OPINION – The housing minister is in for a rude awakening

Nick SalmonYesterday’s story in EYE about government plans for property transactions, and the opposition from some in the conveyancing world, unsurprisingly generated much comment.

The press release of the announcement from the Ministry of Housing, Communities and Local Government (MHCLG) last Sunday, 9th February, was optimistically headlined, ‘Home buying and selling to become quicker and cheaper‘. It immediately put me in a deja-vu state of mind.

25 years ago the predecessors of the present government, in the shape of the then Labour housing minister, Nick Raynsford, and the civil servants in what was then known as the Department for Environment, Transport and the Regions, expended vast amount of time and effort (and probably considerable sums of money) in their ill-fated attempt to ‘improve the home buying process’.

A charitable view of their track record in pursuing the aim to speed up transactions, do away with uncertainty in the process, and save consumers money that was being lost in wasted time and fees, would be that they were sincere and well-meaning.

A more realistic assessment might conclude that they failed to consult with people who really understood the process, were blinded by dodgy statistics, wedded to policy and not pragmatism, hoodwinked by those who saw opportunities for financial gain in the shape of sellers’/home information packs, and deaf to any criticism of their plans.

No wonder that a battle-royal took place over a period of nine or ten years between government and those of us who were of the view that the proposed changes would substantially disrupt the market – and not for the better – cost the consumer dearly, and ultimately fail to materially improve the home buying and selling process.

The current MP in charge of MHCLG is Matthew Pennycook. Ironically, he succeeded Nick Raynsford as MP for Greenwich and Woolwich when Raynsford stepped down in 2015.

Pennycook’s ‘about me’ page on his website shows he’s had experience of working in the charity and voluntary sector but there’s nothing to indicate a qualification or career role that particularly fits him for the position of Minister for Housing and Planning. In that respect he’s hardly different to any other of the long parade of here today-gone tomorrow housing ministers who have been installed in the post in recent decades. And it may explain why he apparently believes that digitalisation is some sort of silver bullet to solving the issues of the home buying and selling process. If he does believe it, then he’s in for a rude awakening.

So perhaps he and his boss, Angela Rayner, might do well have a sit down with someone who knows only too well that attempting to make home buying and selling quicker and cheaper is fraught with difficulty. I’m referring to the present Home Secretary, Yvette Cooper. Between about 2003 and 2007 she was, as an Under-Secretary and a Housing Minister, intimately involved in progressing the Home Information Packs legislation through Parliament, against fierce opposition. The legislation eventually passed but HIPs were then suspended in 2010 by the incoming Conservative administration.

Cooper initially batted off criticism of her government’s proposals for the home buying process, but as time went on it became clear that she had begun to realise there were serious flaws with the scheme, and with the so-called statistics on which the government had based its policy decisions. It is my view that she eventually understood that HIPs could never deliver on their promise. She might give a timely warning to Pennycook and Rayner that bigging up policies via catchy but ultimately vacuous headlines can lead to spectacular negative outcomes. Rayner is going to find that out anyway when the projected annual house building requirement figures are shown to have been nothing more than an exercise in headline-grabbing futility.

So, here we are, 25+ years after the whole ‘improving’ thing began and we are arguably no further advanced. Will Pennycook be able to make a difference? Frankly, I very much doubt it. Especially as he appears to have swallowed similar nonsenses to those swallowed by his predecessors.

Just read Sunday’s press release…

‘One of the key reasons the buying and selling process can be long and frustrating is a lack of digitalisation and join up in the sector…’ Is digitalisation really at the heart of the ‘long and frustrating process’? No, it isn’t.

‘…which is why the government is opening up key property information, ensuring this data can be shared between trusted professionals more easily, and driving forward plans for digital identity services to slash transaction times.’ Will digital identity services really slash transaction times? No, they won’t.

And I will bet my shirt on estate agents not being included in the charmed circle of ‘trusted professionals’.

‘These reforms will make home buying fit for the 21st Century and give much-needed certainty to everyone involved in property transactions…’ A frankly ludicrous assertion, given the myriad reasons why there isn’t any certainty for everyone involved in property transactions.

‘By making information available at people’s fingertips, it will be far less likely for surprises to be encountered later on in the process. This will make it easier for people to get onto the housing ladder…’ I think Mr Pennycook will find that affordability is a rather more relevant factor in determining the ease of getting on the housing ladder.

And finally – ‘Currently, fall throughs – which impact one in three transactions – cost people around £400 million a year, on top of the four million working days lost by conveyancers and estate agents alone which is equivalent to £1 billion. By bringing the process into the digital age, and learning from success stories such as Norway where transactions complete in around one month, the government is putting more money into the pockets of hardworking people and delivering on our Plan for Change to grow the economy.’ Oh dear, here we go again. Statistics being used to arrive at very questionable conclusions.

Digitalisation may well be desirable. But anyone who believes it will make a substantial and significant improvement to the home buying process is wishfully thinking. Of itself it certainly won’t make home buying and selling quicker and cheaper.

Unless and until we deal with the fundamental blocks to progress, such as the mortgage process, money-laundering regs, management information delivery, search and land registry information, and yes, estate agencies more interested in listing fees and third-party addon fees than effective sales progression, there isn’t going to be much beneficial improvement in the home buying and selling process.

And all this is before we get to the real cause of most transaction failures – human nature. Good luck to whoever tries to get to grips with that one.

 

Nick Salmon is managing director of Property Industry Eye. Prior to founding EYE he had a long career in estate agency and led the SPLINTA campaign in opposition to HIPs proposals.

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15 Comments

  1. Rob Hailstone

    Nick, we go back a long way, nearly the full 25 years. If only HIPs had been suspended, reviewed, and re-introduced as a much improved concept and product (exchange ready), we would not, in my opinion, be where we are now.

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    1. Nick Salmon, M.D. Property Industry Eye

      You are not wrong Rob. The shame of the HIPs debacle was that it probably could have been made workable and of real benefit. But because of the Labour politicians’ blind adherence to their (flawed) policy, and the civil servants who rejected constructive criticism, there was for several years no real willingness to even consider amendments or alternatives. So the only thing left to do was to campaign to kill it off entirely. Which is what happened.

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  2. Steve_Smithson

    Check out the Aussie route – a tight contract signed immediately upon offer acceptance, giving just enough time for surveys. National average to sell: around 30 days.

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    1. Bless You

      How do sellers find an onward purchase? Do they move into hotels?

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      1. EstasLoco

        They live with friends/family because the agreement is signed at the estate agent’s office with a few ‘get out clauses’. Buyers have to walk around with pre-approved finance. And because Australia is a much bigger country, they have more empty properties available to rent short term. Not possible in this country as they insist on squeezing us like sardines. All the good people are leaving this country.

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  3. DHS75

    The concept of speeding up the process remains right – as it was back when HIPs were being introduced (in my opinion a good idea at the wrong time). But nothing will change until everyone involved in the home-buying process buys-in. You need estate agents, mortgage providers and brokers, local authorities, surveyors, and probably most importantly, the legal profession to actually want to change before it will improve.

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    1. EstasLoco

      We want change. But nothing is going to happen until and unless the underlying legal issues and inherent corruption is dealt with. Civil servants are running the show.

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  4. WiltsAgent

    Twenty five years ago sales went through way more quickly and smoother than they do now. A stream of dreadful leaseholds that have been allowed over the last 25 years have meant that any sale where there is a lease is now treated as a potential disaster by solicitors. One firm local to us will now only act on Freeholds. Lenders are equally wary of leasehold and if there is one in the chain there is simply no way it will proceed quickly.

    Fix the scandel of Fleecehold and that will go a long way to shortening the sale process. Digitisation is a red herring.

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    1. biffabear

      35 Years ago, they went through even quicker than 25 years ago. No I.T. necessary, they just used bits of paper with ink and signatures.
      Lendors/buyer solicitors weren’t habitually scared of everything.
      I feel like it has become the American, ‘compensation culture’, that has made so many scared of being sued that nobody makes decisions and the system drags on and on. EG. Years ago, nobody worried too much about a 60 year lease, or a bit of text in a lease. Mortgage lendors took risks, albeit not much of a risk.

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  5. HitchP

    The house buying process is antiquated and full of vested interest and needs root and branch dismantling.
    A possible route for the 21st century is to task universities with researching a
    rebuilding of the process to refocus on the interests of the one paying for the service, update and streamline the legals, learn from other countries and delete duplication and waste.

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  6. ARC

    The great issue is as I said on the story yesterday that the majority of conveyancers still see agents as an inconvenience to be ignored or worse not to be trusted. However when the proverbial hits the fan those same conveyancers will do nothing to keep the transaction on track and just send a bill for the work they have done, cos who cares.

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  7. Peter Ambrose (The Partnership)

    Never a truer word spoken Nick – I remember when we were both on BBC Breakfast all those years ago ( 2007 ) discussing this EXACT issue.

    The fundamentals of this plan are 100% spot on, but anyone with any understanding of the process will know that onboarding are identification and relatively trivial ( albeit critical ) exercises. As I mentioned in a recent article, this is like espousing the merits of making the bus journey from Kathmandu to the foothills of Everest.

    What is not being addressed is what is the value of this data and who is going to do anything with it.

    Let’s not overblow what’s ACTUALLY happening here; a pilot project and some more meetings with Land Registry.

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    1. Nigel Walley

      I went to my first HM Land Registry workshop in 2017. I still have the minutes and the whiteboard output. Since then nothing has been delivered. Any project with them involved is destined to die (alongside Digital Street, the HBSG, the DPMSG etc etc).

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    2. EstasLoco

      Agree – they like to blow a lot of hot air but without releasing any fine detail. I hear it costs £000s to join that group (OPDA) so bet they have to look like they are doing something.

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  8. Matthew Gardiner Legge

    Over the last thirty five years of selling property, I have seen many instances in the UK where a buyer has instructed the solicitor to exchange contracts/complete within a few days. I have sold property abroad (Spain) where a property transaction generally takes a handful of weeks – check title is correct, check the state of the building, put the mortgage in place, transfer funds. Add in a little buggeration time for searches and the odd easement/right of way here and there and there really is no reason why our conveyancing system should be the joke it actually is. I remember HIPs and I thought they were great. Within a few months, we saw many companies set up to get HIPs together swiftly and efficiently – actually within a few days if I remember correctly – something that most conveyancers can’t seem to do even now. There we are, my head over the parapet, take aim….

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