Lenders plan to cut home sale shackles

A RADICAL shake-up in the way homes are bought and sold has been predicted by the body representing leading banks and building societies. Rather than wait for individual buyers to appear, those keen to move could sell to big financial institutions, which would 'make markets' in residential properties.

Michael Coogan, director-general of the Council of Mortgage Lenders, told Financial Mail on Sunday: 'We expect some sort of wholesale market to develop. Initially, it will be restricted to one-off deals, designed to take a property out of a chain that is holding up everyone else. There is no way of knowing how rapidly it could develop beyond that.'

The prospect has been opened up by the increased amount of information online, such as the Land Registry and the addition of home information packs, which will become compulsory for sellers from 2007.

Coogan says that within the next couple of years financial institutions should have access to sufficient information to buy out sellers locked into a chain.

Because homes are so individual, only a one-to-one market could work until now, with buyers responsible for surveying a property and ensuring its condition. But the online Land Registry and sellers' packs will arm institutions with enough information to judge investment risks.

The registry gives up-to-date information on prices of every property sold, while sellers' packs will, by law, inform a potential buyer of the legal title to the home and its condition.

CML external affairs chief Sue Anderson said: 'The more information you have, the easier it is to take advantage of opportunities and see the risk. Certainly, the potential is there. It will not necessarily be our members who are involved, though some may well be.

'It is likely that properties will sell for a discount to what could have been achieved in a traditional one-to-one sale. For the system to work, there will need to be a willingness to reduce prices. But sellers already accept that when they part-exchange an old property for a new build.'

Adrian Coles, director-general of the Building Societies Association, said: 'I am not sure this is a market that will take off, but the conditions are more favourable than they have been previously.'