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Home buying bottleneck means transactions taking longer to complete

29 Jan 2021
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Home buying bottleneck means transactions taking longer to complete

The average property is taking nearly a month longer to sell once under offer, due to a conveyancing bottleneck that has developed since the property market shutdown in March and April.

The multi-agent property seller Movewise looked at properties that had exchanged over the past 30 days, and found that the buyers' offer had been accepted 124 days previously on average - just over four months.

For properties that had exchanged over the past six months, the average time between the offer being accepted and exchange was was 96 days, which is just over three months.

This means that properties are now taking nearly a third more time to exchange.

Conveyancing solicitors are struggling to deal with a backlog of work that has developed since the property market shut down during the first national lockdown in spring, which has led to delays for buyers and sellers trying to exchange contracts.

The stamp duty holiday, which was introduced in July, encouraged more buyers into the market which further increased conveyancers' workloads and has left them struggling to catch up.

There is a similar bottleneck in the workload of local authorities, who have found it difficult to cope with the level of property searches being requested.

Movewise analysed nearly 500,000 property sales from across the UK to get its data.

It also looked at the average time from the property being listed to contracts being exchanged. 

Properties that exchanged in the past 30 days had been listed an average of 160 days or just over five months earlier, while those that had exchanged in the past six months had been listed an average of 127 days earlier, or just over four months.

This represented a 26 per cent increase in time taken.

Tom Scarborough, chief executive and founder of Movewise, said: 'These figures show the pressure that property transactions are under at the moment.

'Although houses are going under offer on average five weeks after initial listing, the bottleneck in the conveyancing process is causing a headache for both sides of the transaction.'

In contrast, the time taken between the initial listing and going under offer was relatively short, 36 days or around five weeks on average. This had increased by five days compared to the average for the past six months.

Looking at the data by region, properties in the East of England took the longest to sell, clocking in at 170 days or about five and a half months, since listing for homes that exchanged in the past 30 days.

However, the North East has felt the effects of the bottleneck most keenly in the past month. That region witnessed the largest increase in time to sell in the last 30 days compared to the past six months, at nearly 29 per cent.

Homes there also took the longest to go under offer after listing - an average of 46 days.

Sellers in Scotland who exchanged in the last 30 days had the shortest wait, at 129 days on average between listing and exchange.

Scarborough said that buyers needed to be realistic about whether their purchase could really complete before the stamp duty holiday deadline, in order to prevent chains collapsing.

'Buyers are still keen to beat the stamp duty deadline and sellers need to be aware of that before accepting an offer,' he said. 

'To avoid transactions collapsing, any offer being made now should be on the understanding that completion is likely to be after the tax holiday ends.

'If required, buyers and sellers should enter into any negotiation on price, before the conveyancing process commences. 

'An honest and frank discussion upfront, could avoid a transaction failing further down the line, after money and time has been spent on searches and surveys.'

'I made an offer in October - now I'm worried I'll miss the stamp duty deadline' 

Roxana Kiddle is a first-time buyer who made an offer on a two-bed apartment in East London back in early October, but has still not exchanged. 

As it is being sold by a landlord, the property is not part of a chain. She said: 

'I put an offer in around 8 October, and there were a few hoops I had to jump through in order to get the seller to accept an offer at the asking price. 

'After that, most of the delays have been due to the estate agent, who has not felt the need to provide me with any form of update, and the solicitor on the sellers' side who at times has given me radio silence.

'I will be told that there is a delay and that I need to chase someone up, but as a first-time buyer, I'm not experienced in the process - you don't always necessarily know what you're asking for. 

'I have also found out that the vendors' solicitor has been posting documents, rather than sending them electronically.

I did manage to get a survey done in December, but I am still waiting for an exchange date as there are still outstanding enquiries. I have been told to expect the end of February.

'I am a first-time buyer, so it should be a fairly straightforward process,' she said. 'You expect that it might take three months, but this is going to go on much longer - and I don't even have a chain.'

'I thought it would happen in good time to benefit from the stamp duty holiday, and I have said that if it gets to the point where the exchange and completion won't be done by then, I will pull out. I won't be liable for paying the extra taxes when I started the process in October.

'The Government giving this stamp duty holiday has caused quite a few backlogs, and I expected a level of professionalism from solicitors and estate agents that is possibly not there.

'That said, my own solicitor, and my mortgage broker SPF Private Clients, have both been very helpful.'

Delays aplenty says estate agent in Wales 

Carol Peett, managing director of estate agent West Wales Property Finders, also told This is Money about the delays her and her clients had experienced over the past few months.

The lengthy period of time it took for the local authority search on a property a client was buying caused the vendor of that property to lose the property they were buying, and therefore the entire chain broke down, leaving our client homeless having sold their property,' she said.

'They now have had to rent somewhere while we find them another suitable property to buy, and then they will have to again experience the delays in the searches coming through; all the time paying rent which they should not have had to do.'

She said the delays were also affecting investors who hoped to cash in on the staycation boom by buying holiday lets.

'Clients trying to purchase buy-to-holiday-let properties have missed owning the properties in time for the peak letting periods, and therefore lost income. 

'Several clients for whom I found properties in July at the end of the first lockdown were waiting until the end of November for their searches to come through - thus missing the lucrative autumn period for letting and in fact just completing in time for the second lockdown.'

Article by Helen Crane, Daily Mail.

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