The CA’s white paper, Modernising the home moving process, sets out the results of the association’s research and consultations with conveyancing stakeholders across the industry, in the UK and abroad, to identify the constraints in the home-moving process and the solutions employed in other jurisdictions as well as the CA’s own vision of how a future technology supported process could operate.*
Our aims with the white paper have been quite simple: to understand the problems and obstacles with the current process; and, by learning from other jurisdictions, to propose solutions based on those learnings and the ideas proposed by our members and other contributors. We also used the paper to postulate what the future might hold in terms of our vision of a data-sharing, collaborative, digital home-moving service: one which would be a positive experience for consumers; one unblighted by unnecessary delays; and one deemed to be value for money.
In doing this, we did not want to be constrained by the current process in terms of how we would like the future to look. We fully accept that there was an element of blue-sky thinking contained within the paper, and that existing practitioners might think that some of our suggestions and ambitions were ‘pie in the sky’. However, we (as an industry) should not lose sight of the fact that, 20 years ago, no one would have thought that, in 2017, routine communication with clients would be via e-mail. And it is through improved and ever-changing technology that we believe that we have the chance of ensuring a much better home-moving process.
The underlying problems of the current process
So, to start at the beginning, what does the white paper believe the underlying problems of the process to be? We set these out as follows:
- Since the beginning of the recovery of the property marker, conveyancing transaction times have increased steadily from six to eight weeks (from offer to completion) up to the latest estimate from Royal Institution of Chartered Surveyors, placing the average transaction time at 12 to 14 weeks.
- Overall, there is dissatisfaction expressed by most stakeholders (as well as by our customers) as to the speed, transparency and certainty of the home-moving process whether they be conveyancers, lenders, estate agents or mortgage brokers.
Identifying the key problems
The white paper sought to identify the key problems within the home-moving process (which is taken to include the tasks surrounding and within the legal process of transferring title) by, first, researching other jurisdictions. We wanted to look at those which were perceived to do it well, and, therefore, spoke to property practitioners and undertook web research on Scotland, the USA, Australia and Denmark. In particular, we wanted to look at both the similarities and differences between the systems run in these countries and what we have here in England and Wales. This research drew out a number of conclusions, namely:
- It is noticeable that where the process is ‘slick’ up to the point of exchange, there are no chains of transactions. In none of the jurisdictions had chains been outlawed, but simply through customer behaviour driven by the supply and demand pressures, sellers are not prepared to accept an offer from a buyer with a property to sell.
- Because the legal commitment can happen much sooner in the process (in most cases within five days) a seller is willing to commit to the sale without having exchanged contracts on a purchase property, with a completion date six to eight weeks after exchange. This is on the basis that they will find a property and exchange contracts with completion within that period.
- Because this legal commitment happens much earlier in the process, home movers have the certainty of a date by which they will move and, as a result, enjoyed a much more positive experience.
- Early commitment reduces or eradicates gazumping or gazundering.
- Creating mutual liability early in the process (whether through reservation agreements or exchange of contracts conditional on searches and finance) enables the home mover to plan their move with more certainty and reduces the stress involved significantly.
- The upfront provision of some or all information was endemic to the jurisdictions, with the exception of the USA, which relies on insurance and has a cooling-off period, and some states in Australia.
- The upfront acquisition of mortgage finance is vital to an early legal commitment and to avoiding chains of transactions.
- Speed and certainty come at a price: the fees and taxes associated with buying a property in other jurisdictions regularly exceed 5%, whereas on a £250k property in England and Wales it is less than 2%.
- The speed of creating a legal commitment and the removal of chains from the process means that there is less need for transparency of the progress of the steps in the process. With a five-day commitment, there is little time (or need) for progress updates. Unexpectedly, there was no evidence of any greater requirement for bridging finance or short-term lets in the other jurisdictions, despite the lack of chains.
Having done this, the white paper looks extensively at the process in England and Wales, identifying the major areas of concern, i.e., lack of transparency, lack of certainty and delay, and undertaking to ascertain the specific issues that cause these problems and the potential solutions which exist or could be created to rectify them.
So, for lack of transparency, we look at the absence of consumer information around the options available to them and the lack of consumer information per se. For lack of certainty, we look at the absence of a binding offer, the changing of move dates and last-minute exchange and completion, while for delay, we identify the main points of constraint and their contributory factors, such as anti-money laundering activities, the provision of property information to the conveyancer, the leasehold sales process, enquiries, local authority searches and mortgage instructions.
Achieving a positive home-moving experience
Undertaking a detailed look at all these areas brought forward a number of potential solutions. Our conclusions resulted in specific proposals to achieve a positive home-moving experience for all by creating certainty earlier in the process. We believe that this can be achieved by the following:
- Centralising the identity verification of the parties to reduce the risk of fraud and money laundering.
- Collating the property information, basic leasehold information and title on marketing the property to be supported by a conveyancer’s certificate as to any missing documents will provide greater information to the buyer upfront, avoid delays in completing the information and ensure that the information is reviewed early to give the seller the opportunity to replace any missing documents ahead of the sale.
- Requiring a legal commitment to costs on offer with a five-working-day cooling off period, either through a reservation agreement or conditional contract.
- Reviewing the standard conditions of sale to require completion monies to be sent through the day before completion to provide certainty on the day of completion.
- Amending the Commonhold and Leasehold Reform Act 2002 to resolve the unreasonable cost and delay associated with the leasehold sales process.
- Reducing additional enquiries through artificial intelligence during the collection of the property information.
- Reviewing the CON29O and R to create separate relevant searches to satisfy lenders’ and buyers’
- Monitoring and resourcing the performance of local authorities.
- Providing a reliable lending decision in principle based on a ‘hard’ credit report without impacting the applicant’s credit score.
- Reviewing the Council of Mortgage Lenders Handbook to remove anomalies and ambiguous entries which generate post-valuation queries.
- Reviewing the statements within valuation reports to anticipate and avoid post-valuation queries.
- Providing a secure portal for communication to protect conveyancers, estate agents and the home mover from fraud.
Following the publication of the white paper, we invited industry stakeholders to debate the contents and to help us set about the next steps at our annual conference, which was held in December 2016. This very successful event has helped greatly in honing our thoughts and ideas. At the time of writing, we are currently taking stock of the conference. We were particularly pleased with the level of consensus in a number of key areas, notably, on the following:
- Ways to improve communication with clients and other process stakeholders (utilising technology to do this) with a focus on the provision of relevant information, plus how best to manage client expectations and protect against fraud.
- The provision of more pertinent and relevant upfront information, potentially in the form of a pre-contract pack, with a clear understanding on what documents would be included in such a pack.
- The development of a mandatory redress scheme for all lease administrators, plus codes of practice in the leasehold sector outlining best practice, particularly in terms of reasonable levels of administration fee charging and response times.
- Developing greater levels of certainty for both seller and buyer in terms of exchange and completing the sale through the exploration of certain solutions, such as insurance/reservation agreements/other products.
- The pursuit of far greater digitisation of documentation within the process as well as utilising the new technology available to improve on the speed of document provision and its completion such as use of e-signatures.
Following on from this, at the time of writing, the CA plans to provide an update on its post-conference work and its list of actions. The hard work will then begin on implementing these actions and securing a home-moving process which works for all. This is a group effort and will only be effective with the industry standing shoulder to shoulder in their efforts to improve.
We thank those that have aided us in getting this far. We continue to enjoy a close working relationship with CILEx (as well as other industry stakeholders) and would thank CILEx council member Mike Bowen for his continued support and ideas in connection with the leasehold campaign.
* The CA’s white paper is available here.
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