Another estate agency has come out in favour of reservation agreements.
High-end agency Chestertons says transactions currently fall through too frequently and the latest initiative from the Ministry of Housing, Communities and Local Government may well contribute to improving the situation.
Chestertons has followed Glentree Estates and JOHNSANDCO in backing the move.
“Fall throughs are costly, frustrating and prevent people getting on with their lives. We therefore support the move to try and reduce fall throughs and increase both buyers’ and sellers’ confidence in the process by introducing a binding reservation agreement” says Guy Gittins, Chestertons’ managing director.
“We’d hope that by providing this extra level of assurance people will be more inclined to enter the property market in London. With demand currently outstripping supply in the capital – Chestertons data suggests that in September the number of new properties coming to the marked dropped by 20 per cent compared with the year before, while applicant registrations were up 18 per cent in the same period – anything that could encourage potential sellers to the market should be welcomed” he continues.
“Property transactions fall through far too frequently and this is due to a wide range of factors, including changes in personal or financial circumstances, changes of heart and disagreements over specific terms of the deal. We hope the government takes steps to ensure that people who do have to pull out of a deal for reasons beyond their control are not penalised, although what constitutes a ‘good’ fall-through and a ‘bad’ one will no doubt be subject to a lot of debate.”
The MHCLG has said that a trial of reservation agreements will take place in the New Year, in two so-far unspecified regions of the country; the conveyancers and agents who will be involved have also not been selected yet.
The scope and details of the trial are still being assessed by a company instructed by the ministry.
It is likely that different variations of reservation agreement will be tested - for example, some may have a non-returnable deposit of £500 put down by the purchaser, while others may have a £1,000 sum, and others not involving any advance payment at all.
You can see Glentree’s views here and those of JOHNSANDCO here.