The latest Government gimmick to hit homebuyers -the seller's pack – has become a cause of disquiet.
The controversial pack, which is set to be compulsory from 2003, is designed to speed up sales. It must be put together by the seller before they put their home on the market. This would give buyers access to vital information when they viewed a property and avoid them having to pay for a survey.
Packs must include the title documents, answers to standard pre-contract enquiries, replies to standard search enquiries, planning and building regulation consents, any warranties and guarantees for work carried out on a home, a draft sale contract and a report on the condition of the property.
All in all, this could set sellers back up to £750. Think how many rolls of wallpaper that would buy.
The most interesting part of the pack for the buyer could prove to be the survey. But, as this does not include the valuation required by all lenders, you will still have to cough up another £80-£150 for one if you need a mortgage.
Over a million people moved house in the last year and are all too aware of the enormous associated costs. The idea of forking out for yet another pile of papers is a sickener, especially when it will be of little or no use to the majority of buyers.
Our recent poll revealed that an overwhelming 65 per cent of homebuyers would not rely on the survey in a seller's pack, preferring to pay several hundred pounds for their own when so much is at stake.
One of our users told us: “I would most definitely get my own survey on top. My late father was silly enough to trust a seller's survey, only for his bungalow to start subsiding after a year. The old owners were untraceable and it took five years to settle with the insurance company and another year to sell.”
Others were equally sceptical: “Is this a money-spinner for someone? Or perhaps the Government is proposing to act as guarantor for the efficacy?” and “Is this just another opportunity for the Government to rake in some more VAT?” The pack system effectively shifts the burden of transactions from the buyer to the seller. The Government argues that buyers will benefit from faster surveys and searches, resulting in quicker negotiations and completions and that this in turn will reduce the risk of gazumping – a nightmare for one in seven buyers.
But there are no guarantees that the seller's pack will prevent you from being gazumped. Sellers who have paid for the pack may be even more tempted to raise the price after accepting an offer, knowing the new prospective buyer will be able to make a quicker decision on whe-ther to proceed.
The Law Society agrees that the seller's survey is not necessary and is unlikely to be relied on by a mortgage lender or buyer.
Law Society conveyancing and land law committee chairman Michael King says: “The seller's survey will not be regarded as impartial and will be viewed with suspicion by the buyer as it will only provide a very basic review of the property.”
When the pack was piloted in Bristol recently, accepted offers increased by 15 per cent. But some estate agents involved in the Bristol pilot felt the time taken to assemble the pack – 11 working days on average – meant sellers missing out on prospective buyers, particularly in a fast moving market.
Aspects of the pilot scheme also gave cause for concern at the Council of Mort- gage Lenders. While it championed the Government's objective of improving the housebuying process for consumers, it urged against a rush to legislation on the basis of the Bristol trial alone, in which only 60 sales by private individuals were completed.
Initially, it appears that the CML was “sat on” by the Government, which issued a thinly veiled threat that their working relationship could be damaged if the CML continued to speak out.
This was a great shame. Not only did it appear autocratic, it suggested that the Government had a narrow view of the interests of the CML. Can you imagine ministers dropping such hints to the Consumers' Association?
Thankfully, the minister has now come to his senses and has broadened the horizons of the bill.
Commenting on the decision, CML director general Michael Coogan says: “We are pleased that the Government has taken on board the CML's concerns about the home condition report. While there is still a long way to go on the detail, the Government's confirmation that the bill will be amended to protect lenders is a helpful first step.”
A number of Labour MPs are worried at the potential cost these could add on to cash-strapped homesellers in poorer regions. In some parts of the UK, negative equity is commonplace and there are still properties selling for under £10,000. Gazumping happens predominantly in affluent areas.
By way of a compromise, housing minister Nick Raynsford is still deciding whether to amend the new law so it only applies to owners of homes above the value of £50,000.
Housebuying desperately needs reform but the seller's pack is not the answer. It is like putting a sticking plaster on to a gangrenous limb.