Overcoming the information challenge: Part 2
DigitalMove is a technology project, aiming to give home movers the best experience from start to finish.
Andy Weston is the Innovation Director & Co-founder of ULS Technology plc. Andy first conceived of DigitalMove back in 2013. It’s come a long way since then, but there’s plenty more to do!
Last time I focused on the first of the three main challenges facing a conveyancer: ensuring the buyer is fully informed. I call this the information challenge. You shouldn’t commit to buying a house until you’ve considered all the relevant information. The sooner you can do that the sooner you can make a firm and binding commitment and avoid wasting anyone’s time.
For the best experience, this information should be made available as soon as an offer has been accepted, or ideally even before that. There are two ways to achieve this:
The seller and their conveyancer prepare the information well in advance so that it is immediately available once an offer comes in (Information upfront).
We make the process of obtaining the information and presenting it in an easily digestible format as instantaneous as possible.
I covered point 1 (Information upfront) last time. This is part of the solution, but there are obstacles: the cost implication of property searches for the seller makes that part hard to achieve, without full industry support or government legislation. Also, because the information takes time to collect, there will always be occasions when a buyer is found quickly and it is not ready yet.
Property logbooks / passports
This latter problem could be solved by going back even further and making the information available at the point the property is first marketed. There are several companies offering property logbooks or passports; the idea being that all information about a property is stored in one central repository. Information gathered when buying the property is retained and updated from time to time by the owner. The theory is that when they next come to sell, everything is ready and easily accessible, thus saving time. This is great in theory, but I can’t see many owners bothering to keep it up-to-date, and without wide industry support or legislation, it’s hard to see this idea gaining much traction.
Ultimately, I see the Information upfront tactic as a valuable strategy in the short to medium term, but no substitute for simply making the information instantly available from all its various sources. If we can do that, then there’s no need to prepare it in advance or store it in a property logbook.
Why do we need instant information?
You may ask, do we need this information instantly? Our vision of an Amazon-style shopping experience for buying a house sounds great, but how may many people want that?
I realise that not everyone wants to click ‘buy’ and move in tomorrow. Of course, they don’t. People need time to get organised, pack their possessions, book time off work, and go on the holiday they’ve already planned. However, the current process takes on average 3-4 months (even longer during a pandemic), and most people would prefer it to be much quicker than that!
What I’m talking about is ‘instant certainty’. To be able to click ‘buy’ and know you’ve got the house. Free from anxiety, knowing that you won’t be gazumped, gazundered, refused a mortgage, or that the seller won’t simply change their mind. The actual moving date can be negotiated separately and be whatever’s most convenient for all parties.
I firmly believe that ‘instant certainty’ would benefit all parties. After all, you don’t have to click the buy button until you’ve made up your mind, and we could always incorporate a short cooling-off period.
Why not just insure it?
There is an alternative school of thought that advocates, why bother at all? If investigating everything that could be wrong with a property is so time-consuming, why not just insure against the risk. After all, often, the issues uncovered aren’t going to change your mind about buying.
This argument is often supported with reference to the US, where title insurance is standard, and you don’t even need a lawyer to buy a house. But it’s an unfair comparison. Most US states don’t have a Land Registry so there is no choice but to take out insurance as the title cannot be guaranteed. Also, the title insurance company will still do their investigation which itself takes time. Also, the cost of moving-house in the US is typically around 6% of the property value which is far higher than in the UK.
Title insurance does have a place in the UK, but it’s generally used sparingly to insurance-specific Individual risks.
Insurance is not a good substitute for not knowing something. It’s inevitably more expensive and just leads to disappointment later. We need to focus on obtaining the information quickly and reliably, not insuring the problem away.
Delivering instant information
So, what are the challenges to instantaneous information? It’s certainly feasible. Almost all the information already exists somewhere in some form or other, and there are existing processes in place to obtain it. The problem is that it’s not universally digitised, nor obtainable electronically.
The Land Registry are doing some good work. Most property title information is now available electronically. It’s not necessarily digitised but we can look to AI to extract the important information and build tools to automatically interpret it and present it to home movers in an easily digestible form.
Local Authority search information will remain a problem for some time to come. Again, the Land Registry are doing some good work to digitise and centralise part of this information (the Local Land Charges Register), but this project will take several more years to complete, and even then it still leaves a chunk of information in the hands of over 300 separate local authorities, and no clear plan to address it.
Leasehold information is another big problem. Identifying which company administers a particular lease is not straightforward – there is no register – and once located, obtaining information from that company can take considerable time.
Until these, and other, problems have been resolved, obtaining property information quickly will remain a challenge, but it does need to become a reality, and the industry needs to work hard to ensure it happens as soon as possible.
In the meantime, we’ll need to rely on getting upfront information embedded into the move-moving process. Everything freely available should be gathered together using a digital platform connecting the agent, the seller, and the conveyancer to produce a digital Contract Pack that can be sent to the buyer’s conveyancer the instant an offer has been accepted.
One final point worth mentioning. The current legal process for selling property is based on the principle of Caveat Emptor (Latin for ‘buyer beware’). This means it is the responsibility of the buyer to discover any issues with the property by making their own investigations and asking questions. It doesn’t have to work this way. Some other countries use a system of vendor disclosure, where the onus is on the seller to disclose all known issues.
Some feel that switching to a system of vendor disclosure would speed up the home moving process, by creating a stronger incentive for sellers to gather a complete set of information upfront, rather than waiting for buyers to ask.
The Law Commission are currently consulting about what to include in their upcoming 14th program of law reform and a change to Caveat Emptor is on the list of suggestions. This does not mean it will happen. The Caveat Emptor principle has been established over hundreds of years, and the government, as part of its recent review of home buying and selling, called out the thoroughness of the current system as being one of its great strengths, so there may be some reluctance to making what many will see as such a fundamental change. But you never know!