Do the government’s proposed changes to Home Buying and Selling Risk Reducing the Size of the Market?

It’s a fair concern. Any change that increases the up-front cost or effort required to list a property risks deterring some would-be sellers. But the real question is which sellers it deters, and whether that’s necessarily a bad thing.

A system that works too slowly

The consultation begins by declaring that “the home buying and selling system is not working”. I wouldn’t go that far. It works, but it works too slowly. The process itself doesn’t shrink the market – it simply determines how efficiently the market moves.

If the process becomes faster, fairer and more reliable, consumer confidence will rise. And that confidence, in turn, attracts more participants over time. These proposals are, in essence, about oiling the machine. The challenge is getting the oil into the right places.

The industry view

Across the industry, there is broad agreement that reform is needed. Some are enthusiastic about the government’s focus on transparency and accountability, while others urge caution.

Much could be learnt from property markets in Australia and Denmark, where digital processes and early information allow transactions to move from listing to contract in as little as 30 days. There’s no reason we couldn’t achieve that here, provided we learn from those systems rather than reinventing them.

At the same time, research from GetAgent shows how professional standards within estate agency could be strengthened. Sixty-five per cent of agents surveyed supported the introduction of mandatory qualifications, even though most began their careers without them. Seventy-two per cent said qualifications would improve public trust in the profession. That level of support suggests the industry is ready for reform, as long as it’s practical and proportionate.

The risk of deterring sellers

The biggest worry is that requiring sellers to provide condition reports and legal details upfront could discourage some from listing at all. That’s especially true for those “testing the waters” – people who might sell if they get the right offer, but aren’t committed.

In my view, losing some of that speculative supply is no great loss. In fact, it could make the market more stable. Properties listed without a genuine intention to move waste the time of buyers and agents alike and too often contribute to fall-throughs later.

Of course, there’s a balance to strike. The cost of providing upfront information must remain modest. If it’s around £500 and genuinely speeds the process, most sellers will see that as money well spent – after all we spend to save time in all walks of life, from tolls roads and theme park passes to using Amazon Prime. That said, if costs creep up, it could suppress listings at the margins – particularly in slower markets or at lower price points.

Learning from the HIPs experience

The comparison with Home Information Packs (HIPs) is unavoidable. Between 2007 and 2010, sellers were required to assemble similar documents before marketing their homes. HIPs were unpopular because they were expensive, inconsistent in quality and often went out of date before a sale was agreed.

The current proposals are different in two ways. First, technology now makes it far easier and cheaper to collect, verify and update information. Second, the culture of the industry has changed: digital onboarding, ID verification and AML checks are now routine.

At LRG we use systems that gather material information quickly, allowing motivated sellers to prepare their properties for market in days rather than weeks. The efficiency gains are significant, and the burden is far lighter than it was in the HIPs era.

What really limits the market

If anything is likely to reduce transaction volumes in the coming months, it won’t be conveyancing reform – it will be fiscal policy. Stamp Duty thresholds, potential new property taxes and wider economic uncertainty have far greater influence on whether people choose to move.

Speeding up transactions can broaden the market by making the process less daunting. A buyer who knows that a transaction is likely to complete in 90 days rather than 120 is more likely to proceed. The same applies across the market: to downsizers, first-time sellers and investors. Confidence breeds activity.

Managing fall-throughs

In practice the fear of fall-throughs is a greater drag on the market than any modest rise in upfront costs. One in four sales currently collapses before completion, costing buyers and sellers around £400m a year in wasted fees.

At LRG our fall-through rate is significantly lower than that, largely because we invest in early information, clear communication and client education. If the government’s reforms help others achieve similar results, the overall number of completed sales could rise even if listings dip slightly at the start.

Integrating the process

Delivering the government’s ambitions will depend on genuine collaboration between estate agents, conveyancers, lenders and local authorities. That’s a complex task, but far easier than it was fifteen years ago thanks to digital communication and online data access.

Integration also requires a shift in mindset. Agents are often the first point of contact for buyers and sellers, so our role in explaining new requirements and setting expectations will be crucial. The sector should take this opportunity to feed constructively into the consultation, as we will be doing, ensure the final framework works in practice as well as in theory.

Winners and losers

Some fear that problem properties or complex leaseholds may struggle under greater scrutiny. In reality, those issues already exist; they’re simply revealed later. Better to identify them early than let them derail a chain at exchange.

The biggest winners will be serious movers, professional agents and digitally enabled businesses. A faster, more transparent process reduces stress for clients and improves cash flow for firms. In the long run, that supports a healthier, more resilient market.

Confidence is the key

So, do these reforms risk shrinking the housing market? Possibly in the very short term, as the least committed sellers sit on the sidelines. But if implemented carefully, the result will be a smaller pool of speculative listings and a larger pool of successful completions.

A market that is more predictable, more professional and more transparent isn’t a smaller market – it’s a stronger one. The government’s challenge is to ensure that the detail of reform, the cost of compliance and the timeline for rollout all support that outcome.

Kevin Shaw, National Sales Managing Director, LRG