ISSUE 7/05

Faster selling but at a price

by Kitty Pryse-Jones

Kitty Pryse-Jones

So you've found the ideal home, you're confident you've secured a reliable buyer for your existing property, terms have been agreed and your dream house is within reach. Then disaster strikes … the buyer for your house pulls out! Your dreams are shattered and, through no fault of your own, you find yourself back at square one.

If this or a similar scenario sounds all too familiar, you may take some comfort from the fact you are by no means alone. Nine out of ten people are dissatisfied with the current conveyancing system in the UK. It is the slowest in Europe and is plagued by delays. A staggering 30% of transactions fail after terms have been negotiated. As a result, buying and selling property in the UK is often characterised by stress, disappointment and frustration.

So why is this happening?

The main problem is the long length of time it takes to exchange contracts. This typically occurs when relevant information has been withheld and does not come to light until after terms have been agreed. When this information eventually emerges, it can be unsettling and buyers often want to renegotiate or pull out altogether. This becomes more frustrating when there is a chain of buyers and sellers. One person pulling out can ruin a whole series of purchases, costing all those involved time, money and patience.

Another big concern is the phenomenon known as guzumping, where the seller switches to another buyer for a higher price at the last moment. The longer the process takes, the more opportunity there is for guzumping to take place.

How will the Home Information Pack (HIP) help?

The government has introduced the Packs to give new responsibility to sellers. It should mean faster sales, but at a price. Sellers will have to have a HIP created up front before they put the property on the market. This will enable buyers to make informed decisions right from the word go. In addition to lawyers, the likelihood is that Estate Agents will also offer HIPs as part of their service, but at a price, probably starting from around £500 (and probably more than this if the property is leasehold). Putting your house on the market will cost you, and if you don't sell, you will still incur the cost.

At present it is the buyer who pays to obtain most of the required information in the form of searches and surveys, but now the seller will foot the bill up front. It is worth noting that similar schemes already exist and work well in other countries, notably Denmark and Australia, and the scheme was piloted in Bristol in 2000.

Failure to prepare a HIP prior to offering the property for sale will be a civil offence, punishable by a fine.

What will the Home Information Packs contain?

The HIP is likely to include all the information provided currently as part of the standard conveyancing process:

• Draft contract and copies of title deeds
• Local searches
• Home condition report (similar to a survey)
• All leasehold service charge information and receipts
• Copy guarantees and planning consents.

When will it all start?

Regulations for the contents of the HIP are expected to be made by Summer 2005 and become standard practice by January 2007. During 2006 there will be a "dry run" period where HIPs won't be compulsory but everyone will be encouraged to use them so they become familiar. No doubt buyers will be keen to see this happen sooner rather than later.

What is important to remember is that the government has designed these measures for the consumer so that you're in a strong position and you know where you stand right from the start. As a result we hope that the home buying process will no longer be characterised by stress and disappointment but instead will come to be associated with transparency, simplicity, and dreams that really do come true!