Could buyer dropouts become a thing of the past?

Anyone who has ever bought or sold a house, knows the frustration and disappointment when a sale falls through.

The excitement of having the offer accepted can quickly turn into dismay when a survey uncovers a property’s hidden faults.

We’ve come to accept this process as the norm in England and Wales, but when you stop and think about it, it seems somewhat ludicrous to make an offer on a house and only discover its true condition afterwards.

However, change might be on the horizon. Cross-party talks are currently taking place to implement a system similar to Scotland’s Home Report, where a survey is provided to potential buyers before the property goes on the market.

Reduce the risk

Prior to the General Election being called, The Levelling Up, Housing and Communities (LUHC) Committee had begun an inquiry into improving the home buying and selling process in England. During May, it questioned a wide range of industry professionals, including representatives from the Royal Institution of Chartered Surveyors (RICS), the Conveyancing Association and the HomeOwners’ Alliance.

RICS is urging the Government to consider: “The role of professional surveys earlier in the home buying and selling process, to help consumers make well-informed decisions and reduce the risk of sales falling through.”

Along with other recommendations, it would also like to see the Government’s ‘How to Buy Guide’ become mandatory reading for prospective buyers.

Mandating a professional survey earlier in the process would undoubtedly benefit both buyers and sellers, and doing this digitally would be even better. This is why there are also calls for some form of digital property logbook. Such a logbook would provide all parties with the necessary information not only at the point of sale but also be available later on when the property is resold. This would eliminate the need to start from scratch or search for information again when the property goes back on the market.

Such a database could also extend into areas such as sustainability and the energy efficiency of the home. With a digital central database, property energy efficiency data could also be managed more efficiently and accurately.

Positive impact on market

We’ve seen from the Scottish market that its Home Report has had a positive impact. House prices in Scotland haven’t experienced the same fluctuations as in other parts of the UK. Buyer dropouts are also estimated to be under 10%, significantly lower than the over 30% seen in the rest of the UK.

In Q1 2024, almost one-third (31.3%) of UK property sales fell through before completion, according to figures from Quick Move Now. Among these, just under half (47%) were due to the buyer changing their mind or attempting to renegotiate the purchase price. Some 20% were attributed to the buyer struggling to secure a mortgage, while 19% withdrew after the property survey, 8% due to a chain break, and 6% due to gazumping.

If we are to see sellers divulge more information at the start of the process, it's also important this is mandated and not optional. What we don’t want is a scenario where some sellers choose to provide upfront information while others don’t. Facing the prospect of disclosing all your property’s flaws while other sellers don’t is not going to appeal to many sellers.

It's been a long road for all of those involved to get this far, but progress is being made, and hopefully, it will continue regardless of the outcome of the next General Election.