Aborted Home Sales Run at Double the Rate of Completions

Aborted Home Sales Run at Double the Rate of Completions

10:53 AM, 19th January 2012, About 12 years ago 5

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News Sourced by Property118 News Team

New figures from conveyancing solicitors reckon home sales are failing at twice the number of those that complete.

The firm, In-Deed, claims that house sales are more likely to abort than succeed despite the claims of banks and building societies that the amount of lending to homebuyers is increasing.

The research reveals that an estimated 531,000 sales fell through in the last three months of 2011 – with the rate of failures rising.

The firm also released figures for the rest of 2011 that showed the estimate number of failed purchases has climbed from 394,000 in the first three months, through 376,000 in the second quarter and 542,000 in the third quarter.

The fourth quarter would expect to show a lower figure to take account of the Christmas and New Year break.

The firm says each aborted purchase costs the would-be buyer an average £5,500. They cite the main difficulties as:

  • Mortgage problems: Almost 1 in 4 buyers (24%) could not raise a mortgage, with 11% of sellers reporting the same problem
  • Legal issues: One in eight cases (13%) blamed the sale falling through on incompetence, delays and mistakes by solicitors
  • Estate agents: Around one in five buyers (18%) were unimpressed with their dealings with agents

To help release the stress of buying a home, In.Deed has posted an online game that lets buyers vent their frustrations on mortgage brokers, estate agents and lawyers by firing them out of a cannon.

The angriest buyers with the highest scores could win a cash prize.

Failed sales (estimated) Actual sales
Q4 2011 531,000 N\a
Q3 2011 542,000 212,000
Q2 2011 376,000 211,000
Q1 2011 394,000 215,000

Source: In-Deed and HM Revenue & Customs

Table: Annual house sales since 2006
Number of transactions
2006 1.669 million
2007 1.618 million
2008 917,000
2009 846,000
2010 881,000

Source: HM Revenue & Customs

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9:43 AM, 24th January 2012, About 12 years ago

I've been struggling to sell three new-build two-bed apartments for six months. Frustratingly, I've agreed sales with five buyers who subsequently got cold feet and withdrew their offers:

   - one lost her job and decided not to invest her £130K inheritance on a buy-to-let after all
   - one wheelchair-user was persuaded by his sister not to buy his own ground-floor flat but to live with her and use his inheritance to reduce her mortgage and pay rent
   - a retiree couple changed their mind and decided they wanted to "watch the market"
   - one young first-time buyer felt the same way
   - a non-working Malysian woman with an 19-year old son who's lived in this country for ten years was unable to get a mortgage, despite having a 50% deposit, because her husband is employed by an Asian company as an international salesman, and no finance company would offer a loan to someone who isn't paid in sterling. She's therefore forced to continue renting.
   - I also have three good offers outstanding from people who can't sell their existing properties.

There's always a different story, but in general low- to mid-market buyers seem very skittish. A year ago, when I started building, two-bed flats were selling in four weeks. Estate agents say that now only one-bed flats and larger houses are selling well: my own new one-bed apartment sold in three weeks; two new 5-bed houses down the road priced at £650K and £630K both sold in five weeks.

Interestingly, none of the failed purchases in the above news story cite "buyer nervousness or indecisiveness": perhaps it's just easier to blame the agent or solicitor instead.

11:49 AM, 24th January 2012, About 12 years ago

Tony, have you looked at "Rent to Buy"?

13:48 PM, 24th January 2012, About 12 years ago

Surely these 24 % of failed mortgage applicants obtained a Decision in Principle before they started the conveyancing procedure!?


14:18 PM, 24th January 2012, About 12 years ago

Yes, but I'm a small developer and I can't afford to have my capital sitting dead in such a property for a year or two. The flats will rent very easily - I've already let out one and I had lots of excellent applicants - but the 6% return if I continue to own outright is feeble and rapidly dimishes if I take out a buy-to-let mortgage. A BTL allows me to extract some of my capital but then burdens me with the risks of interest rate rises, tenants damaging the flats, and remorseless depreciation and falling prices.

Also, with buyers so skittish, who's to say the rent-to-buyer won't wimp out as well when it comes to the purchase decision, or lose her job and so on? I can't see the point of retaining a depreciating asset I don't want to own, just to allow the buyer to live off my capital while she makes up her mind about whether to buy or not.

15:17 PM, 24th January 2012, About 12 years ago

Yours is a classic example of how there will not be badly needed increases in housing stock needed in the UK.
No developer is going to bother with the figures as you suggest.
There has to be more govt assistance to encourage developers to build.
As you suggest there isn't much chance of things being viable for future projects.
You would be better off puting your money under the mattress or into your own residential offset mortgage if you have one!!

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