House sale fall throughs can have devastating financial and emotional effects on the buyers and sellers who invest so much time and energy into the sale only for it to fail before the exhausting process completes.
Last year alone, over £270 million was lost to housing sales collapsing after the initial offer was accepted with the Government claiming dropout rates exceed a third of all housing sales.
Recent research of over 500 home buyers and sellers, compiled by Reallymoving between July 2018 and July 2019, suggests that Governmental estimations could even be somewhat conservative with 67% of respondents experiencing a fall through in the last 12 months.
Around a third (29%) cited a change of mind as the main reason for any failed transaction with a fifth (17%) pulling out of a sale based on problems found after a survey was carried out.
15% of sales stuttered and failed because of mortgage issues with many struggling to obtain a mortgage in principal before they made an offer for a property.
Whilst many feared that gazumping and gazundering are leading to home sale failures, only 13% of fall throughs were attributed to this factor.
The wasted time, effort and heartbreak in a failed home sale has influenced many (67%) to back the Government’s calls for increased protection and accountability through enforced reservation agreements.
Over the summer, the Government launched a ten-month research and trial into reservation agreements with a long-term goal of legally enforcing the agreement into the home buying and selling process after an initial offer is accepted.
Government research highlighted a deep mistrust and declining confidence in the home buying and selling process with 46% of sellers and 33% of buyers anxious that the other party will change their mind before completion.
Furthermore, 68% of those surveyed went into the purchase thinking that it would not progress to completion.
The research encouraged the Government to set a date for two pilot regions. Reservation agreements will now form part of the compulsory process with buyers and sellers obliged to pay in a monetary deposit to lock them into the agreement.
Whilst many are confident this will help reduce the amount of non-committal stakeholders from changing their mind so flippantly, others have inferred that reservation agreements could be covering up more endemic issues in the conveyancing process that require regulatory change.
Experts have intimated that stakeholders need to provide greater information and certainty before committing to a sale. Recommendations have been made to ensure sellers provide accurate information through a logbook MOT type system which moves with the owner whilst regulators were encouraged to ensure that only buyers with at least a mortgage offer in principle are permitted to make an offer in a bid to reduce fall throughs.
Although mitigating circumstances like job losses and chain collapses will be difficult to prevent unexpected fall throughs, Governmental intervention could see reservation agreements become a legal staple in the home buying and selling process within the next year.
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