/ Home & Energy

How can buying a house be made less of a nightmare?

home-buying

A government review of the home-buying process has begun and our call to simplify one of the most stressful purchases is being heard. We’ve called for change and we’re now hoping to see actions as well as words, and sooner rather than later.

Anyone who has ever bought a home will know this: it’s one of the most stressful experiences in life. The process can be fraught with stress about whether the dream home you’ve set your sight on will end up being yours. A home is the most significant purchase that many will make.

There may be good news though. We could be about to see that stress and the problems that come with home-buying tackled at long last.

Back in April, we issued our calls to all political parties on the consumer issues that need to be tackled by the government. Nearly a third of people (27%) said the government should prioritise home-buying and selling as a consumer concern that ought to be addressed after the election (with only social care, energy prices and scams coming before it).

In an online poll between 19 and 20 April 2017, 2,130 people were asked to provide up to three consumer issues they believe the government should prioritise next, out of a prompted list of ten issues. Here are the results.

Consumer issues survey 2017

We called on the government to conduct a review into reforming home-buying to make the process easier, particularly for the buyer. We also asked them to examine the role that professionals, such as estate agents and conveyancing, play.

Home-buying review

This weekend the government published the first stage in progressing with this reform by calling for evidence to feed into their review.

We want to see the government now bring forward changes to the outdated and flawed home-buying process. They must put consumers first, ensuring estate agents deliver a better service for both home-buyers and sellers, and that the conveyancing process is simplified. This will mean consumers will be able to make more informed choices about the professionals they use when buying or selling a house.

More than one million properties were bought in England and Wales in 2016 alone and our research found that it can take people an average of four to five months to complete a purchase. One in three sales fall through and as a result, on average, consumers lost £2,200 because of the costs already incurred.

Making these changes could not only make buying a home easier, but help hundreds of thousands of people a year, and potentially save consumers thousands from when a sale falls through.

What elements of the home-buying and selling process do you most want to see simplified?

Comments

John’s right. Not sure when, but I’m guessing around 20-30 years ago Which? (then the CA) campaigned for and won some changes in the law regarding buying selling property. However, Which? was highly critical of the eventual changes, saying not only did they not go far enough but the most important suggestions had been omitted by the government in framing the legislation.

Can one of the team do a quick search?

I think it is time to think outside the box. There are ove one million second/holiday homes, most of which are empty for the majority of the year. These can bridge the gap between the buying and selling process. I personally would like to tax them out of existence as this would solve the housing shortage but in the meantime they should not be allowed to sit there un-used.

I agree up to a point, but the majority of holiday homes exist in places where jobs are in short supply and local people could not afford to buy them. They can also be an important source of income for local shops and businesses that rely on the tourist trade to survive, whereas they may stand empty for most of the year. I used to own one and let it out to friends and family so it was occupied for most of the year.

The argument about holiday homes is that houses in the area may cost less if local people did not have to compete with investors to buy housing. But I can’t agree with anyone who wants to tax them (or anything else, such as people of certain professions or races) out of existence. That is not what taxation is for. It is there to raise money to pay for government services.

The problem of house prices would be better solved by arranging for people to pay what they can afford, rather than what they can borrow. What that means in practise is for mortgages to be three years’ salary not seven, and 50% or 60% not 100% or even 120% of the house valuation. If prices don’t inflate so much, then people could save for substantial deposits. With “buoyant markets” deposit savers are chasing a moving target, and as rents rise they have less and less to save. The only benefit of “buoyant markets” is the people who stay in the same house most of their lives do have some equity with which to pay for their old age care. But in practise “buoyant markets” tax savers to the benefit of borrowers.

The impossible problem is how to get the cost of housing down to a more reasonable portion of earnings. Using violence (strikes) to force earnings up just produces a spiral. Using violence (taxes) to force nett prices down would cause the market to collapse and no one could buy a house. A vicious wealth tax (like council tax) on property ownership with the funds confiscated thereby paid as some sort of grant to house buyers might at first sight seem to be a solution. But the beneficiaries, ie buyers, then become the victims ie taxpayers. So the problem remains with different feedback loops. Trying to solve the problem seems like trying in invent a perpetual motion machine.

But maybe someone thinking outside the box can come up with something.

I think we must consider housing where it is cheaper and more available, away from the major cities and housing hot-spots. However this means providing work in these areas, and that could be facilitated by government. Is it any longer-term than trying to continually add houses to already overcrowded areas? Maybe a little, but if it is never started we will continue in this vicious cycle.

It would also relieve traffic congestion and rail problems in the commuter areas.

Many areas of the UK are far more attractive than the big cities. We should encourage their use.

The only way to lower house prices and make them affordable strategically is for the government to lubricate the market by providing resources to local authorities and social housing providers. The government could buy up or release surplus land and lease it at a peppercorn to such providers so that they never own it but are saved the expense of buying it. I think this is far preferable to putting restrictions on the rights of people to have two properties which would be full of complications and disputes. There are endless arguments for and against second homes so it can easily become an unhelpful distraction from the real issue.

The government should also take direct action to relocate employment to areas with an excess of housing relative to local demand.

Controversial though it is, it has always seemed odd to me that there are people living in housing hot-spots like central London who will never work again and people with jobs in central London who are having to commute for 100 miles each way every weekday. I am not saying the first group should be compulsorily dispossessed and moved out but there must be a way in which the government can influence and encourage the balancing of supply and demand, even if it means incentives to enable older people to live in a more healthy area where there is an abundance of reasonably-priced property.

Andrew (Wylde) says:
28 October 2017

Involvment in house chains is the price which their participants pay for the security and convenience of those in each chain whose sales and purchases are synchronised.
That involvment can be eliminated or reduced by those participants in one of two ways: they can commit to purchasing by a given date by finding the purchase price, usually by taking out a bridging loan, irrespective of whether their existing property has sold, or they can commit to selling at a given date and move out into rented accomodation if the sale of their existing property fails to complete in time.
Either course of action involves risk, but that is the reality of the much vaunted Scottish system. As matters stand, chains will continue in England and Wales so long as participants value the security of a synchronised exchange of contracts above the risk of committing to purchase or sale first
It used to be fashionable to blame conveyancing solicitors for the delays and uncertainty which are synonymous with chains, but in truth they are the inevitable consequence of the choice which consumers make when they opt for the low risk course.

Conveyancing solicitors ought to use email with read receipts instead of telephone call centres or snail mail. If a read receipt is not received for emails after say an hour of office time they should be re-sent. The problems with snail mail include letters being dictated and joining a queue in the typing pool and then joining another queue to be stamped and posted, and possibly the use of second class mail. Telephone call centres involve people who charge hundreds of pounds an hour (+VAT) waiting in queues listening to music interrupted every 20 seconds with lies about their calls being important to the recipient. Even telephone calls to a direct line are fraught with problems of “telephone tag”. The telephone is old technology that resolves the problem of distance but not time.

The price of a low end house is commensurate with a high end car. The latter sale and purchase can be completed quickly, so why not the house, and by extrapolation why not a more expensive house. We are supposed to live in a democracy, so if we elect MPs who are not involved with the legal profession we ought to be able to get better results than we do.

I don’t think someone can be an MP if they are involved with arms, pharmaceutical or civil engineering, so why can people involved with the administration of law be MPs? Maybe they don’t deliberately enhance the income of their industries for personal gain, but their modes of thinking would tend to favour their colleagues still in business.

Why should consumers be expected to take high risks? It is up to the legislature to provide a framework that is fit for purpose. Otherwise people are taking fees for services that are not fit for purpose, and government collecting value added tax where no value is being added.

In every sale or purchase that I have been party to over the last twenty years the bulk of the correspondence, including forms, has been done via e-mail, and quite rapidly. Certain things like documents to be signed and witnessed need to go by post and can take time but this is not necessarily on the critical path. We have always made ourselves available to attend at the solicitor’s office for formalities and, where possible, sellers should choose a local firm for one side of the process at least. It’s different if the property being purchased is remote but the speed of the solicitor or conveyancer is not the cause of the hold-ups these days; it is more likely to be the buyer’s hesitation over details, funds, survey, indemnities, and general prevarication, plus the chain reaction for sequential transactions.

bishbut says:
30 October 2017

most people in call centres know about anything is what is on the computer screen in front of them they can be helpful but often have not got the answer to your question as it is not on the computer

I can’t remember the last time I had a problem like that when dealing with a call centre. In my experience the staff are usually well apprised of the situation and capable of giving good advice or executing whatever has to be done. I think call centres have improved a lot in recent years, at least for the companies and organisations I deal with, and even the waiting times do not seem unreasonable on most occasions – or they have call-back facilities which I like.

It is the call-back facilities that promise to get back to you within 24 hours that are annoying especially if they take that long to get back to you.

You have everything prepared, any documents laid out in front of you, know what you are going to say, and they ring you back when you are in the middle of something else. 😟 Grrr.

Exactly! So why don’t companies let customers and potential customers have access to a web site that provides this information. Confidential information could be accessed with a user name and password as with banking.

I suspect the reason is that they make money from them queuing listening to music interrupted by lies about the call being important every 20 seconds.

If the same service was available on line, then the pressure on telephone call centres would be much less and only from illiterate people.

Andrew, that seems like a fair summary. Perhaps some want it all ways – all the benefits with none of the disbenfits?

Tammy says:
29 October 2017

I’ve been gazumped several times over the years, once as late as the day I should have been exchanging contracts. I lost money from the survey plus legal work I’d paid for, never mind the stress of it all. It’s a ridiculous system and I think it needs to be changed to give buyers much more protection. Conveyancing, if you get that far, always seems to be slow and expensive for the work that needs doing.

Given that the proportion of solicitors who become MPs is far higher than the proportion in the electorate, and given that government charge VAT on their fees, this isn’t likely to happen that soon. If they were only allowed to charge fees and VAT on successful transactions maybe market forces would sort it out.

What are the respective percentages, John? I was not under the impression that there were many solicitors in the House of Commons overall or that the introduction of new legislation was hampered by a professional blockade.

Referring back to your earlier comment, so far as I am aware there are no restrictions on people becoming MP’s by virtue of their interests in the arms trade, civil engineering or the pharmaceutical industry, nor in any other legitimate commercial or professional occupations.

The success of a sale or purchase is not usually under the solicitor’s or conveyancer’s control so massaging away the fees in failed transactions is not an appropriate answer to any of the problems. The costs would remain in the system and would have to be recouped somewhere. If a solicitor or conveyancer has been negligent and a conveyance has collapsed because of it there are remedies but it is a very rare occurrence. I believe insurance cover is available for this risk but would only be of nett benefit if the transaction was extremely critical and contingent on other factors. Despite its many deficiencies, the England & Wales process does appear to work in nearly every case. It is fraught with multiple uncertainties however which give rise to much of the anxiety and stress. If we could chip away at these one step at a time the system would never be perfect [because some other niggle would supervene] but at least it would become less imperfect.

Googling produces some relevant articles.

I do agree that the costs would remain in the system, but making them fall elsewhere may motivate people to speed up or otherwise improve the system.

The amount of time the process takes gives rise to the greatest uncertainty. Things happen that make people change their minds. Once a sale is agreed, sometimes buyers instruct their solicitors to deliberately string the process out in order to see which way the market is going, especially in times of financial crisis like 2008/9.

Harryp says:
29 October 2017

10 years I sold my house and bought another. Our solicitor charged a flat fee of £500 ! Given that estate agents sell a house, whatever the value, why not do the same? Makes no sense at all the current way???

On-line selling is one response to this problem but it is taking a long-time to gain traction. Shop-front estate agents are frightened of this development but only have themselves to blame if they lose market share in that direction. So far, on-line selling does not appear to have led to any improvement in the quality or efficiency of the service or reduction in fees. I would have thought that, by now, the conventional lock-in of the agent for several weeks would have given way to a more flexible situation but it hasn’t happened. In our part of the country, the embedded estate agents seem quite complacent and smug that the on-line selling operations will have no impact on their business, claiming that they are not good enough, and they miss no opportunity to reiterate that. This is not surprising given that most firms have grown very fat on the management of rental property over recent years and they are less exposed to commercial pressures than they were in previous market declines when they were actually having to close branches . Internet property portals have also saved their bacon and cut their selling costs [but not their fees!] so newspaper advertising now only has a representational purpose.

karen young says:
30 October 2017

Do away with stamp duty…that would make it easier for me and for people who need to downsize. Why are the government still allowed to rob us with this useless tax!

On an annual basis government revenue from residential stamp duty receipts were £8.9 billion,
This tax would have to be replaced from elsewhere. So, for example, VAT could increase to 22%, or 8.8% on NI contributions, 19% on excise duty……The choices are several.

It could be fairer though.

Where we live can depend on many things, roots, family, relationships, work,etc. We don’t always have a choice.

If you buy in a cheap area, not only is the property cheaper, but all costs associated with it are probably cheaper too including mortgage payments.

Is it really fair if you live in an expensive area to be hit for higher selling fees and higher stamp duty on the same type of property as one in a cheap area?

It would not be fair on those who never buy a house – renters for example. It is simply another way of raising tax revenue, not devised to be fair. Why should more expensive houses be subject to a higher rate? I agree. I’d think the tax rate should be uniform; the tax paid would still be more on the higher-priced houses. VAT on all the fees does not change – still 20% irrespective of the size of fee.

I would be more sympathetic if the £8.9 billion raised in stamp duty were directly used to fund real social housing – where subsidised accommodation were built for rent to those who are in genuine need and are unable to pay market rents. But not for subsequent purchase, nor to continue when the renter has the means to join the open market. They should remain as subsidised accommodation.

It seems to me that the timescales involved in some of our archaic processes open up the risk of a sale falling through, therefore anything that streamlines the process can only help:
1. Refine process for getting local authority searches – these took weeks rather than days to turn around. If automated so that they are available on line, and on demand (for a fee) it not only cuts down time, but also allows people to do ‘pre-searches’ before an offer is even made. Will take local govt to invest in new methods of doing this, or are they already automated internally within councils, and therefore only need to be tweaked to open up to the public?
2. Give people a prescribed, standard amount of time once their provisional offer has been accepted to carry out their own survey etc, after which the offer becomes firm and payment to the non-defaulting party becomes due if the other party pulls out (a small enough amount of money not to deter serious buyers, a large enough amount to compensate for costs incurred on legal fees etc to that point – say £5 – £10k)

Kate says:
31 October 2017

The stress ( and expense ) is throughout the whole process. Estate agents need to work to far higher standards. A handful are good. Too many are not. Checks on prospective buyers can appear almost non existent. Mortgage providers need to see the bigger picture and not focus on small detail when assessing whether to lend. Solicitors vary greatly in terms of proficiency and approach. And take responsibility to protect peoples money transfers.
There could be reasonable reasons why a seller pulls out or a buyer does not proceed eg. unexpected redundancy, ill health, separation. But non serious sellers and buyers are a problem and I do think a deposit of some sort payable to the injured party is appropriate once offers have been accepted. You are not just losing the house you wanted but you also lose valuable time and assuming you do not go in for multiple offers on different houses , the chance to offer on other properties. Other houses will have come and gone. A deposit or some sort of compensation might help deter. Sellers who accept an offer should not be able to accept a higher offer later on from elsewhere. Once prices agreed post survey no reduction in price should be able to occur. Surveys and at what point to do them in the process needs exploring.

Ingrid says:
21 November 2017

my daughter and I are in the process of buying a house together, I will never live in the property as I already have the family home but I am supporting my daughter getting on the property ladder. We are choosing to do this via a mortgage on the property as it is important to protect everyone’s interest in the property, for my daughter to have the real experience of managing g her mortgage and personal finances and the sake and also our other children to ensure all are treated equally particularly from an inheritance perspective. As a consequence of this I have to pay 3-5% stamp duty for a second home that I will neither live in or profit from just to support a young person getting on the property ladder. I do this as she was paying more in rent than she will for a mortgage, she manages that financial outgoing well but the building societies would not lend her sufficient money as a minimum wage earner.

Our experience has been difficult and continues 3 months in. The first property the vendor pulled out of the sale due to a change in personal circumstances, thankfully we hadn’t progressed too far into the purchase but had we have then we would have lost money in relation to the survey, solicitors and opportunities to purchase other properties. Whilst I understand that circumstances can change I do feel that money lost as a consequence by the buyer should be reimbursed by the vendor through a bond or similar lodged with the estate agent.

The second property we found is still incredibly problematic. Despite having our offer in principle, the mortgage provider (HSBC) took an inordinate length of time to progress the mortgage (2-3 months). Some of the queries they raised were ludicrous and others duplicated previous requests and information provided. For example they even asked for the whole application to be resubmitted to put my name and not my daughters name first on the mortgage application. I should add that alone my income covers at least double the mortgage applied for and other than utilities I have no outgoings. Both of us have good / excellent credit rating. However her wage is paid hourly despite it being a full time contracted position 40+ hours per week and this caused significant problems with the mortgage provider despite my income alone more than covering the mortgage. I could go on but I will leave it at that, but overall an unnecessarily difficult and stressful process.

On to the house – we had a full but not structural independent survey done on the house at a cost of £350, for peace of mind more than anything else as the house was built in the 1950’s and in reasonable condition, ex council owned but with all in the locality now privately owned. condition. The survey was money well spent as it identified a number of significant issues, including no lintels above the windows / doors affecting the structure, blocked drains and significant damp which appeared to be caused by cavity wall insulation becoming damp – this may also have affected the wall ties. All items are must do’s and at significant cost. All would affect a mortgage application and reduce the purchase price / value of the house. The HSBC surveyors attended for a valuation survey and to their credit identified the lintel issue and have apparently requested a structural survey. I say apparently as although they went almost 3 weeks ago I have only had verbal conformation the formal letter that was ‘in progress’ two weeks ago has still not been received. I feel that timescales should be put on lenders as these delays cause problems for both vendor and purchaser that is out of their control and there is no apparent recourse.

The vendor has now decided that they will progress the survey, again the vendor loses any control – this could be eased by it being a joint process and legally binding. The vendor does not appear to be moving swiftly which cases me concern that they may pull out of the sale and in the meantime the property remains empty and unheated which can only be damaging the fabric of the building further.

In the meantime we are still having to view properties because we do not know whether this will happen or not, if it doesn’t we will have lost a lot of money that a first time buyer cannot afford (surveys and legal costs) but also we don’t know whether we should make offers on another as we are still tied into the original house purchase which we would like to continue with at a price that reflects the requisite work.

A very difficult and stressful time for all involved and still no legally binding contract or security about the purchase

Ingrid, I realise you are in deep with the purchase of this house but I think the signals are telling you to walk away now. I cannot foresee the seller reducing the price sufficiently to cover all the work that will be required. You could also find that the lender could apply a retention until certain works are completed. Inserting lintels will be a difficult and disruptive operation and rectifying the damp problem could also be very complicated. Whatever happens to the price there will be no compensation for the disruption, disturbance, mess and general inconvenience caused.

I think you should keep looking for the right property. I appreciate that you will have lost money in the process, especially if the house was seriously overvalued and its condition not apparent, but the money you paid for a survey could be regarded as a saving since you might face an even bigger outlay if you carry on.

On the question of Stamp Duty Land Tax, you will be subject to an unintended consequence of the new rules for which there seems to be no relief. The 3% additional home surcharge was designed to catch the buy-to-let market and cool it down. It was directly intended for people who will not live in the property but will profit from it – unlike your case where, presumably, your daughter will not be making any repayment to you directly but will be repaying the loan, or perhaps you are sharing the repayments. It could be that there are better ways of structuring this purchase in order to legitimately avoid the surcharge liability but I don’t want to raise your hopes.

Ingrid, Have you contacted Which? Mortgage Advisers? They may be able to source better products for your situation.
https://mortgageadvisers.which.co.uk/

On the basis that unreasonable delays seem to a lot of the problem with house transfer, maybe something along the lines of compulsory fee reduction or even automatic damages if a process takes more than a set limit. Also staff at solicitors’ offices, mortgage companies and so on should put their names to transfers and be personally liable for bad work, as are health professionals. The purpose of this would not be to collect money, but to nudge people into doing their jobs properly.