Homebuyers and sellers in England could be protected by a new legal house sale agreement.
The Government is to trial the new contract later this year, aimed at making the home-buying process move faster and avoid the issue of sales collapsing late on in the deal.
Increase people’s commitment
Housing Minister Heather Wheeler announced the trial at the annual conference of the Council for Licensed Conveyancers (CLC), telling property professionals: “We want to increase people’s commitment by ensuring they’ve got some skin in the game.
“While an agreement can’t compensate for the emotional stress of a failed transaction, people should be able to recover their costs. And there’s no reason why this can’t become standard practice; I believe the appetite is there.”
Change led by industry
The standard reservation agreement is being developed by the industry-led Home Buying and Selling Group in consultation with the Government.
Where the agreement is in place for a home purchase, those who lose money because the sale fails could receive compensation.
Delegates at the CLC conference were told that research from the Department for Business shows that 70 percent of buyers and 66 percent of sellers were convinced their sale would not go through to completion, even after an offer had been accepted. Meanwhile, a survey by the Royal Institution of Chartered Surveyors (RICS) revealed that the average time to put a house on the market to completing on a new property is 19 weeks.
Must be consequences for pulling out
Mrs Wheeler said: “Too many people are walking on a tightrope from the moment they put in that offer.
“Things can happen over 19 weeks that can genuinely scupper a move – and I wouldn’t want to force anyone to move if they don’t want to.
“But I also don’t want people pulling out without consequences, just because they’ve now decided they don’t like the avocado bathroom suite.
“When this happens, it can take a whole chain down.”
Addressing other issues
Other issues that cause a sale transaction to lag include slow response times from local authorities to the essential searches required in conveyancing and dealing with leasehold properties.
Mrs Wheeler said she had written to English councils last year to demand they deal with property searches within 10 working days.
She told the conference: “I’m pleased to see that, based on the latest data, more than 80 percent of local authorities are hitting this target. The quickest can turn searches around in under a day. Now that’s what I call progress.”