Government proposes major changes to the way we buy, sell, lease and let property in England
Independent property expert Kate Faulkner talks through some key changes proposed by the government that will affect landlords and investors, whether you’re buying, selling or letting.
- Increased regulation of estate, letting and managing agents
- Changes for leasehold
- Suggested changes to the buying and selling process
- How could all these changes benefit you?
Increased regulation of estate, letting and managing agents
The private rental market now accounts for around 20% of households (4.7 million) in the UK, with an additional 4.2 million leasehold properties in the residential market. The growth of these sectors has, according to the government, ‘fuelled the growth of a multi-billion-pound property agent market’, often leaving consumers ‘disempowered in the process’.
While the majority of agents are honest and professional, lack of regulation means that - as it currently stands - anyone can act as a letting, managing or estate agent. This could leave some consumers open to abuse.
In response, the government has proposed some major changes to the way agents will be regulated in the future, including:
- Creating a mandatory and legally enforceable code of practice for letting and managing agents, setting minimum standards for a number of things, including service charges and dispute resolution
- Introducing a nationally-recognised qualification to operate as an agent
- Establishing an independent regulator that owns the code of practice, is responsible for delivering the qualifications and has enforcement powers
- Requiring estate agents to hold professional qualifications
- Requiring estate agents to be transparent about the fees they charge for referring clients to solicitors, surveyors and mortgage brokers
- Strengthening the National Trading Standards Estate Agency Team, enabling them to carry out more enforcement activity, including the option of banning the worst estate agents
- Criminal sanctions to be imposed on agents who practise after being banned
Changes for leasehold
Government changes that will affect leaseholders and agents include:
- Simplification of the 'Right to Manage ' process
- Empowering leaseholders to change managing agents if they perform poorly or break the terms of a contract
- Managing agents and freeholders will have to provide up-to-date lease information for a set fee and to an agreed timetable
- Restricting ground rents in newly-established leases of houses and flats to a ‘peppercorn’ rent, i.e. of zero financial value
- Addressing loopholes in the law to improve transparency and fairness for leaseholders and freeholders
- Working with the Law Commission to support existing leaseholders – including making buying a freehold or extending a lease easier, faster, fairer and cheaper
Suggested changes to the buying and selling process
Around 1.2-1.3 million homes are bought and sold in England each year and government research reveals that over 60% of buyers and sellers have felt stressed by the process, with roughly one in four vendors saying they would use a different agent if they were to sell again.
The government is keen to introduce measures to streamline the process. The latest proposals include:
- Introducing consumer-friendly ‘How to Buy’ and ‘How to Sell’ guides
- Encouraging the use of voluntary reservation agreements to help prevent sales falling through and crack down on gazumping
- Educating vendors on the value of collecting and safely filing relevant information (such as planning permissions, guarantees for work and previous search results) as it comes to them, in order that they can be ‘sale ready’
- Encouraging buyers to get a ‘decision in principle’ from a mortgage lender before they begin looking for a property, to clarify how much they are able to borrow
- Setting a timeline for local authority searches so buyers get the information they need within 10 days (some take over 40 while others deliver in a matter of days)
- Working with lenders, conveyancers and removal firms to see how the process around the release of completion funds can be improved
- Establishing a technical working group to engage users, industry professionals and partners (such as HM Land Registry) to understand needs for new digital technology and stimulate innovation in order to reduce completion times
How could all these changes benefit you?
A better standard of professional agent
Estate and letting agents will, in the future, all be properly qualified and trained to the same standard, so a more consistent service should be supplied. Hopefully this won’t just be in the ‘technical’ aspects of buying, selling and letting, but also in how to advise consumers on their particular purchase, for example buy to let.
A raising of standards in this way will mean those agents who aren’t doing things properly, and never intend to, should be forced out of business.
Bear in mind that there are already a lot of properly-trained agents at your service: those who are members of NAEA, ARLA, RICS, UKALA, ARMA, etc. You should already be using one of them, rather than any cheaper alternatives that may not be abiding by the law.
Processes and transactions will speed up
If information can be obtained from sellers, freeholders and local authorities more quickly, property transactions should progress much more quickly. As an investor, you should know sooner rather than later if the property is right for you. If the proposed measures to get firm ‘reservation agreements’ come into being, the whole buying and selling process should be a great deal less stressful and more ‘guaranteed’ once an offer has been accepted.
Kate Faulkner is one of the leading, independent property experts in the UK and regularly features in major newspapers; on BBC, ITV and regularly co-hosts the Property Show on LBC.
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