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Reforms Needed to Fix High Levels of Property Sales Falling Through
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
According to research undertaken by YouGov on behalf of the HomeOwners Alliance and homebuyer IMMO, the UK sees a collapse of more than 300,000 property transactions each year, costing the seller an average of £2,700. This was recorded to be as a result of buyers changing their minds, costing sellers a total of £400m between them annually.
It is beginning to feel like being caught between a rock and a hard place for many landlords. To maintain a portfolio is becoming increasingly costly, due to a combination of the Stamp Duty surcharge and stricter mortgage lending, yet to sell a property is no easy task these days.
With gazumping being a longstanding issue, the government has announced plans to improve the situation by introducing voluntary reservation agreements. With both the seller and the buyer paying a non-refundable fee, they will be locked into the sale. Such a method should be beneficial for both parties, as a way of avoiding time-wasters and likewise making them legally bound to see the process through to the end.
YouGov’s survey revealed that 20% of sellers experienced the collapse of their sale, with 51% having to face costs averaging £2,727.
69% of the home sales that fell through were due to issues on the buyer’s part, such as the purchaser changing their mind. The lengthy process also allows the opportunity for buyers to end up pulling out for another property, resulting in 39% of collapsed sales. 28% of deals falling through were due to buyers not having their finances organised.
Gazundering has also been an issue for some, a situation where the buyer has lowered their offer just before the exchange of contracts. This accounted for 8% of collapsed sales.
Paula Higgins, chief executive of HomeOwners Alliance, commented: “We often hear about would-be buyers losing their dream homes as a result of sellers accepting higher offers but less is said about sellers forking out thousands in wasted fees only for buyers to change their mind, leaving the seller back at square one”.
“Gazundering and time wasting is a huge problem. The homeselling system is so unreliable it’s deterring homeowners from selling – adding to the ongoing housing shortage crisis as a lack of suitable homes is one of the barriers to people moving up the property ladder.”
Samantha Kempe, Co-Founder of IMMO, has also said: “The current system has created a fundamental power imbalance between the seller and the buyer, with the seller often at the buyer’s mercy during what is often the largest financial decision of their lives.
“Sellers should be able to proceed with the sale of their property knowing what price they will receive and feeling assured that the sale will go through.”
