Why can't Labour do anything right? I know it sounds horrendously naive to say something like but sometimes I find it really difficult to accept that there is a total lack of common sense in the Government. Take the housing market for example. It's always been a complete nightmare buying a home in England, and god forbid you’re selling and buying in a chain, it's positively horrible, especially if you suffer gazzumping or gazzundering.
The Government wanted to make it easier for first time buyers and so thought a really good way to help people out would be to put the obligation to get a survey and searches done on the vendor. In the past, when you bought a house, you agreed a price through an agent with the vendor and then you sent your surveyor round (at a cost to you) to check that the place wasn't falling apart. The Government's idea is to reverse that and make the vendor pay for a "seller's pack" which it then provides to the buyer. The pack contains all the information the buyers needs, like searches and a survey.
This might sound great in principle, but in practice it's actually nonsense. Firstly, the seller's pack is only valid for six months. If you get it done and then fail to find a buyer for your house you lose the cost - estimated to be about £1000. The Government argues that this stops vendors putting their house up for sale to "test the market", but if you're a normal average person you'll be able to figure out what the rough price your house is worth by looking in an agents window locally.
The second practical problem with the pack comes straight down to an issue of trust. If you're a first time buyer, about to make the biggest single investment of your life, are you really likely to trust the person selling to you to be totally honest? More to the point, is your mortgage lender going to? The simple answer is no. Buyers are likely to want their own survey carried out under their own instructions, and the mortgage lender will definitely want it. They don't want to be lumbered with a property that can't pay off it's own debt.
The Sellers Pack is, to be frank, a very expensive bundle of paper. It actually discourages vendors to put their house on the market whilst ironically being created to encourage and help first-time buyers. Joined-up Government at its best!
This leads me nicely on to what I think the Conservative Party should do to genuinely reform the housing market. I'll be perfectly honest; I'm not in the least bit original, because all I’m doing is looking at Scotland. Yes, as much as it pains me to admit it, they've got it right. The time it takes from the decision to sell to completion rarely takes more than six weeks in Scotland. They implement a closed bidding system whereby the vendor puts the house on the market with "From £xxx,xxx". People then submit bids to the vendor before a closing date and the highest bidder wins. There is no gazumping or gazzundering, it’s just straight, clean sales.
Rather than tinkering on the edges with gimmiky "Seller's Pack" we should be adivcating root and bracnh reform to the entire process of buying and selling homes. In my view Scotland's system hold the key.
4 comments:
thanks for the comments, I'm just a consumer in the market place so it's good to see my views are at least shared by some people in the industry. What do you think of the Scottis method of house buying?
What a sensible list of suggestions, from both of you! There is but on flaw in the Scottish system - and that is solicitors can also be estate agents. They are charged selling the properties and representing a clients legal needs in the sale process. This can lead to some insider dealings, especially in small towns were there are only 2 or 3 estate agents/solicitors.
Another example of how this system has problems is what happened when I sold my flat. After I signed the contract with my estate agent, I found out that they were also legally representing the person I was selling to! There was a real conflict of interest, and they should not have accepted both of our business (or at the very least informed us before we signed!). In the end, it all worked out ok, but I was a little worried for a while.
Perhaps a study of the Spanish method. I sold a property in Spain, some years ago, in just five days. The purchaser viewed on the Sunday and we signed the escritura on the Thursday.
I think we would benefit from moving towards the US system in terms of property listing. Let us say I live in Utah and want to move to Alaska, I could visit one agent who would have access to all the properties for sale. If I find the property I want via the realtor who has the listing, that agent gets all the commission, and if the property is listed by another realtor, the two split the commission.
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