Consultations on the lettings and sales markets
by Patrick Garratt - 1st November 2017
Lettings and sales markets get a brace of new consultations
In October, Sajid Javid, the Secretary of State for Communities and Local Government launched two consultations covering lettings and sales in the property market.
The first, titled Protecting consumers in the letting and managing agent market: call for evidence, seeks views on the regulation of letting and managing agents and the approaches government could take to implement any such regulations.
The consultation paper sets out the perceived problems with the market, views on minimum entry requirements and standards agents should meet, potential options for a new regulatory approach and considers how to empower consumers through providing greater choice and rights to switch agent.
The second – called Improving the home buying and selling process – focuses on the frustrations experienced by buyers and sellers during the sale process. Sajid Javid writes “It doesn’t have to be this way. The government has committed to reforming the process – to make it cheaper, faster and less stressful. We need your ideas and suggestions to make this promise a reality.”
Protecting consumers in the letting and managing agent market
Chapter 1: The consultation paper details the argument to further regulate letting and management agents and discusses the current issues experienced by tenants.
Chapter 2: The case for minimum entry requirements are made for companies or individuals to operate as a managing or letting agent. Codes of practice vary between the existing trade bodies and questions are asked about setting core basic standards that would apply to all agents.
Chapter 3: Three options for how a regulatory body should be set up are provided:
a) All letting and managing agents join an existing professional body.
b) As above but with oversight from a regulatory body, created or approved by the government.
c) The government setting up or a proving a new body, which agents would be required to join. Membership of a professional body would be optional but lower entry fees could apply to agents who are existing members of a trade body.
Chapter 4: This section focuses on enabling consumers through rights to chose and switch agents or to challenge service charges. The questions in this section refer to block management where Right to Manage isn’t an option.
Respond by 11.45 pm on 29th November 2017
Click here to read the full consultation paper.
Click here to respond to the survey questions.
Improving the home buying and selling process
Estate agents: The consultation paper proposes that individuals should undertake professional training before they can operate as an Estate Agent. It also opens the potential for further government of regulation of Estate Agents and more promotion of the existing facilities for buyers or sellers to make complaints about Estate Agents.
Questions are also raised about referral fees charge by some Agents to third party providers.
Conveyancing: The government acknowledges that there are unnecessary delays in the conveyancing process. It suggests better information could be provided to consumers about conveyancers so they can make better decisions. In addition, it puts forward the creation of a ‘property passport’ so that oft repeated searches don’t have to be carried out each time a property is sold.
Digital Technology: The government believes that now is the time for a digital revolution in conveyancing and they will be working with HM Land Registry to explore how data on property can be made available more easily online.
Mortgages and the requirement of lenders: Questions are asked as to how this problem can be solved: “When a property is purchased with a mortgage, the lender requires trusted information on both the credit-worthiness of the borrower and the condition and value of the property before they can formally offer the necessary funds. Depending on the lender, the buyer’s personal circumstances and the condition and nature of the property being purchased, this process can take weeks. We understand that a number of conveyancers work on a ‘no sale no fee’ basis and will understandable delay their due diligence work until the mortgage application has been approved. This stretches the process and creates delay.”
Educating buyers and sellers: The government proposes that buyers and sellers are provided with some standardised guidance similar to the ‘How to Rent’ guide, which landlords and agents are required to provide to tenants.
Better information at point of sale: The report specifically advises that there is no intention by the government to reintroduce the failed ‘Home Information Pack’. However, the government believes that information from standard legal forms, which are completed by the seller as soon as they accept an offer, should be provided to the buyers before an offer is made to help make a home ‘move ready’.
Sharing information about each other and increasing commitment: According to the government survey of 2000 people, 25% of all transactions don’t progress to completion. To address this, the report suggests more information should be shared about the buyer and seller and some form of reservation contract or registered deposit scheme could be made compulsorily, with the introduction of a financial penalty, if either party backs out.
Buying a leasehold property: The government seeks suggestions on how the delays attributed to buying a leasehold property can be reduced.
Buying a new build property: Buying a new property is often a very different process as developers often sell properties off-plan directly to buyers who are frequently put under a lot of pressure to exchange contracts within a short period of time. The government sees opinions on how the customer experience of buying a new build home can be improved.
Respond by 11.45pm on 17th December 2017
Click here to read the full consultation paper.
Click here to respond to the survey questions.