This week a body set up by the previous government delivered its findings on the role of condition information in the home buying and selling process, and offered ideas for the provision of new products onto the housing market, designed to deliver this important information to buyers. Its finding are interesting but it is not clear whether they will see the light of day again following the change in Government.
As we all know many people, buying a home is the most significant spending decision they will make in their lives and most do it without any form of survey.
A Which? study of May 2008 reported that fewer than 50 per cent of people buying a home in the previous five years had actually commissioned a survey. The rationale for why some buyers proceed without important information is unclear, although cost or desire to avoid a ‘deal breaker’ late in the transaction process are often advanced. A lack of awareness among consumers about the potential benefits of condition information may be contributing to low take-up.
However, the Which? study demonstrated that where a condition survey had been commissioned and a problem was uncovered, 44 per cent of respondents negotiated a reduction in price for the property they purchased and a further 10 per cent ensured that the problem was rectified before completing the purchase. The study also reported that respondents who did not identify problems before purchasing a property spent an average of £2,500 rectifying them, with one house buyer spending more than £10,000.
Clearly, property professionals have a pivotal role to play since they provide the key interface with consumers as they move through the different stages of the home buying and selling process. The raising of consumer awareness on the importance and advantages of condition information at the appropriate points of contact in the process has been recognised as key to helping to improve consumer take-up of these products.
The committee found that the overwhelming majority of buyers considered condition information to be an important part of the home buying and selling process and felt that condition information should be available as early as possible in the home buying and selling process. Sellers felt that buyers should see the information when viewing a property and said that they would be comfortable with providing full details about the condition of their property. Seventy per cent of buyers found condition information to be useful for informing their decisions about a property regardless of its source and seventy-eight per cent of respondents agreed they would only trust condition information provided by an independent surveyor who they had appointed themselves.
Ipsos MORI research provides evidence to demonstrate that a majority of consumers want condition information about a property and believe this information should be available as early as possible in the process. In spite of this, the apparent demand does not translate into action given the low level of consumer take-up. The research also points to tension between the views of buyers and sellers over making condition information available earlier in the process, with significant issues of trust and integrity around a buyer’s willingness to rely on information commissioned by the seller.
To overcome these obstacles and achieve a positive change, consumers will need access to a market that provides them with high quality condition information products, which are more relevant to their needs and on which they can rely. Cross-industry agreement on standardised assessment and reporting would give consumers condition products which contain a consistent set of information, while allowing practitioners to provide additional services. Consumers should benefit from this consistency and the ability to compare products, which should then create greater familiarity and trust, leading to greater reliance on condition information.
Examples of the type of additional information that industry might wish to offer consumers put forward by the working group include:- reinstatement cost – valuation – electrical safety check – gas safety check – comprehensive structural condition report – ground contamination report – specialist report on building conservation issues – ground stability report – arboriculture report.
The Working Group has identified the need for industry to agree and implement a single assessment and reporting framework to underpin the move to incorporating a core set of information in all condition products. To make this effective it would need to operate within a framework that secures buy-in across industry and at the same time provides consumers with assurance and confidence. This links strongly to the industry led approach to driving up standards of the services which consumers receive from all property professionals mentioned previously. A single body or organisation with responsibility for the regulatory framework could create greater coherence across industry and increase effectiveness. Such a body would need transparent and effective governance arrangements put in place to demonstrate independence, but would also require significant weight in terms of enforcing compliance against standards to ensure credibility. Given the success or otherwise of HIPs, can you see the benefit of providing buyers with condition information? Would this slow down the buying/selling process? Have your say….