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Buying and Selling Properties in 2028

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Buying and Selling Properties in 2028

Most buyers and sellers appreciate that agreeing to a property sale doesn’t necessarily mean that things will go according to plan.

Around 1 in 3 property sales are still falling apart – often leaving both homebuyers and sellers out of pocket.  Throw in the stresses of reinstructing estate agents and effectively starting the process from square one, it’s no surprise that so many people despise the process.

Yet, given the notable advances in the PropTech space in recent years, it’s worth highlighting where things currently stand and – more encouragingly – where they may be heading over the next decade or so.

The Current Problems

Although investment purchases tend to be more secure, Jefferies International estimates that 51.8% of all UK properties on the market are failing to sell within 10 months.

Of course, price and the speculative nature of local housing markets certainly have a major role to play.  For instance, the practice of both high street and online estate agents frequently promising unachievable sales values to win business remains commonplace[1].  A recognisable pattern then emerges as vendors enter a frustrating cycle of disappointment as their properties struggle to sell – a problem worsened if any of the parties is in a chain.

Arguably, however, the fragmented nature of conveyancing and mortgage application processes is the major barrier.  From ID verifications, bulky property information forms and deed history examinations through to underwriting confirmations, discharges, seller enquiries and contract drafting, few would deny that the entire process is a bureaucratic haze.

Rarely are the full facts disclosed upfront and it’s often only once the transaction process starts that the cracks start to appear.  Negative search results, restrictive covenants, problematic easements, third-party consents, ransom strips and leasehold issues can all unexpectedly crop up.  As a result, even the most conscientious solicitors can never guarantee that the sale will progress smoothly.

Then comes the survey, with down valuations being the most common issue.  Often traced back (again) to over-ambitious estate agency asking prices, any appeal is likely to fall on deaf ears which either results in some form of negotiation or the transaction falling apart completely.

Similarly, latent defects or other undisclosed issues (subsidence, structural problems Japanese Knotweed etc.) can throw a further spanner in the works.  Although some vendors deliberately choose to keep quiet, many are not.  Either way, they’re subsequently faced with the prospect of remarketing a ‘tainted’ property.

Dirty Tricks

The lack of transparency, combined with an obscure interaction between buyers and sellers, also impedes progress.

In addition to mortgage and transaction fraud, the practice of buyers outbidding each other after the sale has been agreed (gazumping) continues, especially in hot marketplaces.  Often happening shortly before exchange of contracts, there’s very little protection nor any recourse for the abortive costs incurred by the buyer.

At the opposite end of the scale, there’s gazundering.  This is where buyers underhandedly undercut the price close to the point of exchange.  Practised by a handful of unscrupulous fast house sale operators, reluctant vendors who are in a tight spot are forced into moving forward.

Rant over!

Buying and Selling Properties in 2028

Expecting the ills of the conveyancing and the buying/selling process to be cleared up overnight would be unrealistic, yet there are a number of early signs that things may be moving in the right direction.  The hope is that we’ll see less ‘paper-pushing’ involvement of estate agents, mortgage brokers and solicitors as core processes shift to the digital world.

In our interview with Lauren Tombs from the Land Registry’s Digital Street, for example, it was interesting to see how search and other relevant data would be available at the touch of a button.  Buyers can access key information before making any kind of decision and act accordingly – avoiding all the unnecessary expense and reliance on the unknown.

A successful roll-out of the instant mortgage facility piloted under Digital Street could also mean that key underwriting criteria and other checks are available from the very start.  Both sides can therefore confirm the legitimacy of the transaction before moving forward.

Cutting Out the Middleman?

Excluding the intermediary from property transactions is nothing new. Historically, buyers and sellers would barter amongst themselves – using a legal professional to ensure the process was executed in the right way.  Since the early 2000s, our sister quick cash sale company Property Solvers and others like us have also engaged directly with house sellers.

Yet, taking things much further from this direct to vendor approach, blockchain’s integration into the conveyancing process could perhaps stimulate a radical transformation to the transaction process.

In its simplest form, key stages of the buying and selling process are digitally streamlined, with the actual transaction potentially occurring in milliseconds.  The self-executing nature of smart contracts provides a secure protocol that facilitates and enforces even the most complex of transactions.

Blockchain’s application in property is perhaps best described as an extensive and immutable vault of ‘blocks’ containing key and in-depth information, including:

  • Historical sales / transactional information, surveys, condition reports and other investigations;
  • Architectural drawings, photography and other imagery;
  • Surveys, valuations, inspections and other relevant condition reports – held on account indefinitely;
  • Integration with Building Information Modelling (BIM) protocols (procurement, designs, previous planning applications and much more);
  • Direct reporting / confirmations that can be forwarded to the relevant authorities (tax, registration, confirmations for future sales, transaction legitimacy etc.).

Although there are a number of unanswered questions and challenges, it will certainly be interesting to observe how blockchain integrates into the property industry.

Valuation Accuracy

When it comes to how most people value their homes, emotions often trump the facts, and much is based on the speculative whims and rose-tinted views of the market. Furthermore, the heterogeneous nature of UK property means it’s not a simple case of applying generalised rules.

However, with an estimated 1.5 and 0.6 billion annual visitors respectively, real house price data on Rightmove and Zoopla has certainly helped sellers get a better grip of what their properties are actually worth.

The likes of Hometrack and Realyse are using increasingly sophisticated algorithms to deliver data on remortgage valuations, square footage and other more granular information.  Whilst these platforms currently come with subscription cost, it would not be unimaginable for this data to become available in the public domain at some point in the future.

In short – the lesser reliance there is on anecdotal and speculatively-driven valuations, the better.

Where Next?

Although technologists debate over the validity of Moore’s law (which essentially states that computer processing power doubles every two years), few would doubt that there’s much more is to come in terms of innovation and how it will respond to business needs across the board.

Most buyers and sellers probably wouldn’t want deal within anything overly complex, nor expect the process to be governed by robot advisors and become too dehumanised.  Ultimately, what is being called for is less friction.  The PropTech and FinTech innovators that can facilitate a safe, efficient and user-friendly experience that removes the tiresome games are most likely to achieve success.

[1] One notable comment from our recent interview with founder and CEO of The Advisory, Gavin Brazg was that “estate don’t win instructions by telling the truth.”

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