Buyers should not be able to pull out of transactions without financial repercussions “just because they have decided that they do not like the avocado bathroom suite”, the housing minister has said.
At the Council for Licensed Conveyancers conference yesterday, housing minister Heather Wheeler said that reservation agreements, by which sellers and buyers pay deposits once they have agreed a deal, should help prevent the number of failed property transactions.
She told delegates: “We want to increase people’s commitment by ensuring they get some skin in the game.”
Wheeler said that the Government will run a field trial of reservation agreements this year.
Wheeler also told the conference what the Guild of Property Professionals heard last week and as EYE reported – that new guidance is to be published about referral fees that estate agents must disclose.
The guidance is due to come next month from the industry regulator NTSEAT (the National Trading Standards Estate Agency Team), with an updated code also set to be issued by The Property Ombudsman.
Wheeler warned that if a review in a year’s time shows that there is no change in behaviours, she will press for a ban on referral fees.
Yesterday’s conference also heard from Matt Prior, senior civil servant at the Ministry of Housing, Communities and Local Government.
He revealed that that reservation agreements that will be trialled are being designed with the help of Philip Freedman QC, chair of Mishcon de Reya, and a member of the Law Society’s land law and conveyancing committee.
He said that the Government is also commissioning research into the behavioural psychology of sellers and buyers to help decide how reservation agreements might work, and what the parties involved might have to pay if they decided to walk away from deals.
The Government wold also look at the circumstances in which parties could walk away from a deal without penalties – for example, bereavement or job loss.
The Law Society Gazette’s report of yesterday’s conference drew some notably unenthusiastic responses from conveyancers on the subject of reservation agreements.
One commented on situations where the same ‘factory’ firm of conveyancers acts for both buyer and seller; another asks, “Whatever happened to ‘subject to contract’?”; and others query the wisdom of putting another hurdle in the way of the house buying and selling process.