U.K.'s housing market faced a £1.5 billion loss due to unsold homes according to Santander, prompting speculation on potential solutions.
In the UK's housing market, common issues such as gazumping and gazundering - where a higher offer is made at the last minute or the asking price is cut at the eleventh hour - are causing significant challenges, leading to around half a million home sales collapsing each year.
According to a new report from Santander, titled "Fixing the Broken Chain," this antiquated home buying process costs consumers and the economy at least £1.5 billion annually. The report estimates that 530,000 failed housing transactions occur annually in England and Wales.
The property market allows both buyers and sellers to pull out without consequences until contracts are exchanged, leading to emotional and financial strain for many. Santander's findings reveal that approximately 85% of people who experienced a transaction reported some sort of financial loss, with the average cost per failed transaction being £1,240. One in five people reported losses in excess of £2,000.
Santander is calling on the government to take action to fix the UK's broken housing market. They propose more upfront information and digitisation as key solutions to improve the homebuying process. A government-owned, centralised property data system could make finding property information easier, while streamlining the process by adopting standard templates, clearer regulatory frameworks, and integrating fintech solutions could reduce time and administrative burdens.
Promoting transparency and using technologies like cryptocurrency payments with legal clarity can also improve speed and efficiency in transactions. Many estate agent listings do not display property risks and material information as required, adding to the confusion and potential for disputes.
The repercussions on the broader economy are significant. The report indicates that losses of £380 million per year are due to stress-related work output, £400 million due to reduced wellbeing, and £170 million due to wasted leisure time.
Santander's report also suggests that almost one in four people have experienced a property chain failure. The homebuying process, still operating within a century-old framework, is causing strain on the economy and needs powerful reforms to increase confidence and ease financial and emotional strain.
The bank is not alone in its call for change. Experts suggest that streamlining the process by adopting standard templates, clearer regulatory frameworks, and integrating fintech solutions can reduce time and administrative burdens, improving the overall efficiency of the UK's housing market.
