According to campaign group the Conveyancing Task Force, early binding contracts are the most dangerous proposal in the government’s home buying reforms roadmap. Spokesperson Stephen Larcombe explains why.
The dangers of early binding contracts, a central tenet of the government’s home buying and selling reform roadmap, are already visible. In one recent case, a buyer, immediately after his offer was accepted by the agent, was pressured to sign a reservation agreement presented only as a glossy web page.
When the real document finally surfaced, it contained a £5,000 ‘commitment’ buried in footnotes, a clause awarding 50% of any penalty to the estate agent, elevated defect thresholds that made withdrawal by the buyer harder, a payment structure where the buyer pays upfront and the seller pays nothing until the exchange of contracts, and an arrangement ensuring the agent profits whether the sale completes or collapses.
On this occasion, the buyer walked away. Otherwise, it would be a case of ‘heads the agent wins, tails the buyer loses’, and the legal practitioner is left to pick up the pieces.
The risks are not confined to agents’ schemes. A recent Gazeal case saw a party deemed to have “withdrawn unreasonably”, resulting in damages running into the tens of thousands of pounds.
This is what happens when binding commitments are imposed on the vulnerable before the legal and factual landscape is understood.
A widening gap
These examples highlight deeper concerns: misleading marketing and implied government endorsement; opaque drafting and hidden financial exposure; unfair risk allocation onto buyers; perverse incentives rewarding failure; collateral contracts concealed in ‘notes for conveyancers’.
Despite the lessons of the BBC’s Connells and Purplebricks exposé, a minority of agents continue to push coercive pre‑contract mechanisms that distort the ‘no sale, no fee’ principle.
Many solicitors, chartered legal executives, and licensed conveyancers do not support the wider direction of travel promoted in their name, not only on reservation agreements, but on the uncritical rush toward digitalisation during a cybercrime pandemic.
Too often, the narrative presented to the government reflects the priorities of sponsors and commercial partners, rather than the best interests of those who carry the legal risk. The gap between leadership messaging and practitioner reality has never been wider.
An unrealistic analogy
The government’s reliance on Scandinavian analogies only deepens the concern. Citing the Netherlands’ 20‑day completions or Norway’s projected £1.4 billion digitalisation savings ignores the obvious point that you cannot simply graft these models onto a land law system that has evolved over a period of almost a thousand years.
Their cadastral, legal and cultural frameworks bear little resemblance to the complexity of English land law.
More troubling still is the failure to heed the most relevant international warning. The Slovakian Land Registry cyber attack, which paralysed the system for months, remains only partially restored. A single ransomware incident froze transactions, halted mortgages and destabilised that market.
It is a stark demonstration of what happens when national land administration becomes so digitally dependent.
Unnecessary risk
To pursue early binding contracts and a deeper digital dependency in this climate is reckless. Home buying is already fraught with risk. Mandating early binding contracts at the point of greatest consumer vulnerability would make it immeasurably worse.
Any new administration, particularly one struggling to regain control of a reform agenda it has inherited, must respect the independence and professionalism of the legal sector.
If the government wishes to deliver reforms that will endure, it must listen to the legal practitioners who carry the legal risk – not to those whose priorities are determined by sponsors, commercial partners, or conference platforms.
2 responses
Modern Auction’s are being allowed and once again the sector does not protect consumers in this regard. As far as I am aware, if a property sale collapses after agreement on a modern auction, the fees all go to the agents involved and none to the vendor? The fees being taken for modern auction are outrageous. I have personal and professional experience in these. Personally, we were pushed to go by modern auction rather than private treaty even though the agent new that the property was in a certain area which needed a certain type of buyer who were unlikely to go for a modern method of auction. This served the agent’s narrative because they were to receive a much higher fee than private treaty. Of course despite repeated warnings the sale did not proceed by modern auction and months were lost.
But of course, these nationwide corporate agent’s must be looked after. (Sense the sarcasm).
I have also seen situations where some very unprofessional contract packs are being issued by modern auction method (frankly because they are ending up at factory firms with high referral fees) to the point where clients have to take a risk on continuing with the purchase or they have to pull out and lose thousands on fees to the agent.
I for one do not see why a simple reservation agreement cannot be drawn up for buyers to commit £500 when they place the offer in to buy. If they fail to proceed the £500 goes straight to the seller. However, no doubt, even in those circumstances agents will no doubt have a £500 penalty clause in a seller’s agreement should a sale fail following the reservation agreement so they get it anyway.
I for one keep saying that offers should not be allowed to be placed unless; a) There is a complete chain b) If there is a probate sale the probate is done c) The buyer and seller has onboarded with a solicitor d) All AML checks are carried out e) All instruction paperwork and protocol forms are complete and ready to go with money paid on account
However the lack of regulation with agents is still causing huge concern for me when it comes to the protection of consumers.
I think this article actually highlights the problem with one specific agreement, not the principle of reservation agreements themselves.
If an agreement is poorly drafted, hidden in footnotes, unfairly favours one party, or rewards an agent financially when a sale falls through, then of course that’s wrong. I’d oppose that too.
But that isn’t what all reservation agreements look like.
The Government isn’t proposing earlier commitment because estate agents asked for it. It’s proposing it because around one in four agreed sales still fall through, costing buyers and sellers thousands of pounds and months of wasted time.
A properly drafted reservation agreement should protect both buyer and seller equally. It should allow withdrawal for genuine reasons such as major survey defects, defective title, mortgage refusal or a chain collapse. It should only penalise someone who walks away without good reason.
The alternative is the system we have now, where someone can agree a purchase, spend five months progressing it, then simply change their mind with almost no consequence. That’s the part that needs fixing.