The Government are looking to trial a new Home Reservation Agreement in the New Year. The Agreement would be between the buyer and seller of a property and entered into when an offer is agreed between the two parties. This will apply to all properties in England and Wales so if you are looking to buy a property in and around Leeds in the New Year this may be something you have to consider.
Early indications suggest that a reservation fee of £1000.00 would be agreed which could be used as compensation if either the buyer or seller pulls out of the deal without a valid reason. The Government anticipate that this would reduce gazumping where a seller accepts one offer and then receives a higher offer from a third party. The costs involved by both parties early on in a sale or purchase are high and leave all parties suffering losses if either party decides not to proceed.
There are a number of reasons why a buyer or seller may not proceed with an agreed property transaction which could be due to changes in their personal or financial situation. The new Home Reservation Agreement would mean that a buyer or seller could not just change their mind without facing financial consequences. It is believed this would increase the commitment of everyone involved. Currently, around one in three transactions do not proceed after a formal offer has been agreed between the seller and buyer.
We already have a similar scheme which is used when purchasing a property from a home builder or developer. Often a buyer will have to pay a deposit to the builder to ensure that they are committed to proceeding and are a genuine buyer. Lets Move Conveyancing have a specialised Newbuild Team who are experts in dealing with these type of transactions in and around the Leeds area and are familiar with the reservation agreement process already in place.
The Scheme will involve ensuring that the seller provides full information regarding the property to the buyer before an offer is made which would include details of any alterations to the property, a list of fittings and contents to be included and general information as to whether the seller has had any disputes regarding the property.
Various types of agreements will be tested to find the most practical way of dealing with such an agreement and how the funds will be held before the scheme comes into place.