Paul Fursman
Legal
Why homemovers need to tighten their trainers
Property continues to catch headlines, whether prices are up or down; city dwellers are moving to the country or back again; or how long it may take to get the keys to a new home.
Following the dramatic 30% fall in the number of sales agreed in the aftermath of last year’s mini-budget, when mortgage rates soared, there were concerns that double-figure inflation and the cost-of-living crisis would put a permanent dampener on the property market. But those fears look to be mistaken with latest figures from the property portal Rightmove showing that the number of sales agreed is on the rebound and just 11% down on 2019.
But while markets may be calmer, it is a ‘new normal’ with a much-extended timeframe from putting a property on the market to completing the paper process and moving home. The time taken to achieve a sale has risen by 50% to 65 days compared to a year ago, with the time to property exchange up 5% to 139 days, according to property data specialists TwentyEA.
The slowdown is due to a number of factors. The market has had to contend with a massive backlog that arose during the pandemic, while also experiencing a surge due to the stamp duty holiday that reduced the cost of moving during 2020 to 2022. According to Rightmove, there were 44% more homes sold subject to contract in June 2022 than in 2019.
The huge volumes are putting a strain not just on conveyancing departments, where pressures are compounded by many different firms likely to be involved in any individual property chain, but also those involved in the many connecting strands of sale and purchase. They include the Land Registry – which is the government department responsible for registering property transactions – local authority departments, and lenders.
Whenever a property is sold the buyer will have a ‘local search’ carried out to check there are no planning restrictions that could have an impact on the future property value, and record numbers of search requests have put extra demands on the process. Many local authorities are taking as much as a month to handle these requests.
Similarly, mortgage lenders are under pressure, with the time taken to secure a formal offer typically taking up to six weeks.
Dawn Verney, Conveyancing Executive in M&P’s Residential Property Department, said:
“It may sound inconceivable, but for those hoping to celebrate Christmas 2023 in a new place, this spring is a good time to start getting paperwork in order before putting up the sale board.”
“It’s like preparing for a marathon in today’s market, as it’s not unusual for the sale process to take as long as six months, particularly if the property has a leasehold element. In these conditions, buyers need to ensure they have their mortgage offer agreed, and sellers need to be well prepared before they even instruct the estate agent. It’s this sort of approach that will make the difference between a failed sale and getting over the finish line to completion.”
For sellers, preparation includes checking the location of any relevant deeds and conveyancing documents from the original purchase. While most properties are held by the Land Registry as an electronic entry, old deeds may contain detailed information that does not appear in the Land Registry records. Any property that has not changed hands for many years may need to be subject to a digital registration, requiring the original deeds.
Other key paperwork is to cover any modifications to a property that required planning permission or building regulations consent. Here, certificates will be required to show these aspects have been followed and satisfied.
For a leasehold property, any works requiring approval by the freeholder will need to be documented too. Ensure that you have up to date ground rent and service charge information available and details of your Freehold and/or Management Company.
And any electrical or gas work will need a certificate to show that the work has been properly carried out in accordance with applicable regulations by a suitably qualified technician. Similarly, new oil boilers or oil tank installations should have an OFTEC certificate and new windows should have a FENSA certificate.
Dawn Verney added:
“Sellers who are race-ready before they market will make sure their solicitor has already examined the title, lined up all the paperwork, anticipated any problems, including potential leasehold issues and dealt with them in advance.
One of the major causes of delays involving a leasehold transaction today may be the need for a Deed of Variation, due to lack of Mortgagee Protection clauses or escalating ground rent provisions, which cannot be covered by an indemnity policy, as not all lenders will accept these. By identifying early whether your lease will need a Deed of Variation is crucial, and contact can be made with the freeholder to put these measures in place before a buyer is found and avoiding lengthy delays to a transaction. Ensuring that the lease term and ground rent provisions are acceptable, including checking that lease plans are properly coloured, before a buyer is found, will also ensure a smooth transaction.
It’s a tactic that avoids delay later and means they are ready to act immediately when a buyer is found, and for those chasing the perfect property, with a continuing shortage of new instructions coming on to the market, make sure you are the best bet, not just the highest offer. Sellers will choose the safe option to keep their move as smooth as possible. Buyers who instruct solicitors, get their finances in order, mortgage offers confirmed and even go into rented property so they are chain-free and flexible on completion dates, will show sellers they are serious.”