Property sales that fall through ‘costs Britain £900 million a year’
The UK economy is losing more than £900 million a year due to property transactions collapsing before completion, new data shows.
Analysis by property portal Rightmove shows that the loss of around £392 million in potential estate agency income and £515 million in stamp duty last year alone was due to sales not re-entering the market within a 12-month period.
The economic impact extends beyond the UK; Scotland are missing out on a potential £7 million and Wales are missing out on around £23 million from similar sales.
These separate calculations account for Scotland’s relatively lower rate of transaction deductions and the different land tax systems applied across Scotland and Wales.
Rightmove said it took an average of five months to complete a home purchase across the UK last year.
Rightmove’s data shows that 6 per cent of property transactions fail and do not return to the market within 12 months, while around a fifth (23 per cent) of transactions initially fail and are later completed successfully.
Rightmove CEO Johan Svanstrom said: “Our analysis highlights the scale of economic opportunity that could arise if rates were reduced.
“More than one in five transactions are affected by outages, leaving agencies with lost or delayed fees and causing some moving companies to pay thousands in recurring costs.”
Rightmove used HM Revenue and Customs (HMRC) house sales figures and average transaction price data to make estimates of the amount of money lost. Additionally, transactions where stamp duty relief could be applied to first-time buyers were also taken into account.
Craig Webster, managing director of Tiger Estates in Blackpool, said: “The true cost of these collapsed transactions goes far beyond a single lost wage.
“When a sale falls through, the agent has already invested significant time and cost in securing the listing, marketing the property, vetting and managing buyers, and advancing the sale through to the offer stage and beyond.
“Anything that improves transaction efficiency will reduce the risk of failure, especially in transmissions and data flows between parties.
“Faster, clearer communication between agents, lenders, lawyers and buyers builds trust throughout the chain and helps prevent delays snowballing into cancellations.
“At the same time, accurate pricing and early legal preparation for sellers are practical steps agents can take to better manage their own risks and provide buyers with greater clarity early in the process.”
Mary-Lou Press, president of NAEA (National Association of Realtors) Propertymark, said: “While falls can never be completely eliminated, many can be prevented with better advance information, improved communication between parties and a more streamlined and digitized transaction system.
“Our member representatives work tirelessly to keep the chains together and guide consumers through an often complex and stressful process.”
He added: “We support measures that encourage greater digitalization, earlier provision of material information and stronger collaboration across the sector.
“But reform needs to work for both consumers and practitioners and ensure the system is both efficient and robust.”
