How to Make Home Buying and Selling Cheaper, Faster and Less Stressful
The Law Society has responded to the Government’s proposals on how to improve the home buying process. In its formal response, which is broadly supportive of the proposals, The Law Society has made various recommendations. While it agrees that the thoroughness of the current conveyancing process “is one of its strengths” and helps protect the security of our primary assets, it believes:
“improvements can and should be made [to the conveyancing process] to make it more efficient to all parties involved. The focus of these [improvements] should be to reduce wasted costs and delay, to promote trust between buyers and sellers and to reduce the failure rate of transactions.”
The Law Society Recommendations include:
- ensuring consumers have the right information at the right stage of the transaction (that does not necessarily mean a greater volume of information);
- technology can play a key role in improving the process but if used, it should be capable of being easily incorporated into the conveyancing process without triggering a need to examine the process itself;
- ensuring consistent, robust and understandable safeguards are in place to protect consumers; and
- currently the same system is used for purchasing residential and commercial property. Careful consideration should be given to changes that lead to two separate systems.
Why does more information matter?
Buyers who have more information to hand when viewing a house, could make a more informed decision about whether to make an offer.
For example, if buyers are aware from the outset that a property is subject to leasehold rather than freehold ownership (meaning ground rents would be payable), they might decide not to proceed.
Without that information, the process could move along for several weeks before the buyers realised the implications of a leasehold property – at which point they might withdraw from the process. This wastes valuable time and costs for all parties including the buyer, the seller, the estate agent and the solicitor/conveyancer.
Making referral fees transparent
The Law Society also recommended that parties be given more information about the process itself – including the costs and fees involved. Particular reference was made to the practice of paying ‘referral fees’ between service providers. Some solicitors/conveyancers enter into arrangements with estate agents under which they pay a fee to the agents for each client referred to them.
The Law Society recommends that current regulations governing the transparency of some referral fees should be broadened to cover all such fees. Currently the disclosure of the fee only has to take place once the solicitor is instructed – which is too late in the process. “When and how this information is given is crucial to maintaining an open and competitive market.”
As stated in the report: “information could be given to consumers so that they can make some assessment of the position, such as:
- “not all firms charge referral fees”
- “this referral fee is much higher than the market rate”
- “you can purchase these services without paying a referral fee at all”
- “there is no referral fee because the agent owns /is owned by the service provider”
- “there are referral fees in relation to conveyancing services, the provision of searches and the provision of financial advice to obtain a mortgage”
Pearson Solicitors' approach
We understand that referral fees are used by other conveyancers as a means of ensuring a regular flow of work and controlling the conduct of transactions and managing chains.
However, we at Pearson Solicitors, support the Law Society’s recommendations on referral fees. It is our policy not to pay referral fees to agents in return for conveyancing client referrals. We rely on word of mouth and the recommendations of our clients and professional contacts to win the business of new clients.
More transparency about referral fees would mean clients could make more informed decisions about who they want to instruct to do their conveyancing work.
If you want more information about the conveyancing process or to discuss the costs involved, contact Victoria Marshall on 0161 785 3500 or make an enquiry.
More information about conveyancing and our services
- For an online quote for conveyancing, click here
- Access our infographic on buying and selling a house here.
- Read our Frequently Asked Questions about the conveyancing process here and about our conveyancing service and charges here
Law Society response: Improving the home buying and selling processSubscribe to our newsletter
Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.
This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.