As we prepare to go to the polls this Thursday, Berwins head of Residential Property, Jo Randall takes a look at the UK property market and offers a plea to the next government from the specialist lawyers involved in house-buying.
Support first time buyers
Interest rates have been at an all-time low for some years now and investors are trying to plug their pension gaps with buy to lets. Though not their intention, the result has been to fuel the price increases which prevent many first-time buyers getting on the property ladder. There’s no easy solution to the problem, but there is a multitude of ways the government can support first-time buyers in home ownership without penalising investors through Stamp Duty Land Tax increases.
The 2016 introduction of a 3% surcharge on second homes did little to help, indeed it resulted in a ridiculous skewing of the market that year and is causing grief and strife for innocent bystanders such as separating couples who want to buy a home before they conclude their divorce proceedings, parents who want to help their kids onto the property ladder but ring-fence the money they provide to achieve this, investors and property developers.
Somebody has to keep housing stock turning over. By all means take steps to ensure the small property investors provide decent homes and security for their tenants but don’t price them out of the market.
Millions of home-movers’ pounds a year are wasted on abortive transactions. So what causes the bottleneck in conveyancing transactions and why do transactions fail? In our experience, the cause is all too common – a lack of communication and transparency.
The reintroduction of the ill-fated home information pack hinted at by Michael Gove would do nothing to improve the situation. Instead, the government should take steps to crack down on the poor-quality estate agents and conveyancing practices offering a cut-price service for… a cut-price.
Ultimately, you will only move at the pace of the weakest link in your chain and an estate agent and conveyancing solicitor worth their salt will have an eye on the bigger picture of the whole conveyancing chain at all times and make sure that there is effective communication of all relevant information.
While the Scottish conveyancing system, whereby the buyer is committed at office stage has its appeal to the frustrated house seller, has been muted many English conveyancers would feel that’s a bridge too far. What about a halfway house whereby there is some kind of financial commitment made by house buyers at offer stage, perhaps equivalent to the seller’s wasted costs if the buyer withdraws for no good reason?
Streamline local searches
‘Why does it take so long?’ Is the question we have to field most often. Some local authorities take up to six weeks to supply replies to the local search – a fundamental part of the conveyancing information. We know local authorities are hard-pressed and trying desperately to balance budgets but for a quick moving and therefore more effective housing market some investment in this area would pay dividends.
Legislate on leasehold
Leasehold properties come with a list of issues that could fill a number of blog articles for many years to come, but one of our biggest bugbears is the excessive charges imposed by commercial flat management companies coupled with appalling turnaround times for producing routine information that their leaseholders are entitled to have in any event. A flat buyer can pay management company administration fees in excess of £500, a figure which is matched and exceeded by the seller in obtaining the necessary information to enable the transaction to go through. This is an industry ripe for effective regulation.
The housing market has a unique and crucial position in the UK economy; whichever government we wake up to on Friday morning we need a cohesive and long term strategy which balances the needs of actual and aspirational homeowners, investors and developers for the benefit of us all.
Jo Randall has over 25 year's experience in property law. She is a Director and head of Residential Property at Berwins.