A round 300,000 housing transactions fail each year at a cost of £270 million, according to the Ministry of Housing, Communities and Local Government. There are many reasons for sales to fall through, but poor property information delivered late in the sales process is a huge drain on conveyancers, estate agents and the mortgage industry on top of the disappointed buyers.
As the Conveyancing Association recommends in its White Paper, Modernising the Home Moving Process, Conveyancing Association, published in Nov 2016, we need to create certainty earlier in the process by: “Collating the Property Information and Title Information on marketing the property to be supported by a conveyancer’s certificate as to any missing documents will provide greater information to the buyer upfront, avoid delays in completing the information and ensure that title is reviewed early to give the seller the opportunity to resolve any title issues ahead of the sale.”
This all sounds good in theory, but the majority of property sales are by ordinary people with imperfect knowledge and information. In the 1980s, homeowners moved every eight years, they now stay for over 25 years on average. That’s a long time for changes to occur in a property and also a long time to forget about the sales process and documentation required.
So, we have to find a better way to prepare the right documentation in order to help the industry professionals to do their job more efficiently and deliver the sale successfully for customers.
Widespread support
We have been creating Property Log Books since 2007 in the private and social housing sectors, providing a simple and readily available record of all critical information for a home.
The case for residential properties having a Property Log Book has long been argued for by a variety of organisations such as the Council for Licensed Conveyancers, Conveyancing Association, Home Buying & Selling Group and the NAEA Propertmark.
It is also one of the recommendations of Dame J Hackett’s report following the Grenfell Tower fire where she believes in ‘creating a golden thread of information’ about a property to be used by ‘dutyholders to demonstrate to the regulator the safety of the building throughout its life cycle.’
So, the need for Property Log Books is clear, the challenge is to agree a national standard that works and then convince consumers that it is a requirement worth investing time and energy in, for a sale that may be decades away.
Operational efficiency
How can Property Log Books improve operational efficiency for mortgage lenders and brokers?
It is quite hard to argue against the case for not having more information available about a home earlier in the sales process, the largest investment of most people’s lives, in order to make better and more informed decisions.
Property type is particularly important when we look at properties that are above 18m / six storeys, post Grenfell. UK Finance, RICS and the Building Societies Association have all agreed on a new industry-wide valuation process which encourages owners of these kinds of properties to proactively seek independent testing of external wall materials.
Matthew Jupp, UK Finance policy manager highlighted that getting this valuation is important to the home buying process, so capturing and storing this information becomes critical for owners who may seek to sell in the future. Although an assessment might only be valid for five years, having this history as part of the property’s story will help instil greater transparency and speed into the process.
As Sally Holdway of Teal Legal pointed out, the mortgage lending process, just like the transaction process can be broken down into three component parts; data, decision and deal. It is not until after an offer is accepted, that thought is then given to putting information together to help relying parties move towards completion.
Putting all relevant information together upfront in a Property Log Book format and making it instantly accessible will clearly reduce issues arising late in the process and reduce dropout rates.
Contents of a Property Log Book
Information in a Property Log Book can be split across different categories from title information, physical information on how the property was built and managed, through to warranties, certificates and guarantees.
Combined, all this information starts to build a story of the property enabling relying parties, such as mortgage lenders and surveyors, to make quicker and more informed lending and valuation decisions.
For mortgage lenders this creates a range of positive opportunities. No longer will a valuer have to make assumptions about the legal profile of a property, it will help quicker decision making to assess whether a property fits a lender’s profile.
As Tim Main of Pip Report argues: “Lenders will be able to see the physical and title information about a property at the click of a button. Assisted by the valuation models now in use, approving a property for lending should be much quicker.”
Combine this greater use of data and technology with the changes in open banking, then affordability assessments can also be made more quickly.
The key is to make sure that the content of a Property Log Book is relevant and of interest to all those involved in the sales process. Based on our experience of providing Property Log Books, focusing on property information is the key.
This includes the full conveyancing pack; how the property was built, where available; any maintenance and improvement work with supporting documentation right down to the type of tile used in the kitchen. With the emergence of digital data from the likes of the Land Registry, a Property Log Book starts to become a living and dynamic digital story of a property.
Looking beyond just the sale of the property we need to consider the value of all this information to an insurer, especially if a property experiences a disaster. The information about the property and indeed its contents will help the insurer come to a quicker resolution for the occupants.
What of the consumer?
Consumers are ready for the change given that they do their property searches online and so much more. So, the behaviour will feel natural, but it will need a concerted effort by the whole industry to initiate the process. Only by working together to help consumers set up their Property Log Books at key times of need will we drive the right behaviours for the long term.
Customer loyalty in the home buying and selling process is important for conveyancers and mortgage lenders and the Property Log Book can help create better customer interactions and smoother sales, leading to a better experience and greater loyalty.
In the case of our customers, they have taken up the product because of difficulties in the past “when we sold our house our solicitors lost some of our information which was very costly. But that wouldn’t happen with this system”.
