UPFRONT INFORMATION & BINDING CONTRACTS: WILL THEY REALLY SPEED UP HOME BUYING?
There is a lot to like about the principle of giving buyers more information about a property earlier in the home-moving process.
The Government's Home Buying and Selling Reform Roadmap, published in June, puts upfront sales packs at the heart of plans to make transactions quicker, more transparent and less likely to fall through. In time, the intention is that these will also pave the way for binding conditional contracts, giving buyers and sellers greater certainty much earlier in the process.
It all sounds perfectly sensible, but will providing more information upfront actually make buying and selling a home significantly quicker? I am not totally convinced, and here is why.
Firstly, we have been here before. Home Information Packs were introduced with similar ambitions before being abolished in 2010. Technology has moved on enormously since then, and I am a firm believer in using digital solutions to improve conveyancing, but we need to be careful not to confuse making information available earlier with solving all the reasons property transactions take as long as they do.
There are also some very practical questions that need answering.
Who pays for the work upfront?
If conveyancers are expected to become involved at the point a property is listed rather than once a buyer has been found, somebody has to pay for that work. So, will sellers be willing to put money on account before they know whether their property is actually going to sell?
That question becomes even more relevant in the current more challenging market, where sellers cannot simply assume that putting a property on the market will result in a quick sale. Properties may sit on the market for extended periods, be reduced or ultimately withdrawn without a sale taking place.
If legal work has already been carried out, who bears that cost? There may well be ways to structure the system to make it work, but this cannot simply be treated as an administrative change. Bringing legal work forward means bringing some of the cost forward too, and we need to be realistic about whether sellers will be willing to pay it.
Who is responsible for the information?
There is another issue around where the information comes from and, importantly, who is responsible for making sure it is correct. If estate agents become more involved in helping sellers complete initial forms or gather information at the point of listing, there is a risk that they are drawn into areas that would traditionally sit with a conveyancer.
Agents have an important role in the transaction, but they are not property lawyers. We need to be very clear about where information gathering ends and legal advice begins.
If a seller misunderstands a question about the title or gives incomplete information, who picks that up? If an agent tries to help and inadvertently gives the wrong guidance, who carries the responsibility?
Getting information upfront is useful only if that information is accurate, reliable and properly understood.
What does the buyer actually want to know?
We also need to look at this from the buyer's perspective. There is obviously legal information a buyer needs to understand before committing to purchase a property. Restrictive covenants, easements, title issues and lease terms can all have significant implications and absolutely need to be understood, but timing and presentation matter.
When the average buyer has just walked into what they think could be the home of their dreams, are they immediately thinking about restrictive covenants and easements or are they wondering whether the curtains and white goods are staying?
That may sound flippant, but there is a serious point behind it. Giving consumers more information does not automatically mean they are better informed. If we present buyers with large quantities of technical information before they understand its relevance, there is a risk that important details simply become noise.
I would be interested to know how much consumer consultation has been carried out around not just what information buyers should receive, but when they want it, how they want it presented and what support they need to understand it.
What happens when that information becomes the basis for commitment?
This becomes even more important when you consider the Government's longer-term intention to introduce binding conditional contracts once upfront sales packs are established.
The aim is understandable. At the moment, an accepted offer does not generally make either party legally committed to the transaction and a buyer or seller can usually walk away before exchange. That creates uncertainty, leaves transactions vulnerable to gazumping and gazundering and can mean weeks of work and significant expense are lost when a sale falls through.
Creating greater commitment earlier in the process could help address some of that. However, if buyers are going to be asked to make a binding commitment sooner, we have to be absolutely confident that they have been given the right information, that it is accurate and that they understand what they are committing to.
It also raises another practical question: what exactly will the conditions be? A buyer may discover an issue through their survey, their mortgage offer could change or further legal work could reveal something that was not apparent from the information provided upfront. Any binding system will need to distinguish between somebody simply changing their mind and somebody having a legitimate reason to reconsider the purchase.
That is why I see upfront information and binding conditional contracts as two parts of the same conversation. If we want greater certainty earlier, the information underpinning that commitment has to be robust enough to support it.
Better information, not a silver bullet
None of this means I am against upfront information. Far from it. At PCS Legal, we have been advocating better use of property information for some time, and it was one of the reasons we introduced Property Logbooks. I believe there is real value in information being gathered and maintained throughout the life of a property rather than recreated from scratch every time it changes hands.
Digitalisation also has an important role to play. Better connected systems, standardised data and easier access to reliable property information can undoubtedly improve the process, but I think we must be realistic about what that can achieve.
Upfront information may help identify issues earlier and make transactions better prepared. What it cannot do on its own is remove every enquiry, mortgage issue, survey problem, chain complication or other factor that causes transactions to take time.
If we want to make home moving quicker, the industry needs to look at the entire transaction rather than assume that moving one part of the existing process to the beginning will solve the problem.
Upfront information is a good idea and greater certainty in property transactions would be welcome. However, whether these reforms translate into a faster, more reliable home-moving process will depend entirely on the detail – who prepares the information, who pays for it, who takes responsibility for it and, if buyers and sellers are expected to commit earlier, whether they genuinely understand what they are committing to.
