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A THIRD of home purchases failed last year amid rising fees and economic uncertainty

More than one in three home purchases have failed in the last 12 months, with prospective buyers typically losing £2,000 out of pocket.

According to the online real estate platform Smoove, 34 percent of real estate transactions ultimately failed.

The problem could stem from a crowded housing market with plenty of competition, as the research also found that searches for new homes by prospective buyers are up 36 percent year-on-year.

According to the company’s first Home Movers Report, the number jumps to 54 percent among first-time buyers.

Out of pocket: Potential homebuyers can risk losing up to £2,000 in legal and survey fees if their purchase fails

Moving costs, which buyers may not be able to recoup in full if a sale fails, have also risen due to rising property prices and the cost of living.

As demand from buyers continues to grow, lawyers are facing capacity constraints, the report said. It found that the average solicitor’s fee has increased by 11 per cent, or £140, from £1,273 to £1,413 over the past 12 months.

Homebuyer surveys have also risen in price, costing an average of £525, up 12.9 per cent from £465 last year.

Potential homeowners are therefore paying almost £2,000 in associated costs – money that could go to waste if the transaction then fails.

Jesper With-Fogstrup, Managing Director of Smoove, said: “Moving can often be an excruciating, terribly stressful experience. The fact that only a few would disagree speaks for a failed system.

“One in three home purchases should not fail. This number represents tens of thousands of broken dreams and huge sums of money that have basically gone down the drain.’

He said the law needed to be reformed to prevent as many sales as possible from collapsing.

Painful process: Delays in surveying and handover have meant buyers may have to wait some time before they get their hands on the keys - increasing the chances of failure

Painful process: Delays in surveying and handover have meant buyers may have to wait some time before they get their hands on the keys – increasing the chances of failure

“Creating more security in real estate transactions is of crucial importance. It will likely require legislative reform to offer greater protection to buyers and sellers once offers have been accepted,” he added.

“In the meantime, however, there are many things the industry could do to reduce stress levels and the proportion of failed deals.

“As we have seen, the sheer length of time is a major contributor to stress and uncertainty. The entire process requires significant digitization and automation, speeding up paperwork and alleviating vulnerabilities.

“People should be able to engage in the transaction process entirely online or via an app, providing digital IDs, signatures, form filling and tracking progress in real-time. This could really help modernize the industry and transform the moving experience.’

The reality is, the longer it takes to buy or sell a property, the more likely the transaction will fail

Paula Higgins, Homeowners Alliance

Chris Sykes, technical director at Private Finance, said the mortgage company has also seen a spike in failed deals

He said it usually happens for one of two reasons. The first, he said, are concerns about the UK’s general economic outlook, which caused potential buyers to change their minds about moving and opt to stay there instead.

The second is a housing stock shortage, meaning one party in a real estate chain can’t find a home to move to, causing the entire chain to fall apart.

“I’ve heard from many customers that all the good qualities are gone,” he says.

The time to complete transactions has also increased by 23 percent since 2019 to 153 days, more than five months.

How to avoid losing money when a sale fails

A failed sale isn’t always avoidable, but there are steps buyers can take to protect themselves if it does happen.

Paula Higgins, chief executive of the HomeOwners Alliance, says: “The longer it takes to buy or sell a property, the more likely it is that the transaction will fail.

“People’s circumstances change, which means they choose not to go through with the sale or purchase, or they simply change their mind.

“And since people can get out with no financial penalty until the contracts are exchanged, frustrated buyers and sellers will find out-of-pocket.

‘This is especially true for buyers who have paid for survey costs as well as mortgage arrangements and transfer fees.

Insured: Prospective buyers can take out insurance to cover losses if their home purchase fails unexpectedly.

Insured: Prospective buyers can take out insurance to cover losses if their home purchase fails unexpectedly.

“Buyers can take out insurance to cover these costs should the purchase fail. The base product offers up to £1500 of coverage, with a premium offering paying out up to £2500 including accommodation and storage fees.’

Higgins also advises hiring a solicitor or conveyancer before bidding on a home, which speeds up the process once you’ve made an offer and limits the amount of time another party can change their mind.

The 34 percent of transactions that collapse represents a 4 percent increase from before the pandemic.

Nathan Emerson, CEO of Propertymark, said: “On average around 30 percent of property sales before the pandemic fell through.

‘The current lack of stock will contribute to the current average as some buyers have placed offers and then withdrawn when a property that better suits their needs comes on the market.’

Keeping track of your records and responding promptly to inquiries from your bank is another way home buyers can avoid delays.

David Hollingworth of mortgage company L&C says: “It pays for buyers to keep track. As far as the mortgage goes, it just helps to have the receipts ready so you have everything on hand, proof of income, payslips to speed things up.

If things are late you might end up in an admin queue, and providing information piecemeal can end up at the bottom of the queue every time.

For first-time buyers, Hollingworth also recommends making an estimate of the costs involved when deciding how much deposit they can afford, and allowing for a slight increase in the loan amount in case they need to increase their loan amount to keep a purchase on track keep.

“Due to the lack of supply, some homeowners may get more offers after acceptance, for example if someone unexpectedly makes a higher offer,” he says.

“With any chain, there is always a chance that something will go wrong, which will have a negative impact.”

The best mortgage rates and how to find them

Mortgage rates have risen significantly as the Bank of England’s base rate has risen rapidly.

If you’re looking to buy your first home, move, or mortgage, it’s important to get independent, independent advice from an agent who can help you find the best deal.

To help our readers find the best mortgage, This is Money has partnered with independent toll-free broker L&C.

Our mortgage calculator powered by L&C, you can filter listings to see which match the value of your home and the down payment.

You can also compare different fixed-rate mortgage terms, from two-year fixed rates to five-year fixed rates to 10-year fixed rates, showing the monthly cost and the total cost.

Use the tool at the link below to compare the best deals, taking into account both fees and tariffs. You can also start an application online and save it in between.

> Compare the best mortgage offers now

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A THIRD of home purchases failed last year amid rising fees and economic uncertainty

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