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A done deal? Not quite...

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This first appeared in the Wigan Observer on June 24th 2014.

Picture the scene: you put an offer in for your dream house and the seller accepts it, the house is now yours – subject to the legal completion of course.

But for an increasingly growing number of people, sometimes buying a house just isn’t that simple. In fact, during March this year, more than a quarter of house sales failed to complete, a 63% increase from the same period the year before. It’s no surprise therefore that purchasing a home has been voted one of life’s most stressful experiences, ranking above getting married or being in debt.

In England and Wales, an offer on a property isn’t legally binding until both contracts have been exchanged. With the average transaction now taking between 8 and 10 weeks, this leaves enough time to accrue costs and problems can and do occur. Here are some of the reasons why house sales fall through:

1: Gazumping: Gazumping is common throughout England and Wales when there is a rise in the housing market. The term ‘gazumping’ is used when a seller accepts a buyer’s offer but then accepts a higher offer from an opposing buyer. It can happen anytime between the acceptance of an offer to the exchange of the contracts. Unfortunately, the buyer will not usually be able to reclaim any of the money they have paid out, such as surveyor and solicitor fees.

2: Survey problems: The purpose of a survey is to identify any significant problems with the home that could affect the sale. Surveyors tend to look for issues such as problems with damp, roofs, plumbing and electrical systems. This inspection gives the buyer and the seller the chance to discuss the problems with the property and come to an agreement over the sale

The seller may decide to repair the property themselves or reduce the asking price for the property to compensate for the work needed, however the seller is not legally obliged to act on the repairs. Surveys can cause house sales to fall through as some buyers are put off with the amount of repairs that are needed to the property.

3: A broken link in the chain: A house chain occurs when a string of house sales are dependent on one another. Each member of the chain is usually reliant on the sellers receiving their money from their house sale to be able to purchase their new home. House chains can ‘break’ for many reasons such as change of heart, cold feet, financial difficulties or the act of gazumping. This is a common cause for house sales to fall through as houses sold without a chain make up only 10% of the property market.

4: A buyer cannot obtain a mortgage: The Mortgage Market Review rules, which came in to effect in April 2014, marked the most significant shake up of mortgage regulation in the UK in some time. The changes provide more safety nets and barriers than were in place before and could make it more difficult for some to obtain a mortgage.

Some of the key changes include more detailed borrower advice, assessment of future affordability, a clearer distinction between mortgages sold as ‘advised’ and on an ‘execution-only’ basis, and a buyer’s expenditure will be more closely scrutinised.

To avoid last minute heartbreak, buyers should always make sure they qualify for a mortgage before setting their mind on a house.

Tom Bridge, managing partner of the Residential Conveyancing team at Stephensons Solicitors LLP, said: “In our experience, these are some of the key reasons why house sales fall through. Buying a house is always an emotional experience and with the constant pressure on both of the parties to complete the transaction as soon as possible, it’s no surprise that a number of house sales fail to complete.

“Although the failures of some house transactions are unavoidable, there are a few things buyers can do to avoid these situations such as having their lending in place before making an offer on a property, ensuring their house is maintained to a good standard before putting it on the market and seeking out buyers who have no home to sell to reduce the size of the chain.”

Stephensons has been helping people to move home for almost 40 years and acts for home movers across the country. The law firm can offer home movers access to the Homebuyers Plus service, which will reimburse buyers for specific costs they have incurred if the property if withdrawn from sale by the seller for reasons beyond the buyer’s control. They will also re-imburse the client if the seller receives an offer greater than £1,000 from another buyer, and accepts it. In addition, if a survey is carried out which identifies rectification work to be done, which exceeds 5% of the property value, and the buyer decides to withdraw, the costs will be reimbursed.

Costs which will be reimbursed would include up to £600 against loss of solicitors disbursements, eg search fees, up to £500 for mortgage arrangement fees/lender fees and up to £750 for survey fees, subject to satisfying the agreed criteria.

For more information please visit www.stephensons.co.uk.


Media information:       Lianne Tracey and Chloe Kendall

                                    Stephensons Solicitors LLP

                                    Tel: 01616 966 229 or 01616 966 229

                                    Email: lct@stephensons.co.uk or cke@stephensons.co.uk