Buying a home could soon become quicker, easier and potentially cheaper following the government announcement that sales packs are set to become compulsory when selling a home.
Collating the documentation you need to sell a home has previously been completed once an offer has been accepted, but the proposed changes will put the onus on the seller to have the information prepared prior to putting their home up for sale.
Predicting savings of up to £650* for buyers, and a reduction of 3-4 weeks on buying time, the reforms will also be accompanied by plans to introduce an earlier binding financial agreement between both parties, along with a new Code of Practice for estate agents.
Why are the changes being made?
With the average offer-to-completion process currently taking around 120 days, and 1 in 3 house sales falling through, according to a government statement it's estimated that this costs sellers around £400 million and the UK economy around £1.5 billion a year.
Johan Svanstrom, CEO of Rightmove put a even greater number on this, saying in response to the plans, "our UK-wide data shows that it takes a lengthy 170 days on average to complete a transaction and that over one in five transactions initially falls through. Last year, fall-throughs alone meant that approximately £900 million in potential stamp duty receipts and estate agency commission in England was lost, and consumers lose both precious time, certainty and money when needing to repeat transaction processes. The implementation and phasing of these initiatives will be key to ensure consistency and adoption."
In essence, by providing a clear sales pack with information on elements such as the condition of a property, the buying chain and leasehold costs, buyers will have a far clearer picture before they make an offer. Pre-mitigating issues will prevent delays further down the line when information like this is generally revealed.
Current housing secretary, Steve Reeves says of the plans: "Buying or selling a home should be one of life’s great moments and not a drawn-out nightmare of delays, hidden costs and failed deals. These changes will make the system faster, fairer and more secure – giving families and first-time buyers the certainty they need all while saving them time and money."
It is hoped that the new changes will mirror the success seen in other countries, including Scotland where sales packs are already standard practice. They also exist in the Netherlands, where a live tracking system for buyers and sellers allows them to check their transaction status. This has resulted in a completion time of 20 days on average, whilst Norway’s efforts to streamline and digitalise the system has estimated savings of up to £1.4 billion over 10 years.
Digital upgrades at the heart of the process
Key to the success of these changes is a move towards making the process of buying and selling a house more digital. A government statement explains how and why this update is being made. "Digital property logbooks and sales packs will allow trusted information to be shared securely between professionals and accessed by buyers and sellers in real-time, cutting out the back-and-forth that cause so many delays.
"The government will also back digital identity checks, electronic signatures and AI-assisted conveyancing to strip out duplication, reduce fraud risk and accelerate transactions from start to finish. Together, these changes will create a modern, end-to-end system where people can track and progress their move more easily."
While the proposals have generally been welcomed by industry leaders, the move to digital is something that will need careful handling so as to not alienate some.
"Moving towards a more digital process should improve efficiency overall, but it’s important that alternative routes remain available for clients who may not be comfortable with fully digital systems," says Daniel Kenworthy lead partner in IT Innovation, at Ison Harrison Solicitors.
"There will also need to be consistency in how platforms are adopted across firms and organisations to avoid fragmentation," he warns. And, while longer-term there should be costs savings, these new measures will potentially involve additional costs.
"In the short term, there may be some additional costs associated with implementing new systems and processes," advises Daniel." Over time, however, greater efficiency and reduced duplication could help stabilise costs and provide better overall value for clients."
Binding agreements will be the last element to be implemented
At present, until you officially exchange on a property, you don't enter into any kind of binding or financial agreement. Exchanging normally comes with the agreement for a financial payment or deposit (often a percentage of the overall property value), and if you withdraw from the sale after exchanging, you stand to lose this money.
This has resulted in buyers often withdrawing prior to exchange, which sounds fair, but can in fact be devastating if, as is often the case, it has taken months to get to that stage. In some cases, you can exchange and complete on the same day, which in itself is somewhat risky if one side pulls out at the eleventh hour.
Putting binding agreements in place sooner is meant to mitigate this risk says the government.
"Binding conditional contracts (will) make a transaction legally binding much earlier, for example once an offer is accepted. They are designed to secure each party’s commitment to progress and complete the transaction by setting out clear terms both sides agree to meet. If a party breaks these terms by withdrawing without valid reason or failing to meet their obligations, they face a financial penalty."
While many will welcome it, not all may consider it a positive, and it could come down to how much information has been made available to them in the sales pack, says Daniel Kenworthy.
"Some clients may welcome earlier certainty, but others may be cautious about committing before all factors are clear. Uptake is therefore likely to vary, particularly depending on how well the process balances flexibility with certainty.
"Many transactions also fall through due to factors outside the legal process – such as changes in personal circumstances or mortgage availability," he adds, meaning this particular change may prove more tricky to navigate.
The government has reinforced, however, that any agreements will not be put in place until the sales packs are fully in operation so as to not put either party at a disadvantage. All other elements of the changes, such as the Code of Practice will come first.
How will the proposed Code of Practice work?
As well as the changes for homeowners, a new Code of Practice is being designed that the government hopes will help raise standards and ensure sellers and buyers receive a better service.
This will also be the first change made as part of this bigger overhaul of the house buying process and is due to be set out later this year. It will outline minimum standards for property agents, guidance on how to improve the quality of information in property listings, and introduce proposals for mandatory qualifications for the sector.
When will the rest of the changes and sales packs be introduced?
The current plans are for a phased approach to the reforms. The Code of Practice is currently planned for 2026, while consultation on estate agent qualifications and expanded digital tools won't take place until 2027.
Then, by the end of the current Parliament, the aim is to have comprehensive legislation in place to require sales packs, binding contracts, and digital systems that support the efficient sharing of trusted digital property information.
However, with the current government in a state of flux, whether these plans change remains to be seen.
In summary, Daniel Kenworthy shares his views on the proposals. "The proposals are broadly positive, particularly around improving transparency and earlier access to information. One area that would further strengthen the process is clear alignment across lenders, local authorities and conveyancers, as delays often arise where those parties operate to different timescales or standards.
"In principle, a shorter and more consistent timeline is welcome. However, achieving this will depend heavily on how quickly supporting infrastructure can adapt," he says. "Without that, timelines may remain variable in practice."
Johan Svanstrom also states that,"the implementation and phasing of these initiatives will be key to ensure consistency and adoption. It needs to be helpful to the vital role estate agents play in the marketplace, and to avoid any unintended consequences.
"Increased mobility, transparency and certainty is key to overall economic growth. We strongly believe that further digitisation and improvements to the home-moving process can help to speed it up and reduce friction. It will require cross-industry collaboration and innovation to achieve the aims set out today."
*According to a government statement, "the £650 figure is derived by comparing first-time buyer costs per transaction pre-reform (primarily conveyancing and search costs) to post reform, additionally integrating additional costs that will arise for buyers as a result of the new reforms (e.g. purchasing logbooks) and the per transaction saving estimate that arises from the reduced number of transaction fall throughs."
