At last, a Government housing inquiry. But can it improve on the others?

Ministers are promising a shake up in the organisation of the property market. Sounds good? Richard Philips thinks he's heard it before
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The Independent Online
It looks as if the property market, and how houses are bought and sold, is in for its biggest shake-up for decades.

And it's not just the Government review, announced a couple of weeks ago, that holds out the hope of better things to come.

There is the initiative by the Law Society to promote a full-service high street chain of Solicitors' Property Centres, where customers can peruse properties, arrange finance, and have a solicitor on hand to guide them through the property maze, all in the one place.

Or there is First American Title Insurance, which wants to develop an insurance policy to cover the pitfalls of buying a home, and remove the delays and frustrations.

Consumers must welcome these moves, and perhaps things will get better. But hang on a moment. For older hands, the Government's inquiry has a strong whiff of deja vu.

The most recent inquiry is the fifth by a Government since the early Sixties. How much is there to show for all these inquiries? Er, well, not a lot. The Law Society introduced a recommended lock-out contract for clients who could choose to use it to reach a legally binding agreement with a buyer, the moment an offer is made. Because it was introduced in the late 1980s, however, at the start of the property crash, it never really caught on. The Royal Institute of Chartered Surveyors has drawn up its own anti-gazumping agreement, but again, this is a voluntary arrangement, so the other side cannot be forced into committing themselves.

The most recent initiative came in 1993, when the Lord Chancellor's department undertook a survey into how homes are bought and sold in England and Wales. (Scotland, where gazumping is outlawed, is different, as an offer becomes binding the moment a buyer accepts it.)

The review was part of John Major's Citizen's Charter initiative. At the time, two initiatives were afoot for further consideration: to set time limits for local authority searches, and to establish a national land information system, to combine all the information held by the Land Registry and local authorities on one single computerised source. Nothing has been heard of these plans since, and doubtless they are still quietly gathering dust in some government department.

For the present review, the Government has said it will track 1,000 house sales up and down the country. The work of the lawyers, estate agents and surveyors will all be examined in detail, along with how the lenders behave. Fees, which vary widely, especially for conveyancing, where cut- price conveyancing has become a topic of concern, will also be closely scrutinised.

The problems are manifold. One of the most visible - but not, by any means, the most intractable - is gazumping. Last year, 50,000 people were gazumped, and complaints to the National Association of Estate Agents have risen fifteenfold this year. The problem is much worse in London, where complaints run at the rate of one-in-every-eleven deals, against one-in-20 nationally.

If, as housing minister Hilary Armstrong has decreed, the Government is to identify "the root causes of delays and delays which cause distress and misery to home buyers and sellers", gazumping is relatively straightforward. One problem is that in a rising market, as we have here, gazumping becomes the norm.

The market has adopted its own practices to combat gazumping, some of which are completely unethical, such as "ringfencing". This is where an anxious buyer bribes the estate agent to take the property off the market, and present his offer as the best one to the vendor.

This contravenes the estate agent's legal duty to act in the best interest of the client. Estate agents deny ringfencing is a problem, or even that it exists.

There are numerous other tricks the study group should watch out for - although, since most agents conceal their misdoings, it is hard to believe a survey of this kind will pick up on very much in the way of untoward activity.

Gazumping itself is also created in part by the lengthy delays that affect the buying and selling process. One of the most avoidable is the time it takes for vendors to get hold of their own title deeds, or lease. It usually takes three weeks for the vendor's bank or building society to respond to the vendor's solicitor's initial request to be sent the deeds. Whatever the reasons for this, it should be a simple matter to obtain the deeds much more quickly.

Finally, there is the quality of advice offered by the various professions attached to the transfer of your home. Some of the problems come from the fear, now rife among lawyers and chartered surveyors, of incurring any legal liability. Much of this stems from the traditional, confrontational method of house selling, that has built up over generations, and is a direct result of caveat emptor - let the buyer beware. The result is that lawyers for both sides are loath to take any responsibility for the decisions reached by either party in the transaction, and their advice is so often hedged in by those annoying, and ultimately confusing comments along the lines of: "The fence appears to be the property of 23 Acacia Avenue, but the buyer should make his own investigations". Hang on a minute - I thought it was the job of the solicitor to find out if the fence is the property of 23, Acacia Avenue - not me, the legally illiterate buyer, which is why I pay all these fees.

The lawyers, however, have been battered over the years by the cost of claims - something else that the steering group should take a careful look at.

Chartered surveyors are often no better. The standard survey forms that a surveyor fills in are often riddled with phrases such as, "There appears to be no damp in the second bedroom, but the purchaser should make his own investigations behind the cupboards that are installed there...".

Elsewhere, however, there is good news for property buyers and owners. The Office of Fair Trading has told lenders and brokers in the "non-status" market, which offers mortgages and other secured loans to people with poor credit ratings, to end "oppressive" dual interest rate schemes and "inappropriate" penalties for early settlement.

The director general of the Office of Fair Trading, John Bridgeman, says that lenders and brokers who ignore the Office of Fair Trading guidelines risk losing their credit licences.

A further chink of light has been the decision to give the go-ahead to tribunals for leasehold flat dwellers who are locked into disputes with their landlords.

Tribunals will be able to settle rows over service charges and other problems, without the risk of running up huge legal bills. The changes come into force from 1 September.

Housing Minister Hilary Armstrong said, "Service charge disputes are renowned for causing distress and misery to many leaseholders who have, in the past, had to go to court to challenge unreasonable charges, risking unknown and potentially high costs.

"From 1 September, leaseholders will be able to apply to the 11 leasehold valuation tribunals, which will use their specialist professional expertise towards settling these disputes. Leaseholders risks of incurring large legal bills will also be limited, because the tribunals will have a discretion to require the other party to the dispute to reimburse this fee."

Ms Armstrong added that bad management was a continuing problem for tenants of flats. But in future they would be able to apply to the tribunal instead of the county court for the appointment of a new manager, if the tribunal was satisfied the landlord was likely to demand unfairly high service charges.

On balance, then, it seems that things are looking up for homeowners. The current Government review, however, will have to take some tough decisions if it is really to make any difference at all.

And it will be a while before it knows what the problems really look like. The study of 1,000 home purchases will not be completed until June of next year.

Solicitors' property centres, page 11