Why home sales in England take so long – and are always at risk of collapse

Buying a home in England and Wales can feel like an endurance test. Months often pass between an offer being accepted and contracts being exchanged, leaving buyers and sellers vulnerable to delays, changing circumstances and deals falling apart at the last minute. It is a system that stands in stark contrast to many other countries, where delays can be less frequent with buyers commiting financially much earlier in the process to avoid things going wrong. Shorts Property professionals say the result is a market where transactions are faster, buyers have greater certainty and sellers are less likely to see deals collapse after months of waiting. It’s why the government is looking to take forward reforms to speed up the house buying process. England and Wales have one of the slowest systems The home buying process in England and Wales is unusual because an accepted offer is not legally binding. Either the buyer or seller can walk away without penalty until contracts are exchanged, often months later. Chris Barry, business development director at property law specialists Thomas Legal, said the length of time involved is one of the biggest reasons so many purchases fail. Speaking to The i Paper, he said: “England and Wales have some of the longest times between sale agreed and exchange in the world. “As we know, time kills deals and as a result, around a quarter of sales agreed never make it to exchange.” Depending on which data set you look at, he said the average time is around 140 days. He argues that one reason the process is so lengthy is the complexity of leasehold property. This means you buy the right to live in a property for a fixed number of years, but do not own the land it stands on. Barry explained: “Leasehold is particularly problematic as the process typically involves more parties and a significant amount of additional information is required for both the buyer and their mortgage lender. “Leasehold properties are typically flats/apartments which are popular with first time buyers and therefore at the bottom of most chains.” The long wait between offer and exchange creates opportunities for buyers to rethink, sellers to accept higher offers or unexpected legal issues to emerge. Scotland offers a different model Many experts point to Scotland as evidence that a different approach can work. Unlike England and Wales, much of the legal and property information is prepared before a home is marketed. Surveys are commissioned upfront and buyers have access to far more information before making an offer, compared to in England, where most of this is given post-sale. “This also allows the right buyer to make an informed decision on whether they would like to commit to buy, safe in the knowledge, they won’t be faced with serious problems mid-way through the transaction,” says Barry. David Hollingworth of L&C Mortgages said the Scottish system reaches agreement much earlier because buyers have more information from the outset. He said: “As a more general overview the Scotland approach looks to get the two parties to agree at an earlier stage. “That requires more comprehensive information on the property and legal aspects whereas in England the enquiries really only start once an offer is accepted. That may change with the proposed changes of course.” Managing director of EHF Mortgages Justin Moy also said Scottish purchases typically progress much faster. Moy explained: “We have had many issues with exchange dropouts, typically as the whole process has just gone on so long. “Scottish cases have always been very prompt, completion within weeks given the valuation/survey is upfront. “The England and Wales issues typically include time lags for searches, surveys, and mortgage offers, as well as dealing with issues not expressed upfront, unlike the Scottish method.” Could deposits stop buyers pulling out Across many other countries, such as France, Germany, the US, Australia and New Zealand, buyers are expected to put money on the line much earlier than they do in England and Wales. That financial commitment makes buyers less likely to withdraw unless there is a legitimate problem uncovered during the purchase. Barry said: “In the US, Scotland and many other counties, a deposit submitted at point of successful offer which is then lost if the buyer pulls out. “In the UK, both parties are on the hook for very little financially if they withdraw before exchange of contracts, thus making this scenario easy. “In other countries, money is secured by lawyers upon an offer being accepted. Much like our new build or auction process.” Emma Fildes, property finder at Brick Weaver, said the current system leaves buyers and sellers exposed to gazumping – larger bids – and gazundering – when an offer is lowered – because transactions take so long to complete. She said: “By conducting due diligence after the fact instead of before (as in other countries), buyers and sellers are totally ‘wrung’ out by the time it comes to exchange.” “In the US when an offer is accepted, 1-3 per cent is payable upfront in escrow, only valid contingency issues are considered otherwise you forfeit what you have put down. This stops timewasters and provides greater certainty for both sides.” A buyer beware system Experts say another key difference is when legal checks are carried out. In England and Wales, much of the investigation into a property’s legal status, leasehold arrangements and searches begins only after an offer has been accepted. In many other countries, much of this work is completed before marketing begins, allowing buyers to make decisions with greater confidence. Fildes believes England and Wales place too much responsibility on buyers. She said: “By putting the onus on the buyer, their responsibility lies with them. ‘Bought as seen’ can come back to haunt you if you haven’t investigated everything thoroughly enough.” She added that overseas buyers often struggle to understand why the process remains structured this way. Fildes said: “I have many American clients to whom I must explain our nonsensical system, which they understandably find deeply frustrating.” Delays can change minds The longer a purchase takes, the greater the chance that circumstances change. Mortgage offers expire, interest rates move, survey issues emerge and buyers begin looking elsewhere. Moy said lengthy conveyancing means the excitement of agreeing a purchase can quickly disappear. He explained: “The initial euphoria of finding a lovely property wanes over time, to the point where your head gets twisted in a different direction.”