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Market Commentary - November 1999

Although there are continuing reports of house price inflation in the press, the housing market appears to have regained a semblance of order after the bubbly enthusiasm of the summer. Prices are continuing to rise - especially in London and the South East - but there is no 'buy now because it'll be £10,000 more tomorrow' hysteria.

The government has been busy over the last month or so with lots of new initiatives aiming to reduce the stress in moving home. Here's a brief digest:

Seller's Information Pack

The government wants to make it compulsory for people selling their property to prepare a Seller's Information Pack prior to putting it on the market. Sellers will be required to prepare the pack and make it available to purchasers. It will include:

• Draft Contract
• Title Deeds
• Land Search Results
• Survey Results
• Planning Permissions (where applicable)
• Warranties or other building guarantees

The effects should be:

• The time between offer and completion can be reduced. It currently takes on average 10-12 weeks to complete a house purchase following acceptance of an offer. Most of this time is spent preparing the information that will be in the pack. The aim is to reduce this time to 2 weeks
• Some of costs currently borne by the buyer will move to the seller. It is estimated that assembling a pack will set a house seller back by around £500. Property prices will probably move up to respond to this.
• People will be less likely to put their house on the market 'to see if I get a nibble'. Only serious sellers will go to the expense and hassle of preparing the Homeowners' pack. It might also dissuade people from moving at all!
• Estate agents will have a statutory duty to ensure that sellers comply with the new rules - they could face fines, or even imprisonment, if there is a failure to provide the necessary information, or if it proves to be fraudulent.
• Buyers will be encouraged to obtain "in principle" mortgage offers before they make an offer on a property.

Some of the measures will require legislation which should happen next year, with the new system likely to come into force in 2001. Ministers have decided not to tackle gazumping head-on, for instance by introducing penalties on sellers who renege on deals

Mortgages

The promised regulation of the mortgage industry will be put off for a couple of years. Instead Stephen Byers, the Trade & Industry Secretary produced a 10-point checklist to buyers to ask of their mortgage:

1. How much can I afford to borrow?
2. How can I tell which mortgage rate is best for me?
3. What is the best type of mortgage for me?
4. How should I repay it?
5. Can I make lump sum payments to reduce the size of the loan?
6. Are there any redemption penalties?
7. Does this mortgage come with compulsory insurance
8. What other charges will I have to pay?
9. What happens if I cannot pay?
10. What about the small print?

These are without doubt good questions - but hardly equivalent to a fully regulated industry. So, start by asking these questions, follow up the answers you're not completely happy with with more questions and don't stop until you understand all the features of the mortgage product you are considering. And if you ever feel that the salesman or advisor is pushing you into something that you're not sure about - just walk away!

September's The Market including buy-to-rent
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