Sold down the river

In 2000, Bristol was the test bed for a new government idea that is intended to solve the frustrating UK housebuying process. Despite a mixed reaction to sellers' packs – in which house sellers provide survey and search information – the government may try to railroad the new process through parliament under new procedures which allow the government to guillotine every bill. These procedures allow very little time for proper scrutiny The sellers' pack idea started in 1997, when the Labour Party election manifesto stated, "The problems of gazumping have reappeared. Those who break their bargains should be liable to pay the costs inflicted on others."

A questionable solution
But sellers' packs – the Labour Party's solution to gazumping - do nothing to address the central issue of gazumping. Before the election in February 1997, Labour released a consultation paper, "No To Gazumping," which promised to take action on the issue. Shadow environment secretary Frank Dobson proposed "a system in which a seller or a buyer who goes back on an agreement would be obliged to meet the costs the other party had incurred in progressing towards exchange of contracts".

The promise resulted in a sellers' pack. Under the scheme, those selling a home must offer to potential buyers a pre-prepared pack containing a surveyor's report, local searches, planning permissions and legal titles. The government intends to make this scheme compulsory by 2003.

Will the packs make any savings? The introduction of sellers' packs will add an estimated extra £500-£700 to selling costs. Any saving to buyers is cancelled out if they are selling a property at the same time. Vendors whose houses fail to sell will be left with a £500 bill.

The greater financial risk lies with the seller, but buyers are a wary bunch. Many buyers and lenders will not trust the survey produced by a seller and will want a survey of their own, hence duplicating costs. In the scheme's Bristol trial, the government paid for all the survey costs; yet one-third of buyers still insisted on undertaking their own surveys. Only 60 households actually completed a sale using sellers' packs alone.

Sellers’ packs - the Labour Party’s solution to gazumping - do nothing to address the central issue of gazumping

Sellers' packs can be a waste of time if homes take a while to sell. Many properties are adversely affected by dry summers or wet winters, and hence the structural state of a property can change within just six months. Many buyers and their mortgage lenders will also not want to rely upon sellers' packs which are "out of date". The extra costs could actually hamper house sales at times when the economy is depressed. Further economic strain may be generated as trading standards officers enforce the production of sellers' packs. Enforcement could place a significant burden on local authorities, adding to council tax or diverting trading standards from more serious offences.

The only purported benefit of sellers' packs is to reduce the time between an offer being accepted and the exchange of contracts. However, even under the present system, it is possible for a buyer and a seller to shorten the process considerably. And in fact, sellers' packs will add three weeks onto the time of putting one's house onto the market.

Chains and exemptions
Furthermore, sellers' packs do nothing to address the issues of chains, delays by solicitors or disputes over a survey. As solicitors Convey Direct have commented, "Ninety per cent of cases involve chains, and here the sellers' pack is irrelevant. No one can complete until everyone in the chain is ready." The government's scheme has been attacked by many estate agent representatives and mortgage lenders. As Trevor Kent from the National Association of Estate Agents remarked, "the whole idea of a sellers' pack is a farce".

The government is considering an exemption in areas with low property values. Yet if Labour concedes that it the scheme will generate costs and act as a barrier to selling a house, they should exempt all areas.