Crackdown on bad practice on the horizon
THE Office of Fair Trading has now formally launched its market study into home buying and selling — and estate agents need to be aware that tough new policing of the industry is on its way.
Many people within the profession have been invited to contribute views to the process and it will be interesting to see whether these comments will be taken seriously or will fall on deaf ears.
Of prime importance to us is how the industry will be enforced in the future.
Will it remain a mixture of Trading Standards taking legal action, the OFT warning or banning agents and the Ombudsman schemes providing effective redress to complainants?
Or will our request for some form of licensing to tackle problems before they arise be heeded and a compulsory programme of training introduced to ensure all agents are aware of the law before they start trading?
At the moment, it is a hotchpotch that has failed to give the public any faith in the services our industry provides.
We have our toothless trade bodies such as the National Association of Estate Agents, Association of Residential Letting Agents and Royal Institution of Chartered Surveyors who manage to disagree on many things but did throw their weight behind the Carsberg Review, calling for reform.
I don’t believe the answer lies with self-regulation. We need a powerful and authoritative body that is pro-active, not reactive, that will authorise estate agents as competent, fit and proper. Should this body be Government-led, with real teeth to put a stop to the malpractice that clouds our profession or should it come under an organisation such as the Financial Services Authority?
We must welcome the OFT’s comprehensive assessment of the existing regulatory framework and await the outcome of its findings at the end of the year.
A lot has changed in the four years since its last investigation — we now have Home Information Packs, compulsory redress schemes, the rise of internet websites and the spectacular downturn in the housing market.
This review is therefore very timely and much needed and, along with its other areas of investigation, will ensure in the long run that our profession can start re-building its reputation and give consumers confidence in the services we provide.
It’s all or nothing with HIPs
IT’S a funny state of affairs when the Government condemns itself over its own mishandling of Home Information Packs — then still fails to do anything about it.
In a report written by the Communities and Local Government Select Committee in response to the CLG’s own annual report, the department has been criticised for the poor implementation of HIPs, adding that the CLG “is still struggling to perfect the scheme at a time when the housing market needs more robust and effective initiatives”.
Haven’t we been saying this all along?
Not only has it been poorly implemented, but at least three quarters of buyers say a HIP doesn’t influence whether they will or won’t buy.
In my view, it is all or nothing. Either we scrap them for good, something I have called for on many occasions, or we make them work by kick-starting the process much earlier using an exchange-ready HIP.
As from April 6, all properties need to have a HIP in place before marketing, now with a Property Information Questionnaire.
Why not take it further to include a legal summary, specialised searches, a draft contract, planning and building regulation consents, and leasehold information where relevant?
Plus you could add a mortgage valuation and/or survey to make it truly exchange-ready.
By checking the title deeds prior to marketing, you can see if there are any defects, encouraging lawyers to act more quickly to solve any problems that may arise. I am told one in five properties doesn’t show up as being registered on initial land registry enquiries, all the more reason to pre-empt problems before they arise.
In getting all this ready up front, the time to exchange can be slashed to eight weeks, reducing the likelihood of sales falling through.
Buyers get substantial savings on conveyancing fees while sellers benefit from a fast exchange of contracts.
Is it no wonder that sellers aren’t rushing to put their properties on the market right now, given all the confusion that still surrounds the requirement for a HIP, more than one year on?
After all, if the Government itself acknowledges that the HIPs scheme is imperfect, how can we expect the public to understand what path to take?
Mutuals come into their own
THE dynamics of the housing market are changing in a way we have never previously witnessed.
Where first-time buyers once drove the market forward, we are now seeing a significant shift towards owners and investors with large amounts of equity keen to take advantage of the fall in property prices and lower interest rates.
It is existing owner-occupiers who are driving the renewed level of interest in the market, supported by investors, many from overseas, making the most of favourable currency movements.
First-time buyers are simply unable to make the leap onto the ladder unless they are helped by the ‘Bank of Mum and Dad’, recognising an opportunity to buy something for their offspring in order to save on inheritance tax!
At the same time, 95 per cent reported that existing houses were the most popular type of dwelling and only 32 per cent reported interest in flats, with new build an even less attractive proposition for buyers — despite all the efforts of developers to offer big reductions in prices and government initiatives on shared ownership.
Even though the housing market has been hammered and house prices have reduced dramatically, making the cost of buying now cheaper than renting in many areas, the solution to getting the market moving still rests with the Government and the mortgage lenders.
Unless we can get back to 95 per cent loan-to-value mortgages, first-time buyers will have no option but to choose new-build over existing supply, taking that all important first link from the chain, killing off the market even further.