Struggling home sales by Santander are estimated to be causing the British economy a loss of £1.5 billion - strategies for recuperating the housing market
In the UK, saving for a mortgage deposit is a challenging endeavour for many. A new report from Santander highlights the need for significant reforms to improve the homebuying process, which is still operating within a framework established over a century ago.
The report, titled "Fixing the Broken Chain," estimates that there are 530,000 failed housing transactions each year in England and Wales. These failures cost consumers and the economy at least £1.5 billion annually, according to Santander.
One of the primary issues is the lack of a legally binding agreement until a property exchange occurs. This lack of commitment allows buyers and sellers to withdraw from a deal without consequences up until contracts are exchanged. As a result, conveyancers and surveyors have time to spot property issues that may have been overlooked earlier in the process.
Another common issue in the UK's housing market is gazumping (higher last-minute offers) and gazundering (price cuts at the last minute). Santander suggests that these practices should be disincentivized to create a more stable and predictable market.
The report also reveals that some estate agents do not disclose property risks and material information as required by rules. This lack of transparency can lead to financial losses for buyers and sellers.
To address these issues, Santander has proposed creating a government-owned, centralised property data system. This system would make it easier to find information on properties and reduce the chances of misunderstandings or misrepresentations.
The report also suggests that around half a million home sales collapse per year, with approximately 85% of people who experienced a transaction reporting some sort of financial loss. The average cost of a failed recent transaction stands at £1,240, with one in five people reporting losses in excess of £2,000.
Santander is calling on the government to take action to fix the UK's broken housing market. By modernising the outdated housing market purchase process, the aim is to simplify and accelerate transactions, increase transparency, and reduce delays.
However, specific regulatory details were not provided in the available sources. The report emphasises the need for a collaborative approach, stating that the challenge with improving the homebuying process is that it only works if all agents and every property professional in the chain are signed up.
In conclusion, the homebuying journey in the UK is fraught with challenges, from the financial strain of saving for a deposit to the emotional and financial losses from failed transactions. Santander's report underscores the need for reforms to create a housing system fit for today's consumers and economy.
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