According to new figures, 35% of property sales fell through before completion in 2022. For anyone hoping to move in the next 12 months, that figure is pretty scary.
So, why are so many house sales falling through, and what can you do to maximise your chances of having a successful move?
The data suggests that sales are falling through for a variety of reasons, with the two biggest causes being the buyer changing their mind and withdrawing from the sale (37%), and the buyer having difficulty getting a mortgage or experiencing a change in personal circumstances that means they’re no longer able to commit to the move (24%).
2022 was a strange year for the UK property market, with many external factors playing a role. At the start of the year, there was strong competition for a limited stock of available properties. This created significant pressure for buyers to commit to a sale quickly and offer well above the asking price if they hoped to have their offer accepted.
It’s little wonder that during the conveyancing process, which in 2022 took an average of 3-6 months, cold feet began to set in. Cautious buyers started to worry whether they were overpaying for the property, especially if any areas of concern showed up in the home survey.
Fast forward to the second half of the year and it becomes a different story. Rapidly rising inflation and political uncertainty led to chaos in the mortgage market. Hundreds of mortgage products were suddenly withdrawn and replaced with much more expensive options. Predictions of a property market crash gathered pace and sales started collapsing for very different reasons to those seen in the first half of the year.
Changes to mortgage lending
Danny Luke, managing director of Quick Move Now – the company behind the figures, said:
We spoke to one buyer who had just had his property valuation report through when he received a phone call from his lender to say his agreed mortgage product was being withdrawn from the market. This was as a result of political uncertainty and rapidly rising interest rates.
He was told the best mortgage they could offer him would have an interest rate 3.5% higher than the one he had applied for, adding hundreds of pounds to his mortgage repayments each month. The higher interest rate made the move unaffordable for him and he had to withdraw. This scenario was repeated up and down the country, with buyer affordability being slashed overnight.
The property market outlook remains uncertain for the year ahead. Interest rates are predicted to rise further over the next few months, before reaching their peak and settling in the second half of the year. So, whilst the latter half of the year will potentially bring more stability to home finances, mortgage lending will still be considerably more expensive than it has been in recent years.
Property experts are suggesting that we’re unlikely to ever see a return to sub-2% mortgage interest rates, so buyers will need to get used to more expensive borrowing and adjust their property budget accordingly. This is likely to continue the current downward pressure on property prices.
Put yourself in the best position:
If despite recent market changes, you are still keen to move in the next few months, there are some steps you can take to increase your chances of success.
- Choose carefully who you work with
With slow sale progress being a common reason for failed property sales, your choice of solicitor or conveyancer can have a big impact on the success of your move. If you don’t already have a great solicitor in your personal contacts, ask for recommendations from friends and family. You want to ensure whoever you use is responsive and proactive (with both you and your seller) and will take a lead in managing the sale through to completion.
- Make an offer with your head, not your heart
In the current economic climate, it’s important to be realistic about your budget and your ability to withstand potential future financial pressures. As the last year has shown us, it’s wise not to overstretch yourself financially. Moving house is expensive, and there is no guarantee that your property will increase in value during your ownership, so it’s essential to ensure the home you’re planning to buy will meet your needs for the foreseeable future and not pay over the odds for it.
- Be proactive
There are some parts of the house-buying process that you have little control of, but there are others that you can be proactive with that will help to speed up the sale. The quicker your sale progresses, the less vulnerable it is. The best way to speed up your move is to prepare as much in advance as you can. Ensure you have an agreement in principle for any required mortgage before you make an offer, and have all your financial records, details of household expenses, etc. on-hand, ready for your formal mortgage application. You should also have a conveyancer or conveyancing solicitor lined up to get going with the purchase as soon as you have your offer accepted.
- Keep in touch
It’s important to keep up the momentum of the sale, and the best way to do that is to keep in touch with your solicitor and the estate agent on a regular basis. This should also ensure you become aware of any potential issues early on and have the opportunity to try to resolve them. This will be especially important if you’re part of a property chain, with a number of different sales and purchases going on.
- Be ready to compromise
In the current market, it’s important that buyer and seller are both willing to compromise in order to achieve a successful sale. It’s a buyer’s market, but there are still a smaller number of properties for sale, so your choices are likely to be limited. Flexibility from both buyer and seller will mean the sale is more likely to reach a successful conclusion.