Fall-throughs and aborted sales are costing UK homebuyers £607 million every year, a number which many predict will rise even further as the stamp duty holiday (SDLT) deadline inevitably arrives.
Fears for an increase in fall throughs are growing and can cause additional stress not only for vendors and buyers, but also for conveyancers who are juggling large caseloads, trying to progress as many transactions through as possible before the SDLT holiday deadline lapses, whilst facing logjams in the pipeline.
WiggyWam, the all in one property platform, has revealed that there are an average of 225,000 fall-throughs in the UK residential property market each year. This means 1-in-4 UK sales fall-through with each one of them costing homebuyers an average of £2,700.
Zoopla’s latest figures suggest 70,000 transactions are likely to miss the stamp duty holiday deadline of March 31.
The property portal has commented:
“The case is growing for a short, month long extension to help buyers who agreed a sale in 2020, and secure the expected savings.”
It added:
“The more buyers rely on securing savings, the greater risk of a spike in sales falling through, with a knock-on impact for whole chains of sales. If an extension fails to materialise, buyers across some chains may help to fund stamp duty costs for others in the chain to safeguard completions” says the portal’s report on the market.”
Due to the logjams in the pipeline, fall-throughs are expected to happen for a number of different factors including:
- Mortgage problems: sales can often fall-through when a buyer’s mortgage offer expires or is altered due to a change in circumstance. Down-valuation, when mortgage lenders value a property lower than the buyer has agreed to pay, can also lead to sales falling apart.
- Problems revealed in survey: A home survey can reveal any number of problems with a property, the more expensive of which can cause a sale to fall-through.
- Gazumping: When the seller accepts a higher offer from a second buyer after they have already agreed to sell to the first buyer.
- Conveyancing delays: The legal processes of homebuying can take a long time. Delays can cause buyers to lose patience or change their mind and drop out of the sale.
- Broken chains: If a sale is part of a chain – where its success is entirely dependent on the successful sale of other properties – it is vulnerable to all of the above issues, multiplied by however many properties are in the chain. Only one chain property needs to experience one of the above issues to cause multiple different fall-through.
Have you experienced any sales falling through as a result of the current situation?
2 responses
Solicitors (and later conveyance rs) have had the benefit of more than 200 years of restrictive trade practice (reserved matters) for property transactions without promoting appropriate certainty for consumers as a quid pro quo
Radical change is needed.
This should include:-
1 Replacement of chains with home brokerage
2 A standard of information (both content and format) to be
a Available for parties before marketing
b Held on line as open data permanently
c Comprehensively guaranteed by a single source
3 Lawyers (etc) be restricted to producing current title reports
4 Parties to be represented by regulated transaction managers
5 In principle financing confirmed before marketing
6 Money to be held and transferred by clearing houses
Consumer bodies should come together to promote this
Great suggestions John Harvey. Now, how do we lobby to make this happen? Change is needed urgently. The distress and utter chaos it causes people needs to be taken seriously. My sale collapsed on the day of exchange and completion as my buyer pulled out because he fancied it (literally. It was like him putting groceries in a trolley and then pulling them out because he changed his mind. Made up a lie and got off without a penny spent. He was the one who refused to exchange and complete on different days by the way. We were forced to move out morning of meaning we were out by the time he pulled out). This system benefits the bottom of the chain (and perhaps the top) only. The middle are left to rot. This had a SEVERE effect on my mental health and the people we were buying from who are elderly. We suffered a lot and are still in distress over it.