The Ministry of Housing, Communities and Local Government has given more details of the trial of reservation agreements likely to take place in the first quarter of 2020.
At a conveyancers’ conference, a MHCLG representative said the test would be conducted in two regions of the country, not yet selected; 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.
And it may be that if a corporate agency is approached to take part in the trial, different branches may have different types of reservation agreement to test - and some branches will continue one the existing buying process without any reservation agreement at all.
MHCLG’s lead officer on house buying reform, Matt Prior, was a key speaker at the Bold Legal LIVE! conference in London, held in conjunction with the ESTAS Conveyancers’ Awards.
Prior told conveyancers that his ministry’s research on the subject of fall-throughs suggested that between 25 and 33 per cent of house purchases collapsed mid-deal each year, costing consumers some £270m in wasted fees.
He said the process as it stood currently was riven with uncertainty for consumers.
Some 33 per cent of buyers had a major concern that the seller would change their mind and not accept their offer or withdraw the home from sale; meanwhile 45 per cent of vendors were concerned their buyer would have a change of heart part-way through the transaction.
Sixty six 66 per cent of sellers and 70 per cent of buyers were specifically worried that the sale would not make it to completion after theyd accepted an offer.
And 50 per cent of buyers and 70 per cent of sellers indicated they would be willing to enter into some kind of binding legal commitment after an offer was accepted.
Consequently, Prior said, the government was working with the industry to develop what he called “a short standardised reservation agreement which can be used in any transaction.”