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Proposals published on improvements for buyer and seller protection in Scotland
The Law Society of Scotland has published a report following an independent review of consumer protections for people buying and selling property in Scotland. The review, by former Sheriff Principal Edward Bowen, examined the current consumer protections in place as well as conveyancing practice and the existing legal framework. It followed high profile and complex cases in Aberdeenshire and West Lothian where clients were left without proper title to land bought through residential property transactions. The Law Society provides a number of consumer protections for people using Scottish solicitors. This includes its Guarantee Fund, a fund of last resort which seeks to compensate clients who are the victims of a solicitor’s dishonesty. The Society also arranges for the Master Policy, a single policy of professional indemnity insurance, to ensure firms are covered for cases involving negligence. Bowen concluded that the cases in Aberdeen and West Lothian arose for very different reasons and were highly complex and unusual, and did not suggest a fundamental problem with conveyancing practice. His report makes a number of recommendations, including consideration of the widening of the scope of the Guarantee Fund, and a possible change to the name of the fund to avoid confusion. Some changes would be likely to require changes to the legislation governing the fund. It also recommends amending the guidelines for discretionary powers for the Guarantee Fund to provide discretionary assistance in restricting continuing losses in certain circumstances and the possible introduction of a new system of protection for purchasers of newly constructed houses to protect from insolvency. This would have to be brought forward by Scottish Ministers. ‘We have an important duty to protect the interests of the consumers of legal services, a responsibility which we take extremely seriously. The vast majority of Scottish solicitors provide an excellent service for their clients, but we need to ensure that we have a robust set of consumer protections to help clients in those very few occasions when things go wrong,’ said president of the Law Society of Scotland, Alistair Morris. ‘These difficult and very complicated conveyancing cases in West Lothian and Aberdeenshire left some questioning if the existing protections are sufficient. That is why we commissioned an independent review to look at the issues arising from these cases, current conveyancing practice and existing Scots law, to see what lessons can be learned for the future,’ he explained. ‘Overall, the report provides reassurance that there are no fundamental or underlying problems with Scots property law and solicitors’ conveyancing practice. It is notable that Sheriff Principal Bowen has concluded that the cases in Aberdeen and West Lothian arose for very different reasons and were highly complex and unusual,’ he added. He also pointed out that these findings are reassuring for both the legal profession and members of the public who rely on the knowledge and expertise of their solicitor when buying a new home. ‘We fully appreciate however, that it does not provide much comfort for the people… Continue reading
Prime London property market likely to be subdued until after election in May
The mood of buyers and vendors alike in the prime London residential market is likely to remain subdued up until after the general election in May, it is claimed. Uncertainty surrounding a potential mansion tax, interest rates and the introduction of capital gains tax liability for non-resident owners are also contributing to the general market angst, according to the 2015 market forecast report from Chestertons. Moreover, a tightening mortgage regulatory environment with the European Mortgage Credit Directive due for implementation by 2016 and the Basel III requirements by 2019 on top of recent new UK rules, may see lenders become more cautious, the firm believes. Indeed, anecdotal evidence suggests that even high net worth individuals are experiencing more difficulty in having their mortgage applications processed despite the fact that exemptions from MMR requirements were given to those with a net annual income of at least £300,000 or a net worth of at least £3 million. The report points out that the UK economy, although forecast to slow this year, is nonetheless expected to remain one of the best performing among developed countries. Indeed, the HM Treasury panel of independent forecasters currently projects GDP growth of 2.6% compared to an estimated out turn of 3% in 2014, although it expects unemployment to reduce further. The panel also forecasts inflation will creep up, although much depends on the price of crude oil and household expenditure. For the time being, the possibility of deflation remains real. It also points out that pricing is likely to become more sensitive in the shorter term following the revision of Stamp Duty and the potential introduction of a mansion tax, and as buyers sense that they have the upper hand in a softening market. ‘Nonetheless, there are pockets of the market which should be active in 2015. Foreign investment driven purchases should remain robust especially in the new build sector which remains buoyant in terms of both buyer demand and price growth,’ the report says. ‘The UK should enhance its attraction as a safe haven for flight capital from a troubled Eurozone and countries with historic ties with Britain who are experiencing geo-political unrest, such as Egypt, Nigeria and other parts of west Africa. Moreover, various surveys indicate that UK buy to let landlords are keen to expand their portfolios while the attraction of property as a pension supplement for households in or approaching retirement continues to grow in popularity as evidenced by the increase in buy to let mortgage lending last year,’ it explains. ‘As we suggested in our previous report, the outcome of the election could have a considerable impact on the prime London residential market. We expect values to remain flat or see further slight reduction in the run-up to the election,’ it points out. ‘Thereafter, if a Conservative Government or a Conservative led coalition is returned the firm anticipates a gradual uplift in values over the remainder of the year. Otherwise, any combination of Labour/Liberal… Continue reading
Asking prices already rising in some parts of the UK
Encouraged by last year's positive property market performance, sellers' asking prices are already rising quickly in London and the South East of England, according to the latest index report. Asking prices are up 0.8% overall in England in Wales in the last month. But the average annual growth fell to 7.1%. Prices are continuing to fall in the prime property market in London. The February asking price index from Home.co.uk also shows that price rises are on the up in East Anglia and the West Midlands and optimism also abounds post referendum in Scotland, where prices have jumped 1.9% in just one month. Not all regions, however, share the same upbeat sentiment. Prices are essentially static in the East Midlands, Wales and the North West, whilst in the North East, they dropped by 0.9% over the last month. Elsewhere, small price rises were observed in the West Midlands, Yorkshire and the South West at 0.7%, 0.2% and 0.2% respectively. The typical time on market for England and Wales is now 125 days, which is 18 days less than this time last year and the data also shows that supply of property for sale nationwide shows a significant uptick. Some 19% more properties were placed on the market this January than in January 2014. Greater London leads the way with a 51% increase in supply, ahead of the South East with growth of 28%, Scotland up 19% and East Anglia up 18%. According to Doug Shephard the firm’s director, high prices are encouraging potential vendors to commit. ‘Although there are clear signs that supply is beginning to outpace demand in London, as indicated by a rising median time on the market. Londoners may be attempting to cash in, but further supply will only serve to ensure a deeper correction in prices in the capital,’ he said. He pointed out that this year rising supply will make its presence felt in London and the South East, thereby placing downward pressure on prices. ‘These regions are much further on in the economic cycle than the northern regions, where price recovery remains as yet elusive. It is conceivable that we will witness a reversal of fortunes in the latter half of 2015 or beginning of 2016, wherein prices fall in Greater London at the same time as they finally rise in the North, as investors target better value regional markets,’ he explained. He believes that the best prospects for growth this year probably lie in Middle England in regions such as East Anglia, East Midlands, the South West, West Midlands and perhaps Yorkshire. ‘It may be argued that these regions are still in the throes of the recovery phase, as supply remains low and prices have not yet risen too far,’ he said. The worst growth prospects are most likely to be in prime central London, where an abundance of unsold stock is whittling away at property values. ‘For the time being, the mmminvestment outlook for… Continue reading
