Property Market Reform Gives Buyers New Hope
With one in three house sales in England not making it over the finish line, it is no wonder that buyers are increasingly nervous of the house buying process. Prospective purchasers are currently obliged to spend sizeable sums on legal fees and surveys yet they could easily be subjected to being ‘Gazumped’ or ‘Gazundered’ at the last minute. When a transaction collapses, the consequences can be considerable: hundreds, sometimes thousands, of pounds are lost in unrecoverable costs and, perhaps more importantly, the hopes and plans tied to a long-awaited move can be left in tatters.
Gazumping – the practice of accepting a higher offer once a sale has already been agreed – is still impacting home buyers who are left in the lurch at the last minute. As is the tactic of ‘gazundering’ whereby the buyers reduce their offer at the point of exchange.
However, in a new shake up announced by the government on Thursday 18th June, greater protection for buyers will help to make the process is fairer.
The proposed changes:
- Legally binding agreements will be introduced much earlier in the transaction process, with financial penalties for buyers or sellers who withdraw without a valid reason.
- Sellers will also be required to provide key property information upfront through mandatory sales packs, making transactions more transparent and reducing the risk of deals collapsing at the last minute.
What does this mean financially for the housing market?
These pragmatic reforms are intended to speed up house sales, cut costs, and provide greater certainty for buyers and sellers.
The government has indicated that sales that have fallen through were costing sellers approx. £400million a year and having a negative impact on the wider economy to the tune of approx. £1.5 billion a year.
It will also take away extra costs from first time buyers to provide searches and surveys (typically £650) as this cost will transfer to the seller with the new sales packs required.
What are the new sales packs?
The proposed sales packs are designed to give buyers most of the key information about a property before they make an offer, rather than weeks later during conveyancing. The aim is to make transactions faster, more transparent, and less likely to collapse due to unexpected issues being discovered late in the process.
According to the government’s reform roadmap, the packs are expected to include details such as:
- The property’s tenure (freehold or leasehold)
- Council Tax band
- EPC rating
- Title deeds and covenants
- Leasehold charges (including service charges and ground rent)
- Building safety information
- Local authority and environmental searches
- A property condition report
- Accessibility information
- Floor plans
- Seller identity verification
- The property’s position in any buying chain
Will the Sellers Pack make a tangible difference?
In practice, the new sales packs are similar to a modern, digital version of the old Home Information Packs (HIPs), but with a stronger focus on property condition, search results, and upfront disclosure of costs and defects.
A similar system was introduced in 2007 but ditched three years later as sellers declared that the cost to produce these packs (£300-600) was having too much of an impact during the financial crisis.
However, it is hoped that with the new system being digitised with the use of electronic signatures and use of AI conveyancing it will make a significant impact on speeding up property deals.
How will it work in practice?
Ministers have stated that buyers or sellers who pull out of a sale once an offer has been accepted will face a financial penalty unless there are clear reasons for their action. The details are due to be laid out in a Bill to MPs by 2029.
Chiltern Relocation are very much in favour of the new rules having seen first-hand the emotional and financial upset that gazumping and gazundering inevitably causes. The new sales packs will require an element of trust that all the information provided is correct and we hope that there will also be a level of accountability if information is not accurate.
As it stands the new rules will be very much welcomed by estate agents who will have all the information at the ready when presenting properties and by the buyers and sellers who want to financially and emotionally commit to their new home with greater security in place.
For more information call 01494 672086 or email: enquiries@chilternrelocation.com or visit our website: www.chilternrelocation.com
