The Ministry of Housing, Communities and Local Government’s Home Buying and Selling Reform (MHCLG) consultation signifies positive progress for the industry, including brokers and lenders. It is garnering the government support it needs to drive change and encourage ongoing private investment in the right technology and infrastructure to support all stakeholders involved in property transactions.
The intermediary market, along with the wider industry, can feel encouraged by the objectives of the consultation. These include creating faster and more reliable transactions, reducing fall-throughs and fraud risk, and improving consumer awareness and information, with the overarching aim of building trust and confidence in the system that is a crucial cornerstone of the UK economy.
Consultation in practice
Making progress towards achieving these broader goals requires an in-depth look at specific steps of the process and how they can be improved. Material information, digital property logbooks, improved data flows and streamlined conveyancing are all essential ingredients of a modern, digitised home buying and selling process, with clear potential to reduce cost and delay for consumers.
The good news for Government is that they do not need to pass primary pieces of legislation to create a more efficient and transparent home buying and selling environment. With a series of low-cost regulatory changes, we could establish a coherent digital framework that speaks to all of those points.
Currently when prospective homeowners take the first step in the homebuying process, many are faced with very little information to enable them to make an informed decision. This leads to a series of issues later on in the transaction: if issues surface, delays occur and deals can ultimately fall through, causing stress and financial loss for consumers, brokers, conveyancers and lenders. Using secondary legislation to define and enforce material information requirements at the point of listing – which it has been estimated currently adds around £1,240 per transaction and introduces months of delay – would go a long way in addressing this.
With better upfront information in place, the next logical step is to improve the quality and ability of this data to flow through the transaction process. Using existing powers to support trusted, interoperable property data by recognising common data standards and opening access to authoritative datasets, such as the Property Data Trust Framework, would remove duplication, reduce professional costs and optimise workflows. Additionally, extending existing powers under the Land Registration Act 2002, could enable digital completion and title registration, allowing verified data to flow through to the point at which money is exchanged for title. Initiatives like the Future Property Transaction Group (a multi-stakeholder initiative which brought together brokers, lenders, conveyancers, tech providers and others) showcase exactly how this can be done to deliver more transparent and certain transactions via effective industry collaboration.
One step further
It is clear a lot of progress has been made, and we must appreciate and acknowledge how far we have come. Ensuring the improvement of the transaction process is at the forefront of the government’s policy thinking is no mean feat, but there remains much to do before we can deliver a fully secure and affordable end-to-end transaction. Transactions often rely on manual processes, losing an estimated nine million hours annually. Significant time is lost due to the duplication of checks, particularly ID verification and Anti-Money Laundering (AML) checks, which consumers undergo on average four separate occasions per transaction. The consultation demonstrates clear actions towards bettering the property industry, but real attention is still needed in the most vulnerable stage in the home-buying chain: completion and title registration.
The movement of funds in a property chain of transactions currently involves multiple stakeholders holding funds in separate accounts, manual transfers via generic banking rails, and duplicated verification checks. In short, the transaction remains analogue at its most financially consequential moment. This fragmented approach diminishes visibility at its most crucial moment, where neither the consumer nor the professional can be certain of the transaction’s status in real-time, heightening the risk of fraud and systemic delays.
Digital completion infrastructure is therefore a foundational component of an efficient and affordable property transaction, and the industry should consider how property completions fit within the wider reform agenda. Addressing and taking the respective action needed to reform the point of completion is key to delivering a frictionless home buying and selling process.
Aligning with the consultation proposals, the property industry is making great strides in the creation of a more secure, certain and transparent transaction process. We can expect to see ongoing engagement with officials as this work progresses, through collaborative work with government, regulators and the wider industry to support reforms that will improve outcomes for consumers and professionals alike. Ensuring that digital completions are properly considered as part of the wider reform agenda will help us progress to a stage where better infrastructure is implemented across the board, and will enable conveyancers, lenders and brokers to deliver a better service to their clients.