As house prices hit another all-time high, we need to cut bureaucracy burdening sales
Yesterday, average house prices in England hit a record high for the third consecutive month, according to RightMove. They reached an average of £360,100.
High buyer demand and a limited number of homes available are likely to send prices even higher. Against this backdrop, it’s about time we reconsider the way we buy and sell our homes.
Complexities in the process can turn a seemingly easy transaction into a nightmarish venture. Clare and Steven George-Hilley thought they had found their dream family home. So they obliged when the seller asked them to sign an exclusivity agreement for the four-bedroom townhouse, agreeing to hand over a £25,000 “’holding fee”. If the sale of the south London property was finalised within four months, the deposit would be safe.
But the George-Hilleys would become the latest family to fall victim to the painfully complex residential property market. Ten months after signing the contract, delays to the deal left the couple with no home — and £25,000 out of pocket. The sale fell apart due to a slight delay on George-Hilleys’ side, prompting the seller to seek a better offer.
Such stories are commonplace. In a 2018 report, the Homeowners Alliance found that roughly seven out of ten home sales fell through because of buyer-related reasons. A government report estimated that a quarter of failed transactions incurred wasted costs of £1,000 or more. This amounts to hundreds of millions of pounds in wasted fees every year, causing substantial distress for many buyers.
In the traditional sales process, there are many laborious steps including hiring an estate agent, making necessary repairs, taking offers and dealing with paperwork. Removing such obstacles could make a world of a difference in an overheated market.
The story of a man from Bromley has also recently caught my eye. Describing himself only as “DK”, he wrote to The Guardian complaining of being trapped in the ruinous legal limbo of probate. DK’s uncle passed away, leaving him to settle his estate. The digital revolution has not been kind to everyone. DK’s predicament was made worse in 2019 when the government moved the probate process online to streamline the system. Ten months after applying for letters of administration, DK is still waiting for probate to be granted. His uncle’s house has to be sold to pay off an equity loan within 12 months of his death and he is losing £1,000 a month in interest.
The real estate industry is ripe for positive disruption.
In the US, tech firms such as OpenDoor have been helping consign incidents like these to history. They are only beginning to enter the British market, by using algorithms they can put offers on properties almost instantly.
These products won’t be for everyone, and they require their own set of careful considerations. But we have moved into a world where everything is on demand – from ordering food to taking out a loan or opening a new bank account with facial recognition. Digitalising the selling process would be a key first step in the right direction – at a time when buyers are already caught in the mix of higher prices and inflationary pressures.
Around two decades ago, the property portals changed how you searched for a house to buy or rent.
The next couple of years will see technology change how you sell your home.