Sellers Deprived Of £1,945 With Every Failed Housing Transaction
A recent report has claimed that one in six UK housing transactions are currently falling through and failing to complete.
Although these figures are more conservative than government estimates that speculate somewhere between a quarter to a third of housing transactions fail each year, it highlights a clear and persistent problem with the home buying process.
The study, carried out by Thomas Sanderson, surveyed 2,056 adults that had experienced the home buying process at least once, found that disagreements involving the price of the property or financing issues were amongst the main reasons for a sale falling through.
Some will claim that these problems are unavoidable with a change in circumstance on either side easily derailing a residential property transaction.
However, the government have made it clear that this issue is a priority when it comes to housing reform in the near future. Earlier this year, the government announced that reservation agreements will be slowly drip fed into a housing market that is losing too much money at the hands of indecisive buyers and sellers.
Heather Wheeler, Minister for Housing and Homelessness Claimed in January that the annual wastage from sellers or buyers pulling out of home purchase exceeds £270 million annually.
The research highlights this loss on an individual level, with each failed sale costing the seller an average of £1,945.
According to the report, 16% of respondents that had sold a property had experience of a buyer pulling out of the deal. Overwhelmingly, the overriding reason involved a buyer struggling to acquire the necessary finance.
16% of buyers that walked away from a property deal had found a property they preferred whilst 19% walked away over a failure to agree terms. Buyers that did haggle over the price of the property, did so at an average reduction of the property price of £8,500.
Here, the issue of reservation agreements was also brought up with 61% of respondents adamant that buyers should pay the loss if fees if they pull out of a deal.
As the government look to create a more efficient and reliable housing market, it seems as though research like this will encourage them to solidify the use of a reservation agreement style standard framework before all property transactions are agreed.
Will reservation agreements prevent more property transactions from falling through? Will this type of process unnecessarily penalise some unavoidable circumstances that prevent a housing sale?