The Government have identified the UK housing market is broken.
Serious changes would need to happen to cut out the conveyancing stress and the Government are keen to test reservation agreements.
Reservation / deposit agreements to lock home buyers and sellers to transactions could be trailed this year, a lead government official has revealed.
It’s been highlighted that the changes need to ensure the buying and selling process is quicker, cheaper and less stressful.
Matt Prior, from the Ministry of Housing, Communities & Local Government, explained at that the government thinks reservation agreements are worth investigating. ‘I do not think it’s the complete answer, but it might be a temporary fix,’ he said.
Currently on average it takes around 20 weeks for the homebuying process. Prior stated: ‘If you put your house on the market today, 20 weeks later you will be able to move into your new home. Not only does it take a long time, it takes a lot longer than people have told you. It sets you up an expectation that’s probably not going to be met. This causes issues all the way through the process. People enter a distrustful mindset. You’re entering into a relationship where both parties are convinced the other side are going to cheat on you.
You’ve got a process that lasts 20 weeks. Why not try to lock people in a lot earlier? You have people who have tried to move two or three times, the buyer pulls out days before, it’s heartwrenching.’
The agreement for buyers and sellers would be to invest money into the new home, with the caveat of a refund for circumstances like a bereavement, job loss, inability to get a mortgage or if the property is unmortgagable.
Prior said the ministry is exploring links between the work being done on reservation agreements with work on making sellers provide some property information upfront. Behavioural insight research has also been commissioned, which is expected to be finished soon.
Ministers will then be asked if they want to test reservation agreements and if so they hope to launch a trial in the first quarter of this year.