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?   

     

4 Comments

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    How will it be enforceable, given the absence of any binding contract?

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    This is bonkers and a poorly thought out exercise which will have catastrophic implications anywhere outside the major cities, another London-esk blanket approach to all that will kill the industry.

    So the issue is simple; almost half of sellers (46%) and a third (33%) of buyers fear the chain falling through.
    This based on 38.8% of all chains not completing last year and this due to a completion time now rising to 18 weeks, the longest in history.

    Sellers fear the chain falling through – get your protocol forms in order early to speed up the process, order the leasehold pack as soon as you list your property.
    Buyers – buy a pack like ours that includes insurance but also speeds up completion times by 5 weeks. You also commit to the seller too.
    Estate Agents – Dont be scared to get your seller in order to move quickly, use good solicitors not based on the highest paid referral fee’s, speak to us about speeding up the above and stop wasting time on buyers who are not serious
    Solicitors – those that move with technology to undertake the above will survive.

    We are losing 15% of estate agents as i predicted last year
    We will lose 10% of solicitors in the net few years as they fail to adapt to technology allowing them to process more efficiently and accurately.

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