Slower market means fewer deals failing

Stock pic of keys: property, house, househunter, homebuyer, housebuyer, tenant, renting, letting.
Stock pic of keys: property, house, househunter, homebuyer, housebuyer, tenant, renting, letting.

Although turnover in the housing market slowed significantly in October, the number of transactions which collapse ahead of completion is falling, says a new survey.

According to 1st Property Lawyers, a new technology venture designed to give both buyers and sellers more detailed knowledge of the progress of each deal, just 23 per cent of property sales agreed in the third quarter of 2011 were aborted.

This is eight per cent below the figure of a year ago, when 31 per cent of agreed sales collapsed ahead of completion.

In the corresponding period of 2009, the fall-out rate was 20 per cent.

The survey also found that by far the biggest cause of transactions collapsing is sellers pulling out. That torpedoes a remarkable 78.2 per cent of transactions already agreed, a 14 per cent rise during this year.

Mark Montgomery, commercial director at 1st Property Lawyers, said: “Continued uncertainty in the housing market means many people remain unsure when it comes to buying and selling property.

“Since the start of the year, we have noticed that many people, unable to find the home they want in a market with fairly limited choice in many areas, are deciding to take a step back until the picture clarifies.

“They say ‘Let’s have a pause’ because there are so many unknowns at this stage.

“The good news, however, is that the percentage of property transactions agreed which do not go all the way through to completion is starting to fall as the market begins to stabilise.

“Our message to anybody who does have a deal in mind is really to get things signed and sealed, before somebody in the chain changes their mind.

“While it is very difficult to control every aspect of your sale or purchase, one thing buyers and sellers can do is appoint a proactive conveyancer who is able to ensure the transaction goes through quickly and smoothly – leaving less scope for people to pull out or get cold feet.”

Although 1st Property Lawyers is pioneering a “21st century” approach to keep clients fully informed of each stage of a sale or purchase – by enabling them to view and upload documents and make secure payments online – Montgomery thinks that only around 15 per cent of decisions to select a conveyancer are actually made online.

“Even then, much of the subsequent work might be serviced by traditional high street lawyers,” he says.

But Montgomery says high street solicitors are coming under pressure as they fight for a slice of the conveyancing sector. Some are squeezed by rising premiums for professional indemnity insurance, while others have been squeezed out when the big lenders cut back their panels of lawyers to lessen the risk of fraud.

He believes that few high street lawyers will commit massive new investment to technology in the hope of transforming the conveyancing process, because the potential profits scarcely justify it.

Key features of the 1st Property Lawyers package for buyers and sellers include:

l No legal fees if the move doesn’t go ahead

l Secure online payments can be made 24 hours a day, with no need to contact the bank

l A dedicated case handler available by telephone or online 8am-8pm weekdays and also at weekends

l There is no need to wait for the postman, as all documents can be viewed online anytime

With a bit of luck, Montgomery reckons his firm will complete 30,000 transactions in 2011, rising to a possible 60,000 by 2014.

“We are working on the assumption that the old days of one million transactions a year in the housing market won’t return for at least ten years, and may never do so,” he says.

“We are probably now in a situation which is fairly close to the new norm.”

1st Property Lawyers was one of the firms recommended in the latest edition of the Which? Guide To Buying And Selling A House – although it makes no claim to be the cheapest online operator in its field.