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SELLERS' PACKS - MODERNISING HOME BUYING AND SELLING PROCESS

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Sellers' packs will be central to the government's major reform of...
Sellers' packs will be central to the government's major reform of

the home buying and selling process, housing minister, Jeff Rooker,

has confirmed.

He said the packs - one of the main themes of the draft Housing Bill

- were aimed at modernising the current archaic and inefficient

system in England and Wales.

He told delegates at the National Association of Estate Agents

Conference that the current home buying process was shambolic and did

not look after the interests of consumers.

'Forty per cent of consumers are dissatisfied with the present

system, and there is huge wastage. Twenty-eight per cent of

transactions fail after an offer has been accepted. This causes

wasted expenditure of up to£1m a day and that is intolerable.

Sellers' Packs will make the home buying and selling process more

transparent, faster and consumer friendly. They will reduce the

stress and wasted costs suffered by hundreds of thousands of

consumers each year.'

The minister also warned that for everyone to benefit from sellers'

packs they had to be compulsory.

'Voluntary arrangements would not work because most transactions are

part of a chain. A single missing pack in the chain would cancel out

the benefits of all the others, and a compulsory scheme had to be

backed up by effective sanctions.'

The government will be bringing forward proposals for a civil

sanctions regime rather than, as was originally envisaged, criminal

sanctions.

Notes

1. The government is committed to making it easier for people buying

and selling homes in England and Wales through a new sellers' pack.

Introducing sellers' packs is a key part of a package of measures to

reform the home buying and selling process. Legislation to introduce

sellers' packs was introduced in the Homes Bill on 13 December 2000,

but was unable to complete its passage before Parliament was

dissolved for the General Election. Legislation will now be

reintroduced as part of the Housing Bill mentioned in the Queen's

Speech.

2. Sellers' pack proposals are the outcome of extensive research into

the home buying and selling process, and a major consultation about

options for improvements. This research showed the home buying and

selling process in England and Wales is among the slowest in Europe,

is fraught with delays and is hugely wasteful - failure and delay

costs consumers up to£350m a year.

3. The problem is that under the present system key information

required to inform buyers' and sellers' decisions only becomes

available after terms have been negotiated and agreed. The packs will

address this by ensuring key information is available up front.

4. Sellers' packs are used in other countries and work well. There

are also several voluntary sellers' pack schemes operating

successfully in the UK.

5. The packs have to be compulsory to ensure every one can benefit

from them, since a voluntary scheme would not achieve the objective

of improving the process for the benefit of consumers. Most

transactions are part of a chain and a single missing pack in the

chain could cancel out the benefits of all the others.

6. A compulsory scheme requires effective sanctions. The Homes Bill

proposed criminal sanctions, as they offer the most effective

deterrent and are well precedented (local trading standards officers

already have similar enforcement duties under the Property

Misdescriptions Act 1991). However, in recognition of strong

opposition to criminal sanctions, the government is proposing an

alternative regime based on civil sanctions.

7. Most of the items in the pack are obtained at some stage under the

current process; sellers' packs will involve doing the same things

but more efficiently, and earlier in the process. Responsibility for

obtaining local searches and a home condition report will transfer

from the buyer to the seller, but since the majority of sellers are

also buyers these costs will usually be balanced by corresponding

savings. It is clear from information ODPM is receiving the industry

expects to be able to defer payment of all, or some of these costs.

The real financial benefit for buyers and sellers is that the

sellers' pack will help ensure hundreds of millions of pounds in

wasted costs, arising from failed transactions, are forced out of the

system.

8. ODPM will shortly publish two consultation papers; one to

disseminate the results of research into the application of sellers'

packs to areas of low demand, and provide an opportunity for further

views; and the second to consider the detailed contents of the pack.

9. The government's main measures are:

- More information at the start of the process

Before putting a home on the market, the person marketing the house

will be required by law to put together a pack of standard

information for prospective buyers. At present, much of this

information is provided after an offer has been accepted, and any

delays mean it can take weeks to exchange contracts. Providing this

information up front will speed up the process, reducing uncertainty

and possible disappointment. The pack is likely to include copies of

the following documents, which the seller currently provides later in

the transaction:

- terms of sale;

- evidence of title;

- replies to standard preliminary enquiries made on behalf of buyers;

- copies of any planning, listed building and building regulations

consents and approvals;

- for new properties, copies of warranties and guarantees;

- any guarantees for work carried out on the property;

The seller will also be required to provide two additional items for

the pack:

- replies to searches made of the local authority; and

- a home condition report based on a professional survey of the

property, including an energy efficiency assessment.

Also, for leasehold properties:

- a copy of the lease;

- most recent service charge accounts and receipts;

- building insurance policy details and payment receipts;

- regulations made by the landlord or management company; and

- memorandum and articlesof the landlord or management company.

- Better preparation by buyers

With the co-operation of lenders, conveyancers and estate agents,

home buyers are being encouraged to obtain 'in principle' mortgage

offers and to undertake other preliminary preparation before they

make an offer on a property.

- Faster mortgage offers and faster local authority searches

Lenders, local authorities and other service providers are being

called upon to ensure that sellers and buyers receive a fast and

efficient service.

- Better use of information technology

All the professions and other bodies involved in the home buying and

selling process are being encouraged to take full advantage of

advances in information technology to ensure that information can be

obtained and exchanged quickly and economically.

Other measures

- The Land Registration Act 2002 has modernised the complex and

outdated land registration legislation and opened the way for

electronic conveyancing.

- Mortgage lenders being called upon to provide title deeds within 5

working days where original deed documents are requested by a

conveyancer

- Insurers are being encouraged to develop further and market more

widely insurance to protect buyers and seller's from gazumping,

gazundering and other problems; and

- The Consumers' Association and the professions have been asked to

work with the government as the detailed proposals are developed.

9. Copies of all key publications about proposals to reform the home

buying and selling process are available here.

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