Ripe for reform

The Conveyancing Association recently published its white paper 'Modernising the Home Moving Process', which recommended a more transparent home-buying procedure.

The report highlights that since the beginning of the market’s recovery, transaction times have steadily increased from six to eight weeks.

The white paper recommends an overarching home mover’s online portal be created, which can be securely accessed by all stakeholders in the process, while also offering protection from the threat of fraud and redirection of client funds.

It highlights the need for more certainty earlier in the conveyancing process. As a result, the report suggests centralising the identity verification of the various parties to reduce the risk of fraud and money laundering, collating the property and title information on the marketing of a property and a legal commitment to send completion monies through before completion day.

From a lender’s perspective, the two most important recommendations are to provide a reliable lending decision in principle based on a ‘hard’ credit report, without it affecting the applicant’s credit score, and reviewing the Council of Mortgage Lenders handbook to remove anomalies and ambiguous entries that can generate post-valuation enquiries.

The report compares the system in England and Wales to that in Scotland, the USA, Australia and Denmark, and concludes that: “…The upfront acquisition of mortgage finance is vital to an early legal commitment and to avoiding chains in transactions.”

The paper notes that Scotland’s delays have become similar to those in England. It partly puts this down to the implementation of the Mortgage Market Review and the impact of affordability checks on the speed of issue of mortgage offers.

The report notes that in Scotland a decision in principle would have almost guaranteed a mortgage at the rate indicated in the past; provided the applicant’s income had not been overstated or their outgoings understated. As a result of the negative impact of multiple ‘hard’ credit checks, however, this is no longer the case.

Procedural delays, due to post-valuation queries raised by conveyancers in relation to mortgage offers, are cited as another concern.

The report notes that the increased cost of borrowing, resulting from the work involved in any credit check, is a “significant barrier to borrowers applying for an offer in principle until they have had an offer accepted on a property”. Given the low repossession rate since the recession, it suggests a “softening of the affordability requirements”.

In addition, the report suggests a review of the impact multiple ‘hard’ credit checks have on credit scoring, so that brokers can obtain a genuine decision in principle based on credit checks.

Furthermore, it proposes a reduction in post-valuation queries through a review of the lender’s handbook and a secure portal through which lenders can communicate with conveyancers.

Beth Rudolf, director of delivery at the Conveyancing Association and author of the white paper, commented: “To be able to remove delays from the process, changes need to occur across the industry to remove the constraints and deliver the certainty which home movers need to enjoy a positive moving experience.”

The next step is to invite industry comment. To this end, a ‘Modernising Conveyancing’ conference is due to take place at the beginning of December.

Titlesolv is the trading name of London & European Title Insurance Services Ltd authorised and regulated by the Financial Conduct Authority.

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