Real estate’s deadly secrets
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You know the story. You’re on the hunt for a new home in a seller’s market, failing to discover anything within your budget parameters unless you compromise on either quality or location. But you’re not prepared to make such sacrifices. You know that if you persevere, the right house will show up eventually (or at least you hope it will).
The only problem is that by now you know you’ve begun to exhaust the patience of the estate agent network you depend on for new listings. Chances are any minute they’re going to classify you a nuisance time-waster and never bring anything good to your attention again.
And then it happens. As if by magic, finally, you stumble on that rare gem – a new listing that seems to tick all the boxes. OK, so what’s wrong with it? You wonder because, let’s face it, such obvious outliers simply don’t pop up by accident. As your mother told you, ‘If you pay peanuts, you get monkeys’.
Nevertheless, on the off-chance you have discovered that rare thing, a “bargain” in the Chiswick area, you head off optimistically to the viewing.
When you arrive you can’t believe your eyes. You’ve found it. It’s the home you’ve been looking for forever. Not only is it within your budget, it satisfies your every want and the good price is all down to the seller being in “distress” – namely, “needing cash pronto”.
And, well, because you know that if you snooze you lose (and it’s not like you haven’t been caught out on the gazumping front before) you do the unthinkable: you make an offer right there and then.
Before you know it, your bid’s been accepted and you’re rushing towards the exchange. All you’ve got to worry about are surveys. But you’re in luck, they come up clean. Joy!
Three months later you’re all moved in and enjoying your new abode when out of the blue a letter arrives from the local authorities explaining that “the council this week issued formal planning permission for the new community stadium” just on your doorstep. “What the hell?”
Yup. It’s a massive oversight. You’ve just bought a residence right next door to a soon-to-be constructed 20,000-seater stadium. So how on earth did you and your lawyer miss this?
Well, sadly, because there’s no obligation for this sort of information to be disclosed in the buying process.
As it stands, searches don’t have to reveal any information on nearby properties or planned private developments at all.
They pertain only to generic public work such as road or urban renewal, or commercial centre developments. In fact, unless you know to ask the seller or the estate agent specifically about private developments, they’re not obliged to offer the information up at all. But it could be worse.
Until recently, estate agents were not obliged to disclose information about any external factors that may affect the property being marketed, such as train lines, flood plains or flight paths. At least, not unless they were specifically asked about such matters.
This changed last year with the repeal of the Property Misdescriptions Act, which shifted the industry to the oversight of the Consumer Protection from Unfair Trading Act in October 2013. From now on agents are obliged to provide all the price-sensitive information they have on a property to prospective buyers.
Unfortunately, there’s still a blurry line on what constitutes price-sensitive information. Most of the time it’s understood to mean factors that materially alter the residential experience. Which, as you can imagine, doesn’t necessarily give you much chance of discovering a property’s murky or spooky history.
Wouldn’t you want to know if a murder had taken place in the house you’re about to buy? Or, alternatively, if the previous owners had been running a brothel or a meth lab on the premises? How about if it’s simply the fact that the previous owners were convinced that the house was haunted?
Unfortunately, as yet, there is no system to help the prospective buyer acquire that sort of information.
And, we dare say, it’s not a whimsical concern either. The truth is that we as people are a superstitious bunch who happily ascribe essentialist values to all sorts of inanimate objects.
We know this precisely because every estate agent in the world would happily publicise a respected author, politician or playwright once having lived in a property they are marketing. It makes sense because there’s value to be exploited. But it’s also true that publicising a property as “Jimmy Savile’s former residence” would do the exact opposite.
Which is why the real estate agent’s best strategy would be to try to obscure this information or market the property to a foreign buyer unfamiliar with the local concerns.
On that basis, when a friend of mine was recently offered a “killer” deal on a property in and around one of Italy’s great lakes, we did have to wonder, what exactly might be buried in the land he is acquiring? But, then, how would you find out that sort of thing?
Izabella Kaminska is a reporter on FT Alphaville
Illustration by Shonagh Rae
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