Housing Secretary Sajid Javid has announced new measures to help improve the home buying and selling process in the UK; demonstrating a proactive response to the ‘Call for Evidence’ consultation, which closed in December 2017.
tmgroup have welcomed the announcement, but accept there will be some scepticism. In particular around the newly-proposed voluntary reservation agreements and how much difference these new agreements will make to fall-through rates – especially as they overlook some of the other factors that can also destabilise the property chain.
Reservations agreements will only go so far in preventing sales from falling through
Echoing the process already in place in the Scottish property market, where homemovers are tied in once they have made an offer, the introduction of voluntary reservation agreements are expected to help “prevent sales falling through and crack down on gazumping”.
Whilst this should help to alter the mind set of those entering into the transaction, as well as make the property chain more resilient, voluntary reservation agreements will not offer a complete solution to the problem – even in cases where everyone in the chain has signed up.
Lack of communication and visible progression could still give homemovers “cold feet” – and compromise the sale
This is because voluntary reservation agreements won’t address the other challenges that contribute to almost a third of all property transactions falling through before they reach completion – such as a lack of communication and visible progression between the consumer, estate agent and conveyancer.
Even with a reservation agreement in place, this vital missing piece could still contribute to homemovers getting “cold feet” and rethinking their transaction.
The exact consequences of someone with a reservation agreement pulling out of a transaction are yet to be known, as the initiative still needs to undergo a period of behavioural insight research and a trial, and so it will still be some time before the industry has a firm grasp of how strictly these agreements will be upheld – and how much of a difference they will make.
PropTech companies are also making great strides to address challenges in the home buying and selling process
Whatever the future holds for voluntary reservation agreements, it is positive to see such an initiative (alongside several others) in motion to try and address the challenges facing the home buying and selling process.
It is also exciting to see new government measures complementing the pioneering strides PropTech companies are already taking to address the challenges in the property chain – such as tmgroup’s mio solution, which improves communication across homemovers, estate agents and conveyancers by offering complete visibility across the chain.
With so many changes underway, 2018 is certainly shaping up to be a memorable year. Perhaps even revolutionary.
Joe Pepper, CEO at tmgroup comments:
“The technology exists to make the property transaction smoother, safer and more transparent than ever before. Yet the average time to complete has grown by over 30% in the last decade – with poor communication being the number one cause of all complaints to the Property Ombudsman in the UK.
Virtually all services can be completed from mobile phones in seconds, from paying for car parking, to taking out a loan from your bank. The property transaction has been managed through a series of service-level agreements for years, but by bringing all the professionals together with the consumer in one secure online data room, the opportunity for a much faster and safer service becomes truly compelling.”