By any measure, the housing market has been unprecedently busy in recent months, fuelled not just by the stamp duty holiday (and potentially sizeable savings for all types of buyers), but also the 95% mortgage guarantee scheme and positive sentiment among all parties as summer arrives and restrictions continue to ease.
The first stage of the two-part end to the stamp duty holiday was reached on Wednesday, and now only homes worth up to £250,000 will pay no stamp duty until September 30. From October 1, the stamp duty holiday will cease once and for all and the nil rate threshold will return to pre-pandemic levels of £125,000.
While a cliff-edge of the like expected at the end of March this year has been avoided this time out, with more breathing space for buyers, sellers, agents and conveyancers to prepare and the deadline already being baked into the market, it does still seem inevitable that there will now be more chains breaking down than usual as buyers and sellers think again or reprioritise.
Even if only a fraction of buyers and sellers withdraw, as recent research from Rightmove appeared to suggest (with 4% of buyers saying they planned to abandon their purchase if they missed the June or September deadline), 4% still equates to quite a large number of sellers and buyers, and quite a number of potentially thwarted sales.
The Rightmove research also found that one in four said they would try to renegotiate with their seller, while 13% said they would try to find a cheaper home. This suggests there will be significant disruption to the homebuying and selling process over the next few months.
What’s more, there are huge numbers of transactions working their way through the system at present, with Rightmove putting the number as high as 704,000, and by the law of averages not all of those will go through smoothly and without a hitch.
There are huge pressures and strains on the system currently, with agents, conveyancers, surveyors and removal firms complaining of being overworked, overburdened and stressed-out.
Which all points to an increased need for a plan B, an alternative if the worst comes to the worst and chains start to fall apart.
Even in normal times, the fall-through rate for house sales is alarmingly high, and this is only likely to be heightened by the sheer number of transactions in the pipeline at present.
What are the alternatives?
To help mitigate against chain collapses and higher fall-throughs, agents should consider partnering with a chain repair expert.
How does it work? Well, when a chain breaks, a chain repair company will step in to keep things moving and prevent a lost sale, helping to prevent hassle and despair on all sides. The cost and stress of a house-chain collapse is avoided, while the sales process is sped up rather than coming to a grinding halt. For agents, there’s no lost commission and an enhanced reputation as a sale is saved.
We know that approximately one in five sales will be lost to a broken sale, causing untold frustration and misery for thousands of buyers and sellers each year. There must be a better way of doing things.
A chain repair company is unique in that it will use its own money and work with specialist conveyancers to buy the problem property in a chain, quickly and efficiently, and prevent the whole thing collapsing like a pack of cards. This helps to keep everyone’s moving date on track.
There are real world challenges we know exist when considering using a chain repair option, too. One of the key challenges we – and agents – face when offering a ‘chain repair’ solution is that the seller isn’t always keen on accepting a lower price for their property, given they had a previously agreed sale price.
There is a clear trade-off, then, between completing as planned but accepting a lower price, or ‘starting again’ and waiting months. Or worse, risking the chain collapse altogether.
One approach that can help ‘soften the blow’ is to negotiate along the chain to share the discount between everyone. If everyone accepts slightly less, it makes it more affordable and keeps everyone moving.
What is being done to prevent fall-throughs?
Numerous initiatives and schemes have been tried over the years to reduce the number of fall-throughs and chains collapsing – and most recently there has been growing pressure for more upfront information to be included by both buyers and sellers, as well as calls to tie buyers and sellers into a legally binding agreement much sooner.
Despite this, the problem remains a significant one, and one that only increases the more transactions there are in the market. The market is highly buoyant at the moment, which in turn means, sadly, a market with more collapsed house sales.
Even in a much-improved system, collapsed sales would probably still be a sad fact of life, for a variety of reasons. But agents, by partnering with a firm which can reduce the hassle and cost of these collapses, can help to improve the market for all.
Now, more than ever, having a plan B alternative in place is a wise and pragmatic move.
*Chris Hodgkinson is Managing Director of chain repair firm HBB Solutions