The Covid crisis has affected everyone. Every individual and every business has had to adjust to the challenges presented by the fear, restrictions and changes brought about by the pandemic. The mental well-being of everyone has been tested, often to breaking point, and it has been a huge challenge for businesses to cope with new ways of working, or in some cases, not working.
The residential property industry has been spared the worst that the pandemic could produce by being allowed to operate, albeit within strict Covid safe protocols, and has had the huge short-term boost of Government intervention by way of the SDLT holiday.
The second half of 2020 was as busy as most of my estate agency and conveyancing clients can remember but the way in which businesses have coped has varied dramatically and huge lessons have, and need to be, learned.
The lack of planning evident across the industry saw a largely reactive reaction to the first lockdown (perhaps initially understandable but not acceptable with later restrictions) with many businesses simply battening down the hatches and not using the time to think about how they operate and bring about lasting change.
In my opinion, Covid will prove to be the biggest paradigm shift since the arrival of the internet, but I still see too many businesses trying to operate as they had done previously and get that approach to fit a changed environment. They may survive in the short-term courtesy of volumes boosted by Government intervention, but they will not survive and thrive in the longer term without recognising and embracing the need to change.
Recent months have seen a growth in antipathy between estate agents and conveyancers. This has been fuelled by the timeframe pressures of the SDLT holiday and by some businesses falling way short of acceptable service standards. Businesses have often sought to hide behind the difficulties of Covid because their long established modi operandi have been proven to be inadequate. There is also a general lack of understanding of each other’s positions and responsibilities.
In estate agency the use of “proptech” to facilitate remote working and virtual accompanied viewings, and to undertake the “heavy lifting” will be vital moving forward, as will the “joined up” approach to working with others in the supply chain and the home buying and selling, letting and renting processes.
Estate agents are likely to remain the “catalysts” for home moving but could do so much more to improve the speed, certainty and efficiency of the process. Conveyancers also need to “open their eyes” and recognise a need to change and embrace new technology and methods of working.
At the present time there are a number of initiatives seeking to get established in the market, based on sellers and their representatives obtaining information vital to the successful sale of the property ahead of a potential purchaser being found. This would undoubtedly shorten the length of time taken between agreeing a sale and exchanging contracts, particularly in leasehold transactions where obtaining a management sale pack with details of service charge and ground rent payments can be a protracted process. Shortening the timeframe will invariably reduce the risks of abortive transactions too.
The HMRC “safe harbour” proposals and use of electronic ID and signatures will also potentially help.
The use of “online auction” technology where a form of “lock out” agreement is created on the fall of the gavel rather than an exchange of contracts, is opening up the greater possibilities of this being used in private treaty sales.
Lock out or reservation agreements are also cited by many as a possible way forward to reducing the volume of abortive transactions.
The provision of up-front information is, however, key to the success of any of these initiatives and a factor in this will be the acceptance by a purchaser and their representatives of the information they are being presented with.
I still find it somewhat ironic that the, much maligned, Home Information Packs were introduced in 2007 but ditched three years later. They needed refining but would have gone a long way towards addressing the issues we currently still see.
The introduction of Consumer Protection Regulations in 2008 has placed an enormous (and costly) burden on estate agents to give consumers “material information” in a timely manner. A sensible “transaction ready” pack of information would largely deal with the issue.
Some potential information required is time sensitive such as searches, and conveyancers often have preferred suppliers and will not rely on others. The whole process still remains slightly adversarial and the need for a common platform and standards that can be relied on (and covered by insurance in the event of something being amiss) will be key to widespread and mainstream take up. I can only see this happening with Government’s direct involvement.
Of course, there are other elements such as mortgage finance and the need to synchronise any property transactions in a related “chain”
Another element revolves around fees and charges. The majority (not all) of estate agents operate on a no move, no fee basis. Many consumers and other industry providers gripe about the level of fees charged by estate agents but the agent is carrying the cost of failure. Those that pay for a successful transaction are, of course, covering the costs of those that do not succeed.
This is not true with the majority of conveyancers who will, understandably, be reluctant to take on any additional work ahead of a transaction, without this being covered by a payment for doing so and certainly the cost of any third-party charges such as searches.
This is partly cultural and partly commercial but will need addressing.
If all involved in the transactions had their interests more closely aligned, then there would be a greater chance of bringing about meaningful change that would be a winner for everyone.
Will the major estate agency groups who either own or have strong commercial arrangements with conveyancers lead on this and, if they do, will this drive change but potentially create a “bloodbath” for those unwilling or unable to change? However, will anyone consider it worth changing if it is not mandatory and, despite the best efforts of some, others involved in the process and in chains remain the “weakest link.
Michael Day MBA FRICS FNAEA FARLA
Managing Director – Integra Property Services
Director – teclet
Founder Member – Agents Together
Participant Member – Home Buying & Selling Group
Artilce written for and first appeared in Inside Conveyancing