Selling a house has been revealed by various studies to be the most stressful life experience. What often adds to the stress is a buyer pulling out at the last minute without genuine reason which can have both an emotional and financial impact.
The government believes that they have come up with a solution to this and have announced that they will be trialing ‘reservation agreements’ later this year. Such agreements are proposed to be entered when an offer is accepted with the buyer then handing over a deposit which cannot be refunded except in certain circumstances.
Housing minister Heather Wheeler told the Council for Licensed Conveyancers’ annual conference in London earlier this year that it is developing standard reservation agreements to reduce the number of failed property transactions: ‘We want to increase people’s commitment by ensuring they get some skin in the game…there is no reason why this cannot become a standard practice. I believe the appetite is there. The government will ‘run a field trial later this year’, she said.
Similar agreements have already been introduced in Scotland and such introduction is said to have almost eliminated incomplete sales.
The government have proposed that the deposit will be £1,000 but it is not yet clear as to what circumstances will be considered ‘reasonable’ if a buyer were to pull out.
Another area that may be problematic is defining at what point an offer is said to be made. Many buyers may make an offer subject to a satisfactory survey result and it would seem unjust for them to have to enter into such agreement and pay a reservation fee prior to their survey being carried out.
The Law Gazette recently ran an article on this issue which can be viewed here
We will be watching developments, but in the meantime, if you would like advice on the sale of your house, please contact Claire Wicks, Chartered Legal Executive in our Residential Property team on 01566 772375 or email firstname.lastname@example.org.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.