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The difference upfront Material Information could make in the UK
As the arrival of Parts B and C of Material Information draw closer, we spoke to Beth Rudolf, Director of Delivery at Conveyancing Association (CA), about the big difference it could make to the buying and selling process.
How will Material Information impact the UK property market?
When it comes to the usage and benefits of providing upfront Material Information to all those involved in the home buying process, we often get asked to show the difference it makes in the UK, or more specifically England and Wales.
I add in that geographical caveat because, despite the provision of upfront Material Information being a key part of the process in many jurisdictions across the world and delivering excellent results, we have to accept that each is different to England and Wales, and some stakeholders are still unconvinced of the problems it can solve and the time it can save on these shores.
North of the border, the Scottish Home Report has already seen average property transactions take four weeks less than in England and Wales, and fall-throughs reduce by 60%.
Can Material Information speed up transaction times?
I’d like to highlight the recently-published results of a year-long upfront Material Information pilot completed by conveyancing firm, Thomas Legal, and search provider, Conveyancing Data Services (CDS) – part of tmgroup.
To my mind, the results reveal what can be achieved and what the benefits could be across our entire property industry, if we can get to a place where the delivery of upfront Material Information is the norm.
The headline here is that transaction times were reduced by up to 70 days when Material Information was provided upfront, early in the process, more transparently and in a format which was acceptable to all sides.
Over that year, and including in excess of 120 ‘high-end property sales’, the time taken from Heads of Terms to Exchange fell from a national average of 133 days to between 63 and 83 days.
And, as Estate Agents reading this, you might also like to know the benefits for the agent involved in the pilot were also significant – the difference in transaction time for properties from sale agreed to exchange, in and out of the pilot, was 51 days.
That’s a time saving of over seven weeks for Estate Agents alone, and only you will know what that might mean in terms of income generation and payment, and the opportunity for your pipelines to be turning at a much faster pace. Again, I suspect it will certainly feel worth your while to be achieving this.
In terms of where that time was saved, there were multiple tasks which were completed and, as a result, delivered those benefits. From obtaining the search information at the point the property came onto the market – a saving of four weeks – to the customer onboarding stage with both automated identification and Know Your Customer verification, plus anti-money laundering and source of funds checks completed 80% faster.
At the same time, CDS were able to supply the search information in the buyer’s name, if required – though the CLC article last year confirms that so long as a search meets the equivalent of the Search Code then a buyer can accept a search commissioned by the seller – plus they were able to refresh Local Authority searches after six months, when they expire, at almost no cost in order that they were not out of date before exchange.
The pilot participants were able to use all the existing technological solutions available to them, to get the necessary forms completed more easily and far quicker, and as a result of those time-savings, the pilot has now been expanded with 16 of the Estate Agent’s offices right across the country now involved.
How should Estate Agents approach Parts B and C of Material Information?
It will depend on how much work is being completed upfront, but we are being advised – not just by this pilot but others – that users of upfront Material Information who are providing the Title (and the documents referred to therein), property information and searches on sale agreed, are now reporting completion dates of between five and 12 weeks, compared to the average times of 22 weeks.
Earlier this year, we completed the consultation on the Buying and Selling Property Information (BASPI) dataset. This will pre-populate the TA6 more easily, for those who wish to continue using it, and also to National Trading Standards Estate and Letting Agent Team (NTSELAT) Material Information Part A.
You’ll certainly also be aware as Estate Agents that the NTSELAT continue to work on its three-phased approach to the guidance around the Material Information that must be provided to any potential purchaser.
Part A is completed by the BASPI already, having gone live in July last year, while we anticipate Parts B and C – which are still under discussion in terms of what Material Information they must contain – will be published later this year. Material information will run alongside the provision of upfront information, and together we believe they can deliver some of the outstanding results mentioned above for transaction times.