Reservation agreements locking in buyers and sellers could be trailed with some agencies and conveyancers early in 2020, a government official has revealed.
A two-page model agreement is believed to have been in existence since the end of 2018, drafted by Philip Freedman QC, chairman of law firm Mischon de Reya.
Now a Ministry of Housing, Communities and Local Government lead officer has told a property law conference that a trial could take place, starting sometime between January and March 2020.
The Law Gazette says Matt Prior - who has been leading on this at MHCLG for some years, giving continuity to the work despite a flurry of different housing ministers - told the conference: “If you put your house on the market today, 20 weeks later you will be able to move into your new home. Not only does it take a long time, it takes a lot longer than people have told you. It sets you up an expectation that's probably not going to to be met. This causes issues all the way through the process. People enter a distrustful mindset... You're entering into a relationship where both parties are convinced the other side are going to cheat on you.
“You've got a process that lasts 20 weeks. Why not try to lock people in a lot earlier? You have people who have tried to move two or three times, the buyer pulls out days before, it's heartwrenching.”
Admissible reasons for withdrawing from a reservation agreement without penalty could include a bereavement, job loss, inability to get a mortgage or if the property is deemed unmortgagable - otherwise, there would be a lost deposit or some other financial penalty.
The Law Gazette says Prior also told the conference that work was being done to expand the volume of up-front information provided by sellers to buyers - the so-called log book.
Reservation Agreements won high-level endorsement over the summer when Phil Spencer and his advice website Move IQ backed the concept.
“Whatever the market conditions, the real culprit is the legal blind spot in the way homes are bought and sold in England and Wales. A legal system that allows buyers or sellers to abandon a sale a day before the exchange has always been a point of contention” says Spencer, whose company has teamed up with PropTech firm Gazeal to push ahead with legally-binding agreements.