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Chance to reform property search market

Better access and more competition required, says OFT

174/05    21 September 2005

Property information held by local authorities in England and Wales should be made more readily available to people buying and selling property and their agents, said the OFT in a study published today.

Download the OFT study Property searches (458 kb). 

Over 1.5 million property transactions are conducted in the UK (1.4 million transactions in England and Wales) each year. Property buyers need information relating to a property and its environment that may affect its value or their desire to live in it – for example, planning permissions, road schemes and building regulations. Such information is generally bought as a property search and obtained by conveyancers on behalf of property buyers and sellers.

From 2007, property sellers in England and Wales will have to provide property searches as part of the new home information pack (HIP).

Information holders include local authorities and water companies.

Property information is obtained through three main routes:

• via a direct request to the information holder
• via an electronic gateway, that acts as a centralised point of contact between information holders and consumers and their conveyancers (see note 3)
• through a property search company (PSC), which co-ordinates searches to provide a single package.

Local authorities hold the majority of the information needed to complete one type of property search.

The OFT found that:

• the price of property searches provided by local authorities varies greatly, with a range of £55 to £269, and it is likely that some consumers are paying too much
• local authorities provide property information under a complex framework of legislation
• some local authorities restrict access by property buyers and their agents, including PSCs, to the property information that they hold.

The OFT recommends that local authorities make their property information available to third parties on non-discriminatory terms that do not advantage their own property search activities over competing property search providers. This should create greater consumer choice and more effective competition within the market for property information. In particular:

• all local authorities should be required to give access to all the information needed to complete an HIP before the packs are introduced in 2007, so that competition from the private sector in the compilation of local property searches is not eliminated
• central government should provide clear guidance on how local authorities should set prices for providing property information to consumers and their agents, including PSCs, so that competition is not distorted
• local authorities and ODPM should agree a revised best-value performance indicator to ensure that local authorities make this information available quickly, and on the same timescale that they apply to themselves. The Welsh Assembly should include a similar measure in the framework for local authorities in Wales.

The study also recommends liberalising the electronic provision of property searches compiled by local authorities in England and Wales. At present there is a single electronic source of such searches in England and Wales, called the National Land Information Service (NLIS). Making the NLIS brand and software more freely available, and encouraging local authorities to set up connections with retailers outside NLIS, should allow for greater consumer choice and competition in this innovative part of the market.

Launching the report, Sir John Vickers, OFT Chairman, said:

'Property buyers must have all the relevant information that might affect their choice of property. Developing electronic provision and the introduction of the home information pack mean that there is an ideal opportunity to set the conditions for a dynamic market that serves consumers well in the future.'

See market study page.

NOTES

1. The study into the market for the provision of property information was launched on 8 December 2004, after the OFT received complaints about the availability of property information and competition issues within the market as a whole (see press release 201/04).

2. The Housing Act 2004 places a requirement on sellers in England and Wales, or their estate agents, to provide a Home Information Pack when they start marketing a property. This requirement is due to come into force by 2007. A consultation is currently underway by the Office for Deputy Prime Minister to decide the content of the packs. See the Office for Deputy Prime Minister website for further information. Proposals regarding the information to be made available by sellers of a house in Scotland are contained in the Housing (Scotland) Bill which is currently being considered by the Scottish Parliament.

3. NLIS acts as an exclusive electronic interface between end users and local authorities. It consists of three channels and a hub. The channels act as a one stop shop client interface, passing requests from conveyancers to the hub, sending property searches to conveyancers, and receiving payments, all online. The hub provides a centralised point of contact between the channels and local authorities and other providers of property information. It passes on requests to the local authorities and other information providers, passes back property searches, and processes the payments.

4. The OFT recently investigated a complaint of anti-competitive behaviour in the online property search market but found no grounds for action under the Competition Act 1998. However as a result of the investigation it was recommended that a market study be launched into the market as a whole. See press release 130/04 for further details.

5. The OFT launched a related market study into the supply of information by public sector information holders on 28 July 2005 (see press release 139/05).

6. The interaction between government and markets, in government's capacity as a purchaser, regulator, supplier and subsidiser, is one of five priority areas for the OFT over the next three years. See press release 58/05 and the OFT's Annual Plan.

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