The Government’s new consultation on reforming the home buying and selling process is a long overdue opportunity to modernise one of the most outdated elements of the housing market.
Mortgage lenders, sitting at the heart of many property transactions, welcome the ambition to create a system that is faster, clearer, more transparent and above all less stressful for consumers.
Buying or selling a home is the biggest financial commitment most people will ever make, yet the process that underpins it has barely changed in decades. It remains paper-heavy, painfully slow and prone to collapse. Around one in three transactions still fail to complete, costing buyers and sellers an estimated £400m a year in wasted fees and leaving hundreds of thousands of people emotionally and financially bruised.
It’s not just individuals who suffer: failed sales create inefficiencies throughout the housing marketplace, from lenders and conveyancers to surveyors, estate agents and removal firms.
Government data highlights the scale of the challenge. The average property transaction now takes around 120 days to complete, up 60% since 2007. By contrast, transactions in Norway, for example, typically complete in four weeks. In England and Wales, inefficiency has been allowed to become the norm.
The problem is not a lack of goodwill – the UK’s homebuying professionals work hard under immense pressure. It is rather a lack of structure, consistency and effective use of technology.
Too often, vital information only comes to light once an offer has been accepted, triggering last minute renegotiations or collapses. Multiple parties use different systems that don’t talk to each other. Consumers, meanwhile, are left in the dark for weeks, uncertain where they stand.
These are symptoms of a process that has failed to evolve with the times. As Santander’s recent report into the homebuying system pointed out, the English property market still operates under rules rooted in the 1925 Law of Property Act. In a world of digital identity verification, instant payments and open banking, that simply isn’t good enough.
Lenders have already invested heavily in digital transformation, making mortgage approvals faster and more consistent.
However, the full benefits of that investment cannot be realised until the rest of the chain modernises too. The introduction of digital property logbooks and packs, storing verified data from trusted sources, could provide a real boost, by enabling key information to be shared securely and consistently across all parties. This would reduce duplication, speed up decision making and give buyers greater confidence.
Many professionals in the mortgage world will remember a previous Government’s enthusiasm for introducing Home Information Packs – which would have mandated the provision of up-front information about properties at the point of sale.
That scheme met with significant opposition – not least from the Royal Institution of Chartered Surveyors (RICS), which sought a Judicial Review of the government’s action on the basis that it had not consulted on it sufficiently – and also from the National Association of Estate Agents, which considered that the scheme failed to address the main reasons why sales fell through.
The proposals eventually fell by the wayside following the General Election in May 2010 which brought in the Cameron-Clegg Government.
While the original proposals for HIPs had a number of flaws, and were regarded by some as being unduly complex (and costly) the underlying principle – of requiring sellers and estate agents to provide comprehensive upfront information at the point of listing, remains valid.
Early access to accurate data about a property’s title, tenure, Council Tax band, EPC rating and condition would help prevent the nasty surprises that currently derail so many sales.
Care would need to be taken, however, to accommodate cases where the required information was simply not available – or not available except at disproportionate cost – which would continue to disincentivise some potential sellers.
The MHCLG consultation paper is accompanied by a second document seeking views on what should constitute the ‘Material Information’ which should (ideally) be provided.
For the scheme to be workable and effective, it must avoid the temptation to be all-inclusive. The best must not be allowed to be the enemy of (and ultimate barrier to) the good. Proposals which are over-engineered and too complex will simply cause the project to fail (again).
Codes of conduct
Another very important aspect of the current consultation is the government’s plan to introduce mandatory qualifications for estate agents and a statutory Code of Practice for property professionals.
It does seem extraordinary that, two decades after the regulation of mortgage advice was introduced, those responsible for marketing and negotiating property sales are still not subject to comparable professional standards.
Mortgage advisers, conveyancers and lenders operate within some of the most stringent regulatory frameworks in the UK. Bringing estate agents into line will help restore consumer trust and drive higher standards across the sector.
A modernised homebuying process will also help to reduce one of the most damaging but least discussed consequences of the current system: consumer stress.
Moving home is consistently rated among life’s most stressful experiences, and with good reason. Long silences, sudden setbacks and failed sales can be deeply demoralising, so much so that many potential movers simply give up. That, in turn, suppresses market activity, discourages downsizing and restricts mobility for those who need to relocate for work or family reasons.
If we want a housing market that supports economic growth and social mobility, people must be able to move with greater ease and confidence.
Reforming the transaction process is therefore not just an administrative issue, it is a growth issue.
A more efficient system, harnessing the power of digitisation where appropriate, would help unlock the natural movement that keeps the housing market, and the wider economy, healthy.
Working together
The consultation also recognises that technology alone will not fix the problem. Success will depend on genuine collaboration between government, regulators and the industry. Standards must be consistent, security robust and data governance watertight.
Digital identity verification and interoperability between systems are essential if the process is to command public – and lender – trust.
Given the right structures and assurances, mortgage lenders are ready to play their part. As an industry, we understand both the complexity of the homebuying journey and the potential for technology to simplify it. But we also know that piecemeal reform will not do. What’s needed is a coherent, long-term strategy, one that aligns the interests of lenders, agents, conveyancers and consumers around a shared goal of clarity, speed and professionalism.
The Government’s consultation marks a crucial step towards bringing homebuying into the 21st century. It’s a chance to create a system that works for modern consumers: digital, transparent, and underpinned by high professional standards.
If implemented effectively, the proposed reforms could reduce transaction times by a third, cut fall through rates by half and save consumers hundreds of millions of pounds each year. More importantly, they could restore public faith in a process that too often leaves people frustrated and disillusioned.
The housing market underpins the wider economy. When people move, the economy moves, and when they don’t, it stalls. Let’s seize this opportunity to build a faster, fairer, more modern homebuying system that works for everyone.
Kate Davies is executive director at Intermediary Mortgage Lenders Association (IMLA)
