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Leading real estate experts call for change in property buying process in the UK

Firstly the abolition of HIPs only goes halfway to encouraging more speculative vendors into the market and minimising wasted consumer expenditure, says Liam Bailey, head of residential research at Knight Frank. That is because the Energy Performance Certificate remains as a legal obligation before a property can be put on the market. Although it is a requirement under an European Union directive other EU countries only require it when the terms for purchase are agree, he points out.
Bailey also calls for changes to the directive. ‘It seems that the only serious argument put forward for retaining the EPC is that it is a requirement of an EU directive. If there really is no consumer benefit from the EPC then start talking tough in Europe and negotiate for changes to the directive. The annual cost to UK consumers for EPCs, even in a low volume market, is close to £100 million, which would seem to be reason enough to make an effort to improve their effectiveness.
The process of collating papers and searches prior to sale could be improved, especially the ‘slow and cumbersome’ process of completing local authority searches and confirming planning issues. ‘The introduction of compulsory time limits on local authorities would be a good first step. With some local authorities excelling in this area there must be scope for sharing best practice,’ said Bailey.
The introduction of e-conveyancing should be speeded up as this would make the whole system more transparent. ‘The ability for agents, solicitors, buyers and sellers to view the progress of their chain in a transparent way online should remove a considerable amount of the frustration caused by the lack of information provided during the purchase process,’ he added.
Bailey also believes that licensing of estate agents and lettings agents would ensure that their consumer protection role is enhanced and promoted, and would be a positive step towards increasing consumer confidence.
He also would like to see more encouragement for long term residential investment in the industry. To help achieve this charging Stamp Duty on individual property values rather than on total portfolio value would be a useful first step to increasing liquidity in the market and the introduction of a residential property Real Estate Investment Trust (REIT) structure in the UK would encourage the longer term investment the UK currently lacks.
While it seems likely that it is too late to change the decision over increasing Capital Gains Tax, Bailey believes that the government recognise the difference between short term and longer term capital gains on investments, with an indexation allowance at the very least and ideally a revived taper relief structure.
Reform is needed of the current slab structure of Stamp Duty, which sends tax bills soaring just because a house buyer spends an extra £1 over one of the £250,000, £500,000 and (from next April) £1 million thresholds. ‘The current system distorts the market, discourages liquidity and damages labour market flexibility,’ said Bailey.
The Royal Institution of Chartered Surveyors is also calling for change. ‘The Government must now use this opportunity to move on positive discussions about improving the home buying process by working closely with the industry and professional bodies that have already done a lot of work on this issue. There is now the opportunity to start again with a clean slate and come up with innovative proposals to reform the system,’ said spokes person Gillian Charlesworth.
‘Rather than seeing the announcement as the death of HIPs it should become the start of a new process that brings real change to people’s experience of buying a home,’ she added.