers, people who place their property on the market either to see what it's worth before deciding whether to move, or people who will move only if they achieve a certain minimum price for their property."

Bristol agent Maria Coleman, who has pioneered the use of seller's packs in her own firm, disagrees: "Why should we worry about toe dippers? I could spend £1,000 marketing their property only for them to change their mind. They cause heartache when they pull out at the last minute leaving broken-hearted buyers." Ms Coleman, who calls the scheme the 'Open Book' system, points out that insurance policies are available to protect vendors who pull out "for genuine reasons, not whims". Since she introduced optional seller's packs in 1997, Ms Coleman has seen take-up by vendors rise from 34 per cent to 98 per cent. Conversely her fall-out rate - offers which fall through before completion - has fallen to a staggeringly low 6 per cent against a national average of 33 per cent. Calling the old method "an appalling system" she says: "I don't see how anyone can fault the introduction of seller's packs."

Ms Coleman has been involved in the pilot scheme, thanks to her personal experience of this system, and praises the Government for listening to the consumer: "They've had the good grace to tweak the system. Initially the report was minimal, surveyors could only rate the condition between 1 for excellent through to 4 for lousy but there's now an additional box and they can add addendum sheets."

Answering critics she says: "Solicitors and surveyors are, by their very nature, a conservative lot and want to get it right but professionals will have to be educated before the public. It takes a lot more work and you have to be professional, it will certainly get rid of the cowboys."

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