The group charged with pioneering Reservation Agreements in the house buying process admits both the industry and the public are split on whether the initiative will be a success.
The admission comes in an update report from the group, seen by Estate Agent Today.
The Home Buying and Selling Group - set up in 2017 with representatives from the Ministry for Housing Communities and Local Government as well as from the estate agency, finance, insurance, conveyancing, PropTech and removals sectors - has been working on Reservation Agreements for over two years via a sub-group chaired by Beth Rudolf, director of delivery at the Conveyancing Association.
A draft agreement of the kind that could be used in the buying process has been in existence for some months, but the latest update from the HBSG suggests that both the industry and the public remain split on the chances of the initiative actually making house moving easier, quicker and possibly cheaper for consumers.
“The initial recommendation from the HBSG working group is that the agreement will be conditional upon the information available at the point of acceptance of offer and the buyer and seller’s circumstances. Both parties will be expected to pay a commitment deposit which they may lose if they breach the terms of the agreement. Any deposit monies paid will be protected by an arbitration process” says the latest update.
But the update then admits: “The industry and indeed consumers appear to be split on whether Reservation Agreements will be successful. They are though, already successfully used with existing homes sales and purchase by some agents and indeed in the new homes industry. Those that use them believe they improve the process and they believe they do save consumers time and money.”
MHCLG presentations at conveyancing and agency industries’ events in the past year have included results from studies suggesting the public is sceptical of the effectiveness of Reservation Agreements.
The January update from HBSG goes on to say: “There are still questions to be answered as to whether the agreements can work. For example, should they be voluntary or will they need to be compulsory? Some worry it may prevent sellers from putting properties on the market, while others feel it could add more complexity to the process.
“However, the HBSG working group is confident that if the government’s initial research suggests a trial of the Reservation Agreement is worthwhile, then industry will be ready and able to play its part in any pilot to find out how they would work in practice.
“If they are successful and property fall throughs are reduced and transactions times speeded up, this would substantially improve the home buying and selling process for all.”
The update also says that two PropTech companies already provide upfront legal packs with legally-binding agreements which agents and others in the industry could use if they wish.