Government reforms of the house buying system

The government has announced plans to make the house buying system cheaper and faster in what it has called the ‘biggest shake-up to the homebuying system in this country’s history. 

What are the key proposals?

1. Faster transactions:  the Government wants to cut around four weeks from the typical home buying timeline with the process, now, taking, on average, 120 days- with 1 in 3 home sales collapsing before completion. 

1. More upfront information: Sellers/estate agents would have to provide important details about the property before listing, including condition of the home, any leasehold costs, chain information (such as how many people are involved in the buying/selling chain). The aim is to avoid last-minute surprises in surveys or other checks- which often lead to delays or failed transactions. 

1. Binding pre-contract agreements: making parts of the property purchase contract binding earlier in the process-aimed to reduce the number of deals which fall through later in the process. 

1. Cost savings (particularly for first-buyers): estimated that first-time buyers could save around £710 on average under these reforms. May also cut costs for people ‘in the middle of the chain’, although, part of the reform shifts costs to sellers.  

1. Digitalisation and data sharing: standardise how data is shared among conveyancers, lenders etc. to reduce bottlenecks caused by paperwork, delays in getting documents etc. There are also proposals for digital identity services, reducing the need for in-person verification of identity. 

1. Consultation and roadmap: the government has launched a formal consultation (open to public, industry professionals). Subject to feedback, they’ll publish a roadmap of how these reforms will be rolled out. 

 

What are they key problems these reforms aim to address?

1. Long delays: the current system is often slow, with a lot of time wasted waiting for surveys, searches, conveyancing etc. 

1. Failed transactions: because critical issues are discovered late, deals collapse often, costing everyone time, money and additional stress. 

1. Unpredictable costs: for both buyers and sellers. Hidden or unknown expenses (e.g. leasehold fees, repairs revealed by surveys) may shock or surprise people causing more stress than necessary. 

1. Barrier for first-time buyers: both in terms of cost and in the uncertainty involved. 

 

What are some potential concerns surrounding these reforms? 

• Upfront burden on sellers/estate agents: requiring more information earlier (such as condition reports and leasehold details) might increase what sellers have to do before listing- these additional costs could increase asking prices. 

• How binding contracts are introduced: if deals become binding too early, it might discourage some buyers/sellers from entering into them or increase the risk of disputes.  

• Risk that additional costs are just passed on via higher property prices or fees elsewhere in the process: sellers might compensate for the added burden by increasing the asking price, or agents might hike fees. 

• Implementation complexity: digitalisation and data sharing involve legal, technical and procedural changes. There could be delays or resistance from parts of the property sector 

• Regional variation: some parts of UK already have different rules, therefore, applying uniform reforms may be tricky. E.g. Scotland has earlier ‘home reports’  

 

What it means in practice and timeline 

• These are early proposals. Because there is a consultation phase, nothing is set in stone yet. 

• For first-time buyers and others, if these go ahead, the process of buying a home could become simpler, more transparent, with fewer surprises and delays. 

• The £710 saving is an estimate for average first-time buyers; some will save less, some will save more, depending on the property, location etc.  

• These reforms appear similar to the government introduction of Home Information Packs in 2004 which aimed to reduce the number of sales that fell through- these included an Energy Performance Certificate, local authority searches, title documents, guarantees etc. These were unsuccessful and were soon scrapped- it was found in later government research that adding extra layers of regulation to improve the property market does not work.