Fall throughs could be costing the property economy as much as £900 million in lost estate agency fees and tax revenue, according to research by property portal Rightmove. The figure does not include lost conveyancing fees, or the wider spend on white goods and soft furnishings associated with moving home.
The figure is based on the 6% of the 1.03 million property transactions in England that fall through and don’t come back to market within a year, with an average stamp duty payment of £7,590 and an assumed average estate agency commission of 1.5%.
According to the analysis, £392 million in potential estate agency revenue and £515 million in potential government stamp duty receipts was lost to transaction fall throughs. Around a quarter of transactions (23%) initially fall through before later completing successfully, which creates a poor experience for home movers who have to pay fees more than once and “suffer from uncertainty and delays to important life plans,” Rightmove said.
Separate calculations for Scotland and Wales show that there is also a nearly £7 million total economic opportunity for Scotland, and £23 million opportunity for Wales by reducing fall throughs. These separate calculations consider the lower rate of fall throughs in Scotland, and the differing land taxes in the two countries.
The results highlight the need for greater efficiency, Rightmove said, with the average transaction taking five months last year. In its submission to the government’s consultation on home buying and selling reform, the property portal said it “strongly believes that further digitisation and alignment of the home-moving process is key to enable a reduction in property fall throughs,” increasing efficiency, transparency and consumer confidence.
Another area of focus for the company is more consistency in the provision of comprehensive upfront information about a property listing, which it says could help reduce fall throughs. In recent years Rightmove has come under fire for its failure to support efforts to introduce more up front information on its listings. Analysis by the HomeOwners Alliance, Moverly and academics has highlighted the failure of property portals to provide information regarded as material to ‘transactional decisions’ under the Consumer Protection Regulations (CPRs). In May of last year the responsibility for enforcement of up front and material information for consumers transferred to the Competition and Markets Authority (CMA) following implementation of The Digital Markets, Competition and Consumers Act (DMCC).
Commenting on the figures, Johan Svanstrom, Rightmove’s CEO, said:
“Our analysis highlights the scale of the economic opportunity if fall through rates can be reduced. More than one in five (23%) transactions are affected by fall throughs, costing agents either lost or delayed fees and leading to some home-movers paying thousands in repeat costs. We believe that further digitisation can help to bring this number down. Addressing it will require government investment, innovation across the transaction process, and stronger industry collaboration.
“The home moving journey is still slowed down by many manual and fragmented processes. A seller shouldn’t need to list their home in April to move before Christmas. Our mission is to build the UK’s leading digital ecosystem for the entire moving experience, creating more opportunities for our estate agency partners and helping consumers move with greater confidence and speed. We believe a more effective system and increased mobility would add to overall economic growth in the UK.”
Rightmove says it continues to invest in its platform. It recently announced it has built and submitted an app to launch in ChatGPT enabling property search on a Rightmove app downloaded via the ChatGPT app directory. The work complements a beta version of its own conversational search on-site, helping home-movers describe what they’re looking for in their own words and with access to all the tools directly on its platform.
One Response
Hmmm, most people that pull out of a purchase, then go on to buy another more suitable property so these figures are so out of whack. Just headlines to help put through the reservation agreements!