New reservation agreements ‘could reduce house sale failures'
The government is planning a new system for buying and selling homes that it hopes will reduce the number of failed transactions.
Currently, house buyers can have an offer accepted for the purchase of a home but then pull out at the last minute causing great inconvenience to the seller. The same problem can happen in reverse, with a seller accepting an offer to buy but then changing their minds further down the line, even though the buyer may have invested a great deal of time and money in the process.
Ministers say they want to trial reservation agreements that would make an offer to buy a home more legally binding.
Housing minister Heather Wheeler told the Council for Licensed Conveyancers' annual conference that such a new approach would reduce the number of property deals that fail through for one reason or another.
She said that buyers should not be allowed to pull out of transactions without consequences “just because they decided they do not like the avocado bathroom suite”.
She added: “We want to increase people's commitment by ensuring they get some skin in the game...there is no reason why this cannot become a standard practice. I believe the appetite is there.”
The government will run a field trial later this year.
Matt Prior, head of home-buying and selling at the Ministry of Housing, Communities and Local Government, said the government is also commissioning behavioural insight research to help establish the agreement parameters.
He said: “Buyers and sellers should have financial skin in the game to reinforce the agreement. But how much will that be? How much should they pay to get out of the agreement? We want to work closely with conveyancers to iron out some of the practical issues to encourage people to adopt this.”
We shall keep clients informed of developments.
Please contact Dipak Odedra or Gurjit Dhadar if you would like advice about the legal aspects of buying or selling a home.