It’s strange, isn’t it? When somebody buys a property at auction, the seller needs to provide all kinds of information before the bidding starts. These ‘sales packs’ (or ‘legal packs’) contain essential information to help them figure out how much they should offer. So why isn’t the same information provided up front to people buying through estate agents?
The truth is that those buying at auction - which represents just 2% of total sales - have a lot more information at their fingertips when they embark on one of the biggest, if not the biggest, purchase of their lives. Those buying through estate agents, on the other hand, must pay a conveyancer to find out even the most basic information - info that could scupper a deal faster than you can say “unexpectedly re-available”.
The question we’re going to ask today, therefore, is whether all properties should come with an auction-style sales pack that’s freely available to interested parties? Although moves are already afoot to give potential buyers more info - agents have had to reveal a home’s council tax band, price and tenure information since May this year - should the sector go the whole hog now to avoid more piggish delays and collapsed deals? It could well save a lot of bacon.
The current situation
As you know, agents only need to reveal the bare minimum when marketing a freehold home: it’s the council tax, tenure information, EPC, and that’s about it. Leasehold properties are slightly better because they come with a leasehold information pack (or ‘management pack’), which is essentially a collection of documents from the managing agent or freeholder.
These leasehold packs are incredibly useful because they tell potential buyers what they’re getting into. They reveal the service charge, the management company’s accounts, and also include fire risk and asbestos assessments. Other information disclosed includes proposed maintenance works plus any past disputes between the freeholder and the other leaseholders.
However, these leasehold management packs still don’t include a Property Information Form and details about fixtures and fittings; therefore, potential buyers won’t always know, exactly, what they’re buying. As a result, plenty can still go wrong once an offer has been accepted and conveyancing begins. In other words, there are still squeaky bums all around.
An auction sales pack, on the other hand…
Auction sales packs give homebuyers the full shebang: management information, lease arrangements, the official register of title, Land Registry and Local Searches, tenancy agreements, planning permission documentation, and special conditions of sale. What’s more, they include those all-important Property Information Forms as well as a fixtures and fitting form to boot. All these elements are available to potential buyers from the get-go. The information contained in the property info form is particularly useful to buyers because it clearly outlines:
- Info on boundaries
- Previous disputes with neighbours
- Proposed developments nearby
- Extensions and renovations completed
- Replacement windows
- Tree preservation orders
- Environmental factors like flooding risk
- Shared responsibilities with neighbours
- The type of heating
- Waste water arrangements
- The presence of Japanese knotweed
Meanwhile, the fixtures and fittings form also remains essential to buyers because it explains precisely what’s included in the sale. Are those heaters, radiators, door fittings, burglar alarms, kitchen appliances, mirrors, towel rails, fitted units, carpets and curtains, garden ornaments, and the satellite dish all included?
All these things are fundamental to any sale. And most homeowners know them off the top of their head, too. Therefore, there’s no reason why all this information can’t be provided up front. It would tell sellers how much extra they’ll need to invest once they move in. And this will no doubt impact the offer they make.
A rocket under the property sector?
Making auction-style sales packs mandatory for all properties on the market would have two potential advantages: (a) it would reduce the number of transactions that fall at the first hurdle by revealing stumbling blocks before an offer is made, and (b) it would give the conveyancing process a head start. That’s a brace of brilliant benefits.
The inconvenient truth is that buyers fear investing time and money in a potential purchase only to find out that a home isn’t suitable for them after all. At the end of the day, they’ll have nothing to show for their efforts other than a conveyancer’s bill. By making more information transparent at the start, sales packs would encourage more buyers to come forward as there’s less chance of getting burned.
Agents should also welcome sales packs because they’ll speed up the time between offer and exchange. It used to take 12-16 weeks. But now it frequently takes more than 20. Sales packs would ease congestion and grease the metaphorical wheels by making relevant information available to the buyer’s legal representatives right away. This would get more deals over the line sooner and give a much-needed boost to besieged bottom lines.
But what about the red tape?
There is a flip side, however. Introducing compulsory sales packs, which create another hoop for sellers to jump through, might put some people off listing their properties in the first place. And that’s a problem at a time when the market has been suffering from chronic shortage of stock.
A possible warning from the past, of course, is the fate that befell Home Information Packs (HIPs) just over a decade ago. Introduced in 2004 to help potential buyers make an informed decision, they were abandoned in 2010 because they were seen as bureaucratic and expensive. Then-Communities Minister, Eric Pickles, accused HIPs of creating extra “cost and hassle” whilst “stifling a fragile housing market”. Ouch.
Would introducing something similar in the shape of sales packs simply create more needless red tape? This would obviously be a problem for agents, too. It could be more paperwork to arrange for no guaranteed reward.
Did you know that about 25% of all property sales fall through once an offer is made? There were about 300,000 disappointed buyers and sellers just last year, each wasting an average of nearly £3,000 each. Not good.
Giving potential buyers the same information that they can expect at auction could help to alleviate this problem. What’s more, it will give buyers extra confidence to make their best offer - especially if the home they’re interested in is an older property, a unique one, or a home that’s clearly been renovated or extended.
Whilst the fate of HIPs is something of a concern, many experts believe HIPs failed because they were watered down versions of what was actually required: they included the EPC and evidence of title but omitted vital details like a property information questionnaire. Therefore, they created a large hoop for vendors to jump throughout without actually providing a necessary springboard to exchange.
Auction-style sales packs, on the other hand, could provide the much-needed bounce that agents are looking for. They won’t solve all the industry’s problems - you never know when an obscure restrictive covenant that bans hanging up washing in ‘a lewd and lascivious manner’ might scupper a deal - but it’s always better for buyers to get their knickers in a twist before an offer is made, don’t you think?