Reservation Agreement trials delayed until late spring

Trials of reservation agreements for buyers and sellers have been delayed until the late spring.

Statements last year from the Ministry of Housing, Communities and Local Government suggested trials would begin in the first quarter of this year, but this has now been delayed. 

Matt Prior, lead officer on buying reforms at the MHCLG, updated delegates on the issue at the annual conference of the National Association of Estate Agents in London. 

He told agents that his department was still awaiting consultants’ reports on the feasibility of the trials. However he felt the exercise would probably involve two regions of the country and a series of agents offering different options - for example some may trial agreements with £1,000 put down by buyers and sellers, while others may trial agreements with no deposit put down. 
 

When they eventually start the trials will last six months.

A key measurement of the success or otherwise of Reservation Agreements would be whether they succeed in reducing the current levels of fall-throughs, running at 25 to 35 per cent level according to MHCLG research.

He said the process as it stood currently was riven with uncertainty for consumers.

In that same MHCLG research, some 33 per cent of buyers had a major concern that the seller would change their mind and not accept their offer or withdraw the home from sale; meanwhile 45 per cent of vendors were concerned their buyer would have a change of heart part-way through the transaction.

Sixty six per cent of sellers and 70 per cent of buyers were specifically worried that the sale would not make it to completion after they had accepted an offer.

The process of introducing Reservation Agreements across the industry - if that does actually happen - is likely to be a slow one.

Prior revealed that after the six month trial there would be an interim report produced. If this suggested the trial provided evidence for the system to be rolled out, it would then require further discussions with “key stakeholders” and agreement on guidelines. 

He concluded by telling the delegates that at next year’s conference he hoped to bring them up to date with the findings of the trials - suggesting the entire process may take somewhat longer than that.