Written evidence submitted by the Society of Licensed Conveyancers [HBS 034]
The Society of Licensed Conveyancers was established in February 1988 to act as the professional body to represent the interests of Licensed Conveyancers in England and Wales.
How efficient or effective is the existing process for buying and selling homes? How could this be improved?
The existing process is quite effective as evidenced by the number of properties transacted in any one year. However, the process itself is quite inefficient. There are many parties involved, some are regulated and some not, at times these parties work together effectively but often this is not the case. Regulation of all parties would help improve the process.
In addition, regulation and mission creep has increased the burden on conveyancers. Over the last 20 years conveyancers have had to shoulder more and more of the burden and liability in relation to conveyancing. This increases costs and acts as a barrier to innovation and investment into law firms.
How could the consumer experience be improved during the process for buying and selling homes?
Regulation of Property Agents to ensure all buyers and sellers are cared for by qualified agents who can be trusted with their money and home security details.
‘One source of truth’ that can be supplied once and relied upon by everyone in the home moving process through the digitalisation of property data.
Approval of single Digital Identity verification for sellers and buyers via the Department of Science Innovation and Technology (DSIT) and Digital Identity and Attributes Trust Framework (DIATF) that can be relied upon by all parties to a transaction and buyers and sellers only must verify their details once.
Is the reliance on voluntary initiatives adequate to improve the buying and selling process, or should improvements be made mandatory through legislation?
It is worth noting that for those who buy and sell professionally, use good quality services, understand all the tasks involved, and understand all the information available the system typically does work well.
Reliance on voluntary initiatives is not adequate to improve the buying and selling process in most cases. Legislation is required to mandate necessary changes that are required, and this should be supported by good, effective, regulation.
However as can be seen by the Building Safety Act, poorly drafted legislation can lead to severe unintended consequences and increased costs to consumers.
Voluntary initiatives have, in the main, stalled or failed due to the sheer number of parties involved in home buying and selling. Some of these parties are regulated some are not, regulation can be a blocker to the adoption of voluntary initiatives.
The Transaction Process:
What is the impact of issues in the transaction process, such as gazumping or gazundering, and how could they be remedied?
Whilst gazumping and gazundering often hit the headlines, in reality such instances are rare. There is little evidence, from our members, that these issues have a big impact on the transaction process. Renegotiation of an agreed price due to survey issues or potential major works, that were unknown about at the time of sale, should not be discouraged.
Would greater use of reservation agreements improve the transaction process?
It is unclear if the greater use of reservation agreements would improve the transaction process. Trials of reservation agreements were due in 2020/21 but did not take place. A lot of research has been undertaken in this area and it’s been concluded that they are not correct for every circumstance.
Agents often state/believe that asking people to pay upfront to reserve a property might reduce the number of properties for sale.
What prevents reservation agreements being more widely used? Why has a short, standardised reservation agreement not been developed, as promised by the then Government in 2018?
There is general scepticism by conveyancers as to whether such agreements will improve the process. There are concerns over who will hold the deposit, identifying the issues when a party might legitimately renegotiation the deal or withdraw completely without penalty.
Further barriers appear to be whether buyers and sellers are willing to pay an upfront payment and whether this is detrimental to first timer buyers and distressed sellers.
A short, standardised reservation agreement was agreed by member of the Home Buying and Selling Group. However, this has not been taken up.
Information Provision:
Do buyers have the right information available at the right time during transactions?
In general buyers do not have the right information available at the right time during transactions. However, too much information or the information being relevant at the time also needs to be considered.
The move to upfront material information is largely seen as the right steps in relations to part a. and b. However, we are unconvinced that the part c requirements really give the buyer the correct information at the right time. Its difficult to see how this information is relevant without a conveyancer interpreting the information to a buyer. As most buyers will not have instructed a conveyancer at this point there is danger of too much information muddying the water.
What effect would it have on the transaction process if sellers were required to provided set information about a property when it was marketed?
Again, the introduction of upfront material information has started to address this. Mandated information in a required format is always welcomed. However as referred to above it must be necessary information. Information relating to broadband and network coverage, any past structural work is essential, however we do not feel that previously rectified or easily rectifiable title issues are necessary.
How much data associated with housing transactions still needs to be digitised and how can the digitisation process be accelerated or prioritised?
Most data associated with housing transactions needs to be digitised. There needs to be a roadmap towards complete digitisation. The issue, again, is the large number of unregulated entities and individuals involved in transactions.
Leasehold properties, quite often, require more than one completed LPE1 form. The LPE1 form was devised to standardise the information required and to speed up responses. However, freeholders and Managing Agents/Companies, have not invested in simple technology that would enable the fast production of these responses. Some of these companies charge extortionate fees to provide the information with a 4–12-week turnaround or charge an additional amount to expedite. These fees can cost in the region of £400 per pack.
The forms that are used by conveyancers have not been digitised completely. Efforts have been made with the BASPI; however, the most common used forms (the Law Society TA Forms) have not been digitised. There are additional issues in that these forms are copywrite to the Law Society and changes are regularly made with little or no consultation.
What challenges are there to digitisation or providing information at listing?
Forms need to be digitised and information pushed to all parties concerned and reused upon sales. At the moment many agents do not even ask the CPR questions of sellers and little if any of this information is included in the listings.
The property portals (Rightmove, Zoopla etc) should clearly display this information or have links to the completed forms. We are aware that some Estate Agents believe they will be able to bypass upfront information by stating please refer to the Agent.
Conveyancers:
Do consumers have sufficient information to determine which conveyancer to use? How could information provision on conveyancing be improved?
Consumers can shop around and obtain information to determine which conveyancer to use. All CLC regulated practices have been required to display certain information to support informed choice for several years.
The real problem when it comes to conveyancing is that consumers do not understand the role (and importance) of a specialist conveyancer and the value that they bring to them during the transaction.
Many conveyancers use external review platforms (such as Trustpilot) to enable consumers to provide genuine feedback from clients. Conveyancers use these and consumer feedback forms to track their Net Promoter Score and continue to enhance their service.
We do not believe that publishing Land Registry requisitions statistics or Legal Ombudsman complaints data would provide any useful information to consumers. Such data would need to be heavily translated, caveated and explanation provided to consumers.
What effect would a mandatory professional qualification for estate agents have?
We would welcome a mandatory professional qualification for estate agents. We have long argued that Estates Agents should be required to have a professional qualification.
At present anyone can set up and call themselves an Estate Agent, without any formal qualification or even experience. This can only be a detriment to consumers who are entrusting the Agent to handle either their home or asset.
A professional qualification should be introduced along with supporting regulation would ensure a minimum standard and this would protect consumers from receiving low-quality services.
It will provide training and continued professional development for professionals working in regulation will protect public safety for health reasons.
It can help to bring greater levels of consistency and a joined-up approach.
Should there be a single, legally enforceable Code of Practice for property agents?
We agree there should be a single, legally enforceable Code of Practice for Property Agents. Introducing this would ensure that best practice is followed and would protect consumers from receiving low quality services.
What impact does the practice of referral fees have, and how would a review, standardisation of practice, or ban affect transactions and consumers?
Referral fees have been the subject of much debate for many years. However previous reviews have shown that there is no detriment to consumers, this was a view shared by the Legals Services Board and the Legal Services Consumer Panel in 2011.
A review of the practice of referrals fees could be undertaken with a view to standardisation of the practice and to ensure that conveyancers are complying with the rules set out by regulators and that these rules are proportionate and effective.
Estate Agents should also be reviewed to ensure they are complying with the guidance set out by National Trading Standards in 2019.
Provided such referral arrangements are clear, disclosed by all parties and the consumer is made aware then it would be difficult to support a ban on this practice.
There has been a long-held belief by some that referral fees equates to poor service; however, it should be noted that such fees are small in comparison to the fee that Agent charges a seller. Agents are more motivated to ensure that contacts are exchanged, and their fee paid on completion. Any referral will also reflect on the agent’s reputation and therefore consumer service is important to both conveyancers and agent.
April 2024