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A third of property transactions fall through wasting £2,000 on average – Smoove

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  • 25/07/2022
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One in three home buying transactions fell through in the last year, wasting almost £2,000 on associated costs in the process, an analysis has shown.

Smoove’s inaugural Home Movers Report tracked the cost, time and emotional impact of moving home using its own data on instructions, mortgage values, associated home moving costs, and completion times.

All other consumer survey data was sourced from a Censuswide poll of 1,000 homeowners in April; respondents were aged 25 years or older and had moved in the last six to 24 months.

Smoove’s report found the average legal fee had risen by 11 per cent or £140 in the last year, from £1,273 to £1,413 and homebuyer surveys cost £525 on average, up from £465 in previous year.

It also found homeowners spent an average £1,640 on unforeseen moving costs and average UK stamp duty costs rose from £5,302 to £5,502 year-on-year.

 Smoove said potential homeowners were paying almost £2,000 in associated costs – money which could be wasted if the transaction then falls through.

Booming housing market

Despite 34 per cent of planned purchases falling through, the volume of busted transactions contrasted booming market activity with new instructions up by more than a third, 36 per cent, year-on-year. When broken down by first-time buyer activity, Smoove said the number has risen even higher, by 54 per cent annually.

This surge in demand has caused a supply crunch, which has impacted house prices and mortgages. According to Smoove’s data, the average remortgage value is £390,647, up from £352,900 the previous year.

The length of time to buy also crept up. Within the last six months, the average time to complete was 153 days, the equivalent of more than five months. Compared to 2019, before the pandemic, this number was 124 days – an increase of 23 per cent.

Smoove said the increase was most likely a result of the post-lockdown boom, as changing consumer lifestyles and demand outweighed supply, combined with greater capacity constraints for solicitors, and local authority searches taking longer to complete likely due to a backlog.

Stress of house buying

One in two homeowners, 55 per cent, said the would be unlikely to move again within the next five years. When asked what they would do differently next time moving home, more than two-fifths, 45 per cent, said they would save more money and almost a fifth, 19 per cent, would choose a different soliciting firm or estate agent. 

Jesper With-Fogstrup (pictured), chief executive of Smoove, said: “Home moving can often be an agonising, horribly stressful experience. The fact that few would argue with this speaks to a failed system.

One in three home buying transactions should not be falling through. This figure represents tens of thousands of broken dreams and huge sums of money essentially poured down the drain. Creating more certainty around property transactions is essential. It will probably require legislative reform to provide greater protection to buyers and sellers once offers have been accepted.

However, in the meantime, there are many things the industry could do to reduce stress levels and the proportion of transactions falling through. As we’ve seen, the sheer length of time is a major driver of stress and uncertainty. The entire process requires significant digitisation and automation, expediting paperwork and alleviating pain points. People should be able to engage with the transaction process entirely online or via an app, providing digital IDs, signatures and form filling and see its progression in real time. This could really help modernise the industry and transform the home moving experience.”     

Conveyancing is the issue

Rhys Schofield, managing director at Peak Money said the legal process was most at fault for either slowing down or preventing property purchases.

He said: “When it comes to communication it seems that some conveyancers just simply don’t get that it’s the most important part of what they do in the 21st century.

“People want to be kept in the loop and even no news is fine if you can communicate when it’s expected that you’ll have a proper update.

“On top of that, some of the factory outfits are not employing competent people or if they are, run at such a tight margin that they take on too much work and good conveyancers crumble under the pressure.”

“On top of that though, it’s gotten so bad that we’re launching our own conveyancing platform by brokers, for brokers which will connect brokers to firms that understand the need to communicate and value customer service. Not a sausage factory in sight. We’re soft launching in August with a view to going out to the wider community later in the year. Time to take the FML out of the conveyancing process.”

 

 

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