- Failed house purchases cost movers estimated £560million every year
More than half of homebuyers and sellers have been in a property chain which has collapsed, new research reveals.
Some 54 per cent of home movers have been in a broken housing chain which has left them missing out on their dream home, losing money on fees and sometimes faced with a scramble to find somewhere temporary to live, research from specialist mortgage lender Together reveals.
And almost two in five buyers and sellers have seen a property chain collapse multiple times due to buyers pulling out, or withdrawing from the purchase themselves because of issues thrown up in the survey or conveyancing process.
When one sale in a property chain falls though, it can cause multiple, if not all, transactions in the chain to collapse.
Not only does this cause emotional stress for those involved, it can hit movers in the pocket too.
Abandon it: Some 20% of homeowners say they would give up on purchasing their dream home if the property chain collapsed
For example, buyers may have already forked out on survey and conveyancing fees.
If they found themselves in a collapsed property chain, some 29 per cent say they would then try to find a chain-free buyer for their property.
These are typically first-time buyers, cash buyers, landlords and those who have inherited a property from a loved one who has died.
It would cause 20 per cent to walk away from the purchase altogether – meaning they may miss out of their dream home – while some 15 per cent would try to find a ‘quick sale’ company, such as Upstix or Quick House Buyer.
These firms offer convenience, but sellers who use them will normally have to accept a lower price in return.
Britain’s ‘outdated’ home buying process
This research comes after Santander in September revealed Britain’s ‘outdated’ home buying and selling process is costing home movers £560million every year due to failed transactions.
It claimed the home buying process is antiquated and ripe for reform due to the complexity of the process.
Its research found more than 530,000 housing transactions across England and Wales fall through every year, which hits buyer confidence.
These failed transactions dent the economy and consumer to the tune of £1.5billion each year, the bank claimed.
Around 85 per cent of people who have had transactions fall through have lost money, Santander says, as costs such solicitor and survey fees often cannot be recouped if a deal falls through.
While the average cost to home movers is £1,240 per failed transaction, one in five people reported losses in excess of £2,000.
Failed transactions and the complexity of the buying process make homeowners less likely to move, which is puncturing a near £1billion size hole in the economy, Santander claims.
Swathes of buyers are taking time out of work to take calls and compete paperwork for the sale which ultimately proves fruitless when the sale falls through.
This is denting the economy by £380million each year, according to the bank’s calculations.
Plus, the onslaught of stress and poor mental wellbeing caused by failed sales and purchases is causing home movers to miss work or have a loss of productivity while at work, which is hitting the economy by £400million.
The loss of leisure time is also swiping £170million from the economy each year.
Last month, the Government has launched two consultations aimed at understanding the measures needed to improve the home buying and selling process.
The aim is to speed up sales, halve the number of failed transactions and improve the availability of material information in property listings.