Hindrance to Buy: Is the Property Industry Working?
Despite unprecedented numbers of first time home-buyers, very little attention has been paid to the thousands of estate agents who will be facilitating the largest, and most important, financial investment an individual is ever likely to make.
Additionally, just as little scrutiny has been afforded to the process that must be endured until the keys and contracts finally change hands.
Like many others, my girlfriend and I are in the process of purchasing our first flat. We’ve found one we like, made an offer and it has been accepted. We were then advised to instruct a solicitor, arrange a mortgage and book in a survey – all to the tune of close to £1,000.
£1,000 is a lot of money to any young person, let alone one who is fiercely tightening the purse strings in anticipation of owning a property and paying off a mortgage. Nonetheless, this money is begrudgingly parted with despite there being no legal obligation whatsoever between buyer and seller.
This is where more must be done to protect aspiring home-owners. It’s been reported that over-zealous estate agents and vendors who get giddy at the sight of headlines declaring a “housing boom” will try their luck and push for a better price, or intentionally delay the exchange of contracts in case a better offer comes along. This severely jeopardises the investment made through pre-purchase costs, and if the vendor decides to pull out of the sale altogether, the whole house of cards comes crashing down and it’s back to square one, but the buyer is left £1,000 out of pocket.
Buying a house in Scotland offers what seems to be a much fairer method that protects the interests of both buyer and seller. After an offer is made, accepted and an inspection of titles is completed, both parties are bound by the terms of the contract constituted by the offer.
Currently, in both Scotland and England, estate agents are not required to hold any formal qualifications (much like PR professionals, I should add), despite their pivotal role in managing deals regularly worth in excess of £1m. Additionally, entry-level estate agents earn around £12,000 as a basic salary, £14,000 less than the UK’s average. Therefore, it is little wonder that with a low basic salary and dependence on commission, estate agents want to push the buyer for the highest price possible.
With the Chancellor and Prime Minister declaring that Help to Buy is vital for “hard-working Britons” to get on the property ladder, there is a still a lot more that needs to be done to ensure that a buoyant housing market is also an ethical and functional one.
With the Wild West practices of the banks only coming under intense scrutiny after millions of people lost out, a proactive approach to sensible regulation of the housing market would be welcome before it’s too late.