The government should change the law regarding buying/selling

propertyman

googler wrote: »

Yet, for folks moving within Scotland, we seem to manage a set of (say) three moves, from buyer/seller 1 at the low end, where buyer 1 is an FTB, and seller 1 is an FTB moving to their second home, buyer/seller 2 at next level, buyer/seller 3, etc..

But you're not thinking- that relies on all parties being ready to move. Thats not always the case in which case a buyer ends up with two homes, or not accepting offers until they find somewhere.

In E & W thats not possible in many areas due to the high cost of homes and loans, and in the various booms, the fear of selling first and defering completion or moving into rented and losing out on price increases.

googler

The previous minister stated publicly that the system was, broadly speaking, fine. Maybe this one will have a different view?

http://www.estateagenttoday.co.uk/news_features/No-reforms-on-gazumping-Shapps-tells-parliament

googler

propertyman wrote: »

But you're not thinking

>>>>> Excuse me ??? >>>>>>

that relies on all parties being ready to move. Thats not always the case in which case a buyer ends up with two homes, or not accepting offers until they find somewhere.

In E & W thats not possible in many areas due to the high cost of homes and loans, and in the various booms, the fear of selling first and defering completion or moving into rented and losing out on price increases.

.. But surely all the situations you outline are developing largely because buyers and sellers aren't committing to entry dates upfront?

Home loans are just as difficult to get in Scotland as they are in E&W, and I can't accept that houses everywhere in Scotland are all cheaper than the 'high cost' houses of E&W .....

Propertyfan

Regarding the £1,000 deposit idea I suggested, I accept it's not a perfect solution. "What if?" can be applied to any part of the buying/selling process. At some point you can't worry about "what if'. You have to go on trust and hope that the buyer/seller are genuine, not misleading you. I believe a deposit is the best route to take because it's more or less saying "okay, you want to buy my property, I need some proof, some guarantee. Hand over a 1000 quid and you'll get it back at the end of the process."

Just to add - if there were a new law which made deposits mandatory it would prevent gazumping. The new law would state:

All property sales in England and Wales, initiated through a registered estate agency, are dependent on a refundable deposit paid after the sale price is agreed. Once the deposit is sent to the seller's solicitor it is unlawful for the seller to consider any other offers on their property.

Basically it means anyone finding a property to buy through an estate agent has to fork out a deposit. It's the law. No ifs, no buts. You want to buy a house/flat/bungalow, chain free, with chain, with cash, with mortgage, you have to hand over a deposit. The deposit is refundable on completion. If you pull out you lose the money. If the seller changes their mind and doesn't want to sell, he/she returns the money. Once the seller has the deposit he/she cannot consider any other offers, even if they're higher offers. The deposit locks the buyer/seller into that sale (subject to contract). Gazumping is made illegal.

Now if people moan and say "it's not fair, why should we, the buyer, have to give a deposit?" The answer is simple: buying a property is the biggest cash investment a person can undertake. It's not comparable to any other purchase. Due to the large sums of money involved, a deposit has to be exchanged so show 'good faith'.

'Good faith' is a recognized legal term:

n. honest intent to act without taking an unfair advantage over another person or to fulfill a promise to act, even when some legal technicality is not fulfilled. The term is applied to all kinds of transactions.

http://dictionary.law.com/Default.aspx?selected=819

The current system doesn't operate in good faith. It's just "yes, I want to buy your property assuming I don't change my mind, but no, why should I show any good faith in paying a deposit?!"

It's no wonder sales fall through. Without a deposit, without gazumping made illegal, there's no incentive for the buyer to honour the deal. I'm sure most buyers do want to honour the deal, same is true of the seller, but if there's no deposit there's a much higher risk of people pulling out of the transaction. Mandatory deposits would also strengthen the buying chain. If buyers in a chain had to pay out a deposit, and gazumping were made illegal, I reckon there's a much higher chance of all the sales going through.

I believe....

1) A 'schedule of sales' contract signed by both buyer/seller after sale price is agreed. The 'schedule of sale' would give the dates by which time all key parts of the conveyancing have to be completed.

2) Mandatory (refundable deposits) unless buyer pulls out.

3) Gazumping made illegal.

...would help everyone buying and selling property. I am going to keep a record of my suggestions and send them to the Minister of Housing.

fart

Propertyfan wrote: »

Regarding the £1,000 deposit idea I suggested, I accept it's not a perfect solution. "What if?" can be applied to any part of the buying/selling process. At some point you can't worry about "what if'. You have to go on trust and hope that the buyer/seller are genuine, not misleading you. I believe a deposit is the best route to take because it's more or less saying "okay, you want to buy my property, I need some proof, some guarantee. Hand over a 1000 quid and you'll get it back at the end of the process."

Or just do it like Scotland where you put an offer in, and once it's accepted can't pull out without having to pay compensation to the seller? Same protection but without any money being handed over up front.

Ultimately the seller has the greatest influence. He's got the thing the buyer wants - the property - so I think it's up to the seller to exert reasonable pressure on the EA, the buyer, his/her solicitor, to get the process moving and to avoid any unreasonable delays.

Not strictly true as the seller can quite often be relying on the sale of the property to ensure that they themselves can move forward with their next purchase/rental/etc. Both parties can often have just as much riding on the completion.

A lot of the the problems involved in buying/selling would be solved or eased if specific time dates were set in a 'provisional contact' or a 'schedule of sale' document/contract. Both parties could sign this 'schedule of sale' and this would lock them into completing various stages of the conveyance by a certain date. I don't think that's a radical concept. I'm sure it's achievable.

Making accepted offers legally binding would prevent this long windedness from taking place. All this does is add paperwork.

The present system is just 'wait and see what happens'. If your buyer is in no rush to get a surveyor, you (the seller) have to wait and wait and then you ring the EA and he/she can fob you off with some excuse. My EA told me yesterday "there aren't many surveyors in South East England" - "it's summer time and they're away on holiday."

On holiday in Scotland....my surveyor on the property i'm going for was based in Colchester

This may or may not be true but it's finding reasons to delay the process. If the buyer/seller have agreed a specific date by which time a surveyor is hired you would avoid telephone calls/emails to EA asking "is the buyer going to get a survey or not? It's two weeks and I've heard nothing."

Again like Scotland the home should have a single survey BEFORE it goes to market. Would make it easier and then a full survey could be done in light of any questions surrounding the foundations, roof or structural integrity of the property.

Some form of pre-contract - a time table of dates by which time key stages of the conveyancing are completed - should be drawn up and signed after both parties agree the sale/purchase. I don't know if there's any pressure group out there lobbying for a change in the system. Things can only change when people - enough people - campaign for change.

I don't particularly think it's fair to put legal time tables on it. At the end of the day they're providing a service but some things take longer than others due to a variety of different parameters. Although i've never bought in England, from what my sister tells me and what i've read the system there is pretty much backwards and inferior in every way to the Scottish system.

I appreciate you've taken time to think this through but none of what you've suggested is really needed. We should just take a base model from a country whose system works better and work from there.

All property sales in England and Wales, initiated through a registered estate agency, are dependent on a refundable deposit paid after the sale price is agreed. Once the deposit is sent to the seller's solicitor it is unlawful for the seller to consider any other offers on their property.

Again, the deposit is pointless. If it's made legally binding upon acceptance of offer you just implement penalties for pulling out of the deal once it's been agreed.

googler wrote: »

Home loans are just as difficult to get in Scotland as they are in E&W, and I can't accept that houses everywhere in Scotland are all cheaper than the 'high cost' houses of E&W .....

My parents are in South-East England and they spent £140k on their 5 bed detached property in a decent area. Some 1-bed flats in Edinburgh are going for upwards of £180k. As you say, same depending on area.

beecher2

propertyman wrote: »

But you're not thinking- that relies on all parties being ready to move. Thats not always the case in which case a buyer ends up with two homes, or not accepting offers until they find somewhere.

In E & W thats not possible in many areas due to the high cost of homes and loans, and in the various booms, the fear of selling first and defering completion or moving into rented and losing out on price increases.

Sellers and purchasers would adapt to the system, if E&W adapted the Scottish way of doing things. They would simply sell first and then look for a property, and in boom times look at the same time as selling. It is perfectly possible and solicitors simply make sure everyone works towards the same entry date. I don't know how people cope with the stress of not knowing when their entry date is, and I don't see any benefits of the English system over the Scottish.

It is possible and even works in areas of Scotland with properties which are very expensive (we do have them, you know).

fart

beecher2 wrote: »

Sellers and purchasers would adapt to the system, if E&W adapted the Scottish way of doing things. They would simply sell first and then look for a property, and in boom times look at the same time as selling. It is perfectly possible and solicitors simply make sure everyone works towards the same entry date. I don't know how people cope with the stress of not knowing when their entry date is, and I don't see any benefits of the English system over the Scottish.

It is possible and even works in areas of Scotland with properties which are very expensive (we do have them, you know).

As far as i can tell, here it just works like letting.

The English system just sounds like going to rent a place without having a clue when you'll be able to move in. Silly really.

fart

Propertyfan wrote: »

Basically it means anyone finding a property to buy through an estate agent has to fork out a deposit. It's the law. No ifs, no buts. You want to buy a house/flat/bungalow, chain free, with chain, with cash, with mortgage, you have to hand over a deposit.

Wait....so if you want to even start searching for a property you have to give a deposit?

At what point in the process do you have to give over a deposit?

Even if you had to give the solicitor (giving it the EA would NOT work) upon the commencement of work pertaining to buying the property, this is a really really poor solution to the current problems.

You think it's easy for people to just lay their hands on a grand to give out, considering the other things you have to pay for when buying a property? Come off it. It will prevent more and more people from getting onto the ladder and thus affecting the market and industry as a whole.

People have every right to pull out of a deal before one has been agreed. If i offer and then decide to pull it before it's been accepted, i have every right to do - they should have accepted it quicker if they wanted to take me up on it. Once an offer has been accepted, it is then that financial penalties should come into play. It's a much simpler solution than what you're proposing.

Propertyfan

The deposit has to be handed over to the seller's solicitor within 7 days of the sale price being agreed.

In other words, a buyer makes an offer on a property, the seller accepts. The EA send out the sales memorandum. At that point the EA instructs the buyer (in a letter) that they have to give the deposit to the seller's solicitor. As the terms of the deposit will be enshrined in a new conveyancing law, the seller's solicitor won't need to draw up the terms of the contract. The deposit contract will be a standard form that all solicitors have on file.

The seller's solicitor prints out a new contract, fills in the details, sends it to the buyer's solicitor and the buyer's solicitor passes it on to the buyer. The buyer signs the contract and returns it and the deposit cheque to the seller's solicitor.

All transparent.

Even if you had to give the solicitor (giving it the EA would NOT work) upon the commencement of work pertaining to buying the property, this is a really really poor solution to the current problems.

You think it's easy for people to just lay their hands on a grand to give out, considering the other things you have to pay for when buying a property? Come off it. It will prevent more and more people from getting onto the ladder and thus affecting the market and industry as a whole.

Okay it doesn't have to be a grand. It can be 500 quid. Anything less than that and it makes the deposit pointless. If you seriously think a buyer will think "sure, I'm happy to pay a deposit but it's got to be 100 quid!" then no seller is going to agree to that. It's a pointless gesture. The deposit has to be of a reasonable size to make the seller have faith in the buyer. If you can't afford the deposit then don't buy the property.

Again, the deposit is pointless. If it's made legally binding upon acceptance of offer you just implement penalties for pulling out of the deal once it's been agreed.

I disagree. If the deposit is pointless then any deposit you've ever made on any item is pointless. Clearly not. Deposits are there to secure the transaction, not jeopardize it.


Anyway, the simple reality is UK people don't live in Scotland. We don't have your system so a deposit might be the only form of protection we've got. Perhaps I should move my home to Scotland. (sarcasm meant)

fart

The deposit has to be handed over to the seller's solicitor within 7 days of the sale price being agreed.

In other words, a buyer makes an offer on a property, the seller accepts. The EA send out the sales memorandum. At that point the EA instructs the buyer (in a letter) that they have to give the deposit to the seller's solicitor. As the terms of the deposit will be enshrined in a new conveyancing law, the seller's solicitor won't need to draw up the terms of the contract. The contract will be a standard form that all solicitors have on file.

The seller's solicitor prints out a new contract, fills in the details, sends it to the buyer's solicitor and the buyer's solicitor passes it on to the buyer. The buyer signs the contract and returns it and the deposit cheque to the seller's solicitor.

All transparent.

I'm not sure if you're just missing the point or are being pig-headed because of the amount of effort you've put into thinking this all up, because you're not listening to anyone.

(For the seventeenth time...)

In Scotland, we give an official offer with every term of sale contained therein, and once it is accepted by the seller, there are financial and legal implications for pulling out, even if it's down to the fact that your funding fell through so you no longer have any money at all.

This is exactly the same thing but with less hassle and effort than what you're proposing.

In Scotland it breaks down as thus:

Contact conveyancing solicitor.
Tell them your offer.
They fax it.
Seller accepts.
Now you may not withdraw for any reason without financial implications (compensation for time effort and money wasted by the seller).
One piece of paper, seller protected against financial loss.

In your proposed (and quite frankly, nonsensical) version of the law, it would work like this:

Contact conveyancing solicitor.
Tell them your offer.
They fax it.
Seller accepts.
EA sends letter to buyer.
Buyer sends letter plus £1000 to solicitor.
Buyers solicitor sends letter plus £1000 to sellers solicitor.
Seller's solicitor sends new contract to the buyer's solicitor.
Buyer's solicitor passes it on to the buyer.
Buyer signs the contract and returns it.

Not only is this stupidly long-winded, but it would increase fees charged by not only solicitor's but also EA's, and the buyer would have to have £1000 cash lying about spare which isn't always do-able.

All for the sake of doing it all in one contract and having that contract protectable under law so that if it's broken, the seller gets (probably more than) £1000 back anyway without having to do all the aforementioned faffing.

I don't mean to be rude but i will be blunt - your idea is stupid.

The England/Wales way definitely needs to be looked at but your proposal is not even a potential solution in any way shape or form.