Government Reservation Agreement Trial Delayed
Government housing officers have delayed the proposed reservation agreement trials until late Spring.
The government had announced that a trial into reservation agreements was set to take place in the first quarter of 2020. However, whilst the Ministry of Housing Communities and Local Government (MHCLG) await responses from consultants on the issue, the trial has been delayed.
Matt Prior, MHCLG’s lead officer on buying reforms, told delegates attending the National Association of Estate Agents annual conference that the trial into reservation agreements is still set to take place in two regions of the country and may differentiate the way the agreements are enforced.
The trial intends to set up a financial penalty with bother buyers and sellers lodging £1,000 in one trial whilst other trials may offer agreements without a monetary deposit.
The government has pledged to produce an interim report detailing the main findings of the trial, once it eventually takes place. However, given the trial is set to take six months and may not start until the end of May, the property sector could be waiting until this time next year before any further insight is offered.
Indeed, Prior hopes that he will be able to enlighten delegates on the reservation agreements pilots when they meet again at the conference in a year from now.
Governmental research also suggested that almost half of sellers (46%) and a third (33%) of buyers were concerned that the other party will change their mind at some point in the sales process.
Very few stakeholders felt confident that the sale would make it to completion with 70% of buyers and 66% of sellers anticipating a problem scuppering the sale.
To appease this uncertainty, the research found that half of all buyers and 70% of sellers were willing to enter into a legal commitment, like a reservation agreement, after the acceptance of an offer.
It is hoped that creating a workable reservation agreement process, with standardised wording, will help to reduce fall through rates.
How do conveyancers feel about the use of reservation agreements during the home buying and selling process?