Reservation Agreements – A More Secure Sale?
Fri 1 November 2019
The government has revealed the timetable for a reservation agreements which legally commit parties to a sale to try and curb the third of sales which collapse each year. The trial is due to take place between January and March next year.
Common in Europe and elsewhere, the proposed scheme would see both buyers and sellers being asked to put down a cash deposit of between £500 and £1,000 before entering into the offer process.
This would mark a radical departure from the long-standing system of buying homes in the UK and, it is hoped, reduce the period between offer and exchange by eliminating those not honest about their reasons for selling or buying a property.
At the moment from the point an offer is accepted to a sale completing the process lasts on average a staggering 20 weeks. The idea of a reservation agreement is to lock buyers and sellers in earlier during the process. At the moment until the point of exchange of contracts either a buyer or seller can withdraw from the sale, this costs the housing market approximately £270m a year, a reservation agreement could drastically reduce these numbers.
McCartneys have been offering their vendors the Secure Sale method where prospective buyers bid online. If their bid is accepted they have to put down a non-refundable reservation fee. This method of sale has reduced the fall through rates from an average of 30% to just 8% so it proves that asking clients to pay fees upfront does make sales more secure and speed up the process.
It will be very interesting to see how the government's trial is rolled out and of course the results, it is something as an industry we would welcome.
If you would like to know to more about McCartneys Secure Sale method please contact your local office.
Debbie Anderson
Partner
Ludlow Office - (01584) 872153
