Property: Must selling a house always be like this?: The professionals may resist change, but the English system needs improvement. Or don't you think so?
Everyone knows that moving house ranks behind the death of a loved one and divorce as the most traumatic event in a person's life. Many sales collapse in the phase between agreeing a price and exchanging contracts. It is those immersed in the process who best understand why this happens. When the nightmare is over (they vow to themselves), they will campaign for changes in the wretched system which, in England and Wales, is riddled with uncertainty.
Now, with business returning to 'normal', the time is right for such a campaign.
The four professions most closely involved in the house purchase process, estate agents, lawyers, surveyors and lenders, have long been resistant to all-out revolution. Many have had a difficult time over the past four years, and the last thing they want is for someone to rock their fragile boat. But the boom and bust have also loosened some attitudes, among agents in particular.
The public may have little sympathy with them, but estate agents have been at the very sharp end of the recession, as down-valuations and nervous buyers have scuppered hard-fought deals. Unlike solicitors and surveyors, they get no money if a sale collapses, no matter how much work they put in. They are also plagued with time-wasters who would be put off by tighter rules.
And when a sale does go through, agents here charge the lowest fees in Europe, and among the lowest in the world. In France agents normally charge 5 per cent, in the States at least 6 per cent; in Britain the figure is 1 1/2 -2 1/2 per cent.
The National Association of Estate Agents wants to see the introduction of contracts to be signed by both buyer and seller at the point when an offer is accepted. The contract would be a standard document which, though it could be subject to a variety of conditions such as a satisfactory survey, search or mortgage application, would be tangible evidence that both parties were serious.
The association is also in favour of 'lock-out' or exclusivity contracts, an anti-gazumping device whereby the seller is legally bound not to try to sell the property to anyone else for a given period, during which the buyer agrees to go through the pre-purchase hoops. The Law Society, too, favours lock-out agreements and is promoting standardisation of the conveyancing process - the solicitor's part of the work.
Almost every other country has a system of early contracts. In the US and France, it happens in the agent's office. Where we have a long gap between acceptance of an offer and the exchange of contracts, they have a longer gap between exchange and completion. You go through the same hoops, but with a deal in writing and a deposit on the table.
In Scotland the system is even tighter. The survey, mortgage and contract are all arranged prior to an offer being made. An offer is usually accepted subject to certain conditions, or 'missives', which are sorted out by both parties' solicitors. These include such things as the completion date, which forms part of the offer. Once these details have been completed, which normally takes a week or two, the deal is binding on both parties.
Where people cannot get their moving dates to coincide - which is unusual - one party takes out a closed bridging loan to cover the gap. (One large firm of Edinburgh solicitors currently has bridging loans on 2 per cent of its property transactions.)
Two criticisms are commonly levelled at the Scottish system. Both apply when more than one buyer is interested in the same house. The first is that, if there are competing bidders, you have just one chance to make your offer, with no idea how high other bidders are likely to go. Second, if your bid fails, the money you paid out for a survey will have been wasted. But that is the price you pay for certainty.
The problem of multiple surveys may be exaggerated. After all, many buyers, under the English system, have to commission surveys on more than one house, as so many deals fall through, while many Scots commission only one survey, because there is no competition for the property they want.
One way of eliminating the problem altogether would be to introduce vendor surveys. This is where a survey is done for the seller, made available to viewers and 'sold on' to the eventual buyer.
The disadvantages for the seller are that the money has to be spent up front (about pounds 500 for a full survey of a country house) and that a buyer who hears about all the property's warts might be put off.
One English firm has already introduced vendor surveys, with very positive results. Bedford Country Property Agents in Bury St Edmunds says about half its clients selling old houses, for which surveys are particularly important, have used the scheme. It has led to a clear drop in the number of sales falling through and a shortening of the time between agreeing a price and exchanging contracts.
David Bedford, who runs the agency, said that buyers have not been put off. If they hear about the drawbacks when they have just fallen in love with a place, they are more tolerant than they would be a month later.
Bedford's panel of surveyors has had no problem with professional indemnity insurance, which many people cite as an obstacle to vendor surveys. On exchange of contracts, the buyer pays the seller the cost of the survey; on completion the surveyor assigns the survey to the buyer. The legal liability is transferred from the seller to the buyer.
The Ombudsman for Corporate Estate Agents, in his annual report earlier this year, recommended either vendor surveys or some kind of house log-book as a means to prevent so many sales collapsing.
But the surveying establishment is nervous. Many members fear it will lead to reduced business, because under the present system a surveyor may end up doing two or three surveys on the same property as sales collapse. There would be only one vendor survey.
However, if the system became the norm - or were even compulsory - they would see their business grow enormously, because only about a fifth of buyers commission a survey at all (although many may commission more than one as their sales collapse).
At the moment none of the vested interests is willing to support a house-purchase revolution. If you point out the benefits of the Scottish system, they will insist that it could not be adopted in England. When asked why, they most commonly respond that the public wouldn't wear it.
Estate agents and solicitors say, somewhat disingenuously, that no one in England would be willing to sign a contract to buy a property if they had not sold their own home first. But if England went over completely to the Scottish system, this would not be a problem. The Law Society even suggests that the only reason the Scots like their system is because they are used to it. We are used to ours, too; but few people have a good word for it.
No one has actually asked the buying and selling public what they think of the current system. The Lord Chancellor's Department asked the professionals last year under the aegis of the Citizen's Charter, and produced a report called Survey of options for simplifying the house purchase process.
The report identified uncertainty as the key problem at present. But it concluded that professionals thought 'the current uncertainty in the system was not sufficiently damaging to warrant the sea change of entering into these largely untested contractual arrangements'. If you have recently tried to buy and sell a house, you may see it differently.
The professionals all point out that any buyer or seller can have binding contracts, lock-out agreements or vendor surveys at any time. They only have to ask. But the truth is that there is little point in breaking one link in the chain when you are bound by several.
I favour a change to the Scottish system combined with vendor surveys, but no doubt there is more than one way forward. But for any new system, legislation would be required. Judging from my mail bag it could be a vote-winner, but a government packed with lawyers is unlikely to find the necessary legislative time.
At the moment it seems we are destined for patchy progress. Unless, of course, we the public can persuade the professional parties that a change is in their interest.
Perhaps estate agents, who are the most malleable group, could have a standard form asking people who have just gone through the system what changes they would like to see. They could send it out with the bill. That normally provokes a sharp reaction.
If you have a view on how the English system for buying and selling houses can be changed, we would like to hear from you. You do not need expert knowledge of Britain's or anyone else's system, just experience of how it has worked for you. Please write to Anne Spackman, The Independent, 40 City Road, London EC1Y 2DB, and mark your envelope 'Next Move'. She will report on readers' reactions in two weeks' time.
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