Failed property transactions cost economy £1.5bn every year, Santander says

According to Santander’s report, Fixing the Broken Chain – which used economic analysis from WPI Economics and a survey of over 2,000 consumers by JL Partners – nearly a quarter have experienced a property chain fall-through, with 530,000 failed housing transactions each year in England and Wales.

This costs consumers around £560m per year on elements such as mortgage and solicitors’ fees, which cannot be recouped, equal to around 37% of the total loss.

Santander said the government had estimated that property chain fall-throughs cost around £400m, meaning costs were being underestimated.

The report added that around 85% of people who had experienced a transaction had some sort of financial loss, with the average cost coming to £1,240 per failed recent transaction and a fifth reporting losses in excess of £2,000.

There is also an additional £950m per year lost to the “wider economy”, the report said. It pointed to the £380m loss of work output due to stress and the time taken out to buy a property within work hours, £400m per year due to the cost of people’s reduced wellbeing and £170m per year due to wasted leisure time.

Sponsored

Are your clients ready for the first Making Tax Digital reporting deadline?

Sponsored by BM Solutions

More than a quarter said they are less likely to move again due to the “difficult and stressful process”.

However, 88% of people who moved recently said they were more likely to move again in the future.

Over a third said the process was longer and worse than expected, and fewer than half of homebuyers regularly felt positive in relation to the transaction.

Around 54% of buyers said they were “constantly or frequently stressed” throughout the transaction, rising to 64% with a failed transaction. Some pointed to heightened anxiety, sleep disruption and strain in personal relationships.

The key sticking points leading to a failed transaction were more likely to occur further down the process, with 17% of unsuccessful transactions collapsing after one month, rising to 43% at or beyond the three-month mark.

Santander is calling on the government and regulators to do the following:

1. Expedite digitisation across all stakeholders
2. Disincentivise illegitimate gazumping and gazundering
3. Implement the collation of better upfront information disclosure from all parties
4. Create a government-owned, centralised property data system
5. Improve data sharing through a Smart Data Working Group
6. Incentivise the use of artificial intelligence (AI)
7. Take a long-term approach to support market activity

‘Uncertain and exhausting process’

David Morris, head of homes at Santander UK, said: “Buying a home should be a moment of excitement and hope, but for too many people, it’s an uncertain and exhausting process that drains their mental, emotional and physical health.

“The home buying journey is still operating in the confines of a framework that was established a century ago. This antiquated system is an increasingly heavy anchor weighing on the economy and fixing it must be key.

“While the government has put the housing market firmly on its agenda – as this research shows – the scale of the challenge remains largely underappreciated, and that’s why we’re calling for powerful reforms to give buyers and sellers more confidence, ease the financial and emotional strain and create a housing system fit for the needs of today’s consumers and economy.”