Shaping the future of homebuying
Mark Riddick of the E-Homebuying Forum describes what the organisation is doing to improve the property buying and selling process and invites more industry players to get involved
The downturn in the property market has forced us all to review our business practices, as companies across the
The need to improve the process actually pre-dates the current economic downturn but, despite industry’s best efforts, real progress is yet to be made and we’ve seen so much time, effort and money wasted on well intentioned schemes with less than fruitful results. I passionately believe that we have the technology, the commercial nous and the political will to make the process better for buyers and sellers, but the initiatives introduced by the government over the last decade, such as Home Information Packs and the Chain Matrix, have plainly not delivered on this potential.
There will always be industry voices seeking to maintain the status quo, but the need for change is clear when you consider the facts. It is well known that transaction times in
Collective engagement
But collective action is inherently difficult because unlike many other transactions, the homebuying and selling process is not delivered by one but several different professionals, businesses and government agencies collectively. This creates unique barriers to reform. In the current market, the need to act together and above vested interests has never been more pressing and we must take steps to ensure adequate, collective engagement from all stakeholders, without which genuine and lasting reform is unlikely to occur. It is for this exact reason that companies such as My Home Move, Goldsmith Williams, MDA and Your Move joined the E-Homebuying Forum (EHF).
The forum, which I chair, brings together forward thinking businesses from across the residential property sector. Its core purpose is to provide an industry-led vision for reform of homebuying and selling, and in doing so, deliver faster certainty for consumers and property professionals engaged in the process.
Since the EHF was established in April 2008, it has grown to 50 companies that span the property transaction process from marketing through to completion. What members have in common is a frustration with the collective failure of government and industry over the last decade to reform the homebuying process for the benefit of consumers and professionals. We are working with government and industry groups to encourage development of commercially viable initiatives that deliver faster certainty to the homebuying process.
Working together to ensure commercial viability is crucial because it is industry that will ultimately deliver the products and services to the market. Whilst the forum is devoid of business or professional self-interest, we still retain the commercial perspective necessary to identify how industry can deliver the envisaged consumer benefit. Acting as an interface between government and industry, we are able to work with a range of stakeholders to identify long-term business opportunities. As a result, members of the EHF are directly involved in shaping the future of the homebuying marketplace from the earliest possible stage.
The Blueprint
With this in mind, a year after its launch the EHF published a Blueprint for the Future of Homebuying, a forward-looking document designed to set out a platform for improving the property transaction process.
The Blueprint identifies 11 recommendations through which we can achieve greater transparency, commitment and efficiency in homebuying and selling. It is not a self-interested proposition, either on behalf of a single business interest or, indeed, a narrow group of businesses, nor is it influenced by a particular property professional (for example, lender, estate agent, surveyor, conveyancer or search company). We believe that as a group, EHF has developed a unity of purpose via the Blueprint which transcends self-interest.
One of the recommendations is improving electronic information exchange between the Land Registry and conveyancers and lenders. We recognise that lender engagement is sporadic at best, but concerns around security and increasing levels of fraud could change this, which in turn will hopefully lead to an increase in efficient information exchange. If we can achieve consensus and get industry to develop a unity of purpose, measures which have previously failed through lack of industry engagement or lack of commercial input can be born out.
Another key recommendation is for the wider use of in-principle mortgage offers. Following consultation, it seems decision-in-principle is a useful tool for consumers, giving them a valuable guide to what they will be able to borrow before they start searching for a property. This makes it easier for industry to work out what consumers can afford upfront and therefore allows them to be realistic about their options. It may also work to reassure the vendor when interest in a particular property is high. An extension of this is pre-qualified borrowers. If a prospective buyer can demonstrate their bona fides, both in terms of their ability to afford a property and their ability to proceed, then a transaction can be pursued with greater certainty.
Widespread use of tools such as these would constitute important first steps towards wider reform.
Future reform
There have been some signs of movement in the sector in recent weeks which give us even greater cause for optimism about the prospects for future reform. E-conveyancing took a step forward in February as Conveyancing Direct became the first law firm in the country to successfully submit a live electronic mortgage deed directly from the case management system using the Land Registry’s new Business Gateway. This represents what could be the start of a revolution, with the potential to transform conveyancing in the
OFT
The Office of Fair Trading’s (OFT) homebuying and selling market study, which reported in February, was an attempt to rectify some of the underlying problems within the homebuying sector. The results of the year-long study, which are still being digested by the sector, call for a shake-up in how homes are sold but stops short of demanding the strengthening and improvement of regulation of the estate agency marketplace. On the latter, I believe the OFT has missed a real opportunity to improve the homebuying process for both consumers and property professionals.
I’m encouraged, however, by the OFT’s emphasis upon innovation and the encouragement of new business models for estate agency. Opening up the market to new players in the online sector, while maintaining the necessary consumer protection, has real potential to bring modernisation to the sector and the government must not fail to act on this recommendation.
Furthermore, the OFT’s support for earlier commitment by parties involved in the process and an up-front survey sits comfortably with the vision set out in the EHF Blueprint. We look forward to working with our colleagues at the OFT and within industry to take these recommendations forward in the coming months.
Looking ahead
In the coming months, the forum will continue working to ensure future government policy is formulated with real and representative private sector engagement. We are currently taking steps to facilitate the delivery of the Blueprint through action groups made up of forum members and interested parties. The group on leasehold information provision, for example, is currently working with the Association of Residential Managing Agents (ARMA) to develop a standard form for pre-contract leasehold inquiries. The estate agents and conveyancers group is drafting a charter establishing minimum standards of communication which we believe will deliver greater efficiency and engender greater cooperation between the two parties. And the property search group has set out solutions to overcome blockages in the current system, which it will shortly be taking to the marketplace.
Whilst these are important steps forward, if there is ever to be any substantial improvement to homebuying – for the benefit of property professionals and consumers – then industry must take the initiative and drive forward change in the marketplace.
Legal Services Act
The need to define the future homebuying landscape is all the more pressing with the prospect of a non-interventionist Conservative government on the horizon. The Tories will be looking to industry to drive change and this, coupled with the 2011 implementation of the Legal Services Act (LSA), will produce significant opportunities as well as challenges for our businesses.
The LSA signals a significant period of transition for the legal sector, with many firms reviewing traditional business models and asking whether they are best suited to serving their clients’ needs and to competition in a new regulatory landscape. Whilst there are differing views about the likely effects of this, it is widely expected that the coming years will see increased external ownership of ‘traditional’ law firms, increased commoditisation of volume legal services and the entry of retail giants and high street banks into the marketplace – the promise of ‘Tesco Law’ has been much discussed and is never far from the lips of professionals involved in the homebuying process.
Market realignment as a result of the LSA will undoubtedly present opportunities for incumbent businesses to grow and diversify, while being mindful of the importance of ever increasing consumer and client protection. The new framework has the ability to allow consumers to access their legal services in a variety of new ways, for example, as a part of a ‘one stop shop’ with other professional services, such as mortgages, insurance and accountancy, thus potentially revolutionising changing how consumers and businesses interact with the homebuying and selling process.
The EHF is working hard to play a major part in these developments and I urge all industry players, regardless of size or specialism, to join us as we help shape the future of your marketplace. Our clear message for industry, and the lending community in particular, is that if you can give the Blueprint your broad support, join EHF to help build the necessary momentum for change.
Mark Riddick is chairman of The E-Homebuying Forum. To find out more about the E-Homebuying Forum and to download a copy of its ‘Blueprint for the Future of Homebuying,’ please visit www.e-homebuyingforum.com or contact Harriet Crosthwaite or Richard Maughan on 0207 618 9100
