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Property sale fall-throughs down but sellers to lose further £788m this year

Written By:
Guest Author
Posted:
08/06/2022
Updated:
08/06/2022

Guest Author:
Samantha Downes

The number of property sales abandoned before completion fell in Q1 2022, but the individual cost of each fall through is set to rise.

Property sale fall-throughs are estimated to cost the UK property market £788m in 2022, according to HBB Solutions, a property purchasing specialist.

In 2021 326,000 property sales collapsed, costing UK sellers £880.5m. The figure had been increasing throughout the pandemic, and was up from 272,768 fall-throughs in 2019, according to HBB Solutions.

It defined a fall-through as a property sale that fails before completion, often caused by the buyer or seller backing out of the sale which can be caused by, among other things, problems discovered during surveying, a break in the chain, and unforeseen issues with a mortgage approval. 

Fall throughs during the first three months of 2022 were down 17% with 71,613 transactions abandoned.

Should this downward trend persist for the remainder of the year, HBB Solutions forecasts that the total number of fall-throughs could fall by 12.2% in 2022, to a total of 286,000. 

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While this would see total sale collapses remain above pre-pandemic levels, they would still be below 2020’s figure when 298,680 sales failed and 2021’s when 326,091 sales fell through.

Conveyancing problems

The individual cost of a fall-through is expected to increase in 2022, up from £2,700 to £2,750. 

Chris Hodgkinson, managing director of HBB Solutions, said: “Fall-throughs have been a problem in this country for a long time. Many people place blame at the door of the conveyancing process, saying it’s too long and complex thus providing far too many opportunities for things to go wrong or for people to change their minds. 

“While this might be partially true, we also need to acknowledge that fall-throughs are part and parcel of the homebuying industry and better protection is needed at a far earlier stage in the transaction process.  

“They’re a problem for property professionals and the general public alike, so while the forecast decline for 2022 will be welcomed across the board, home sellers will still incur huge costs as a result of sales collapsing this year.”

Rob Peters, principal at Simple Fast Mortgage, said the rise in abandoned property sales  in 2021 was a result of rapidly increasing property prices, and poor conveyancing. 

He said: “During the pandemic conveyancing services levels dropped through the floor, partly due to high volume in the sector, partly due to mismanagement, for example firms taking on more work than they had capacity for, poor systems and poor processes.

“This resulted in the legal process of buying a house taking far longer than it should. Impatient sellers, combined with rapidly increasing property values, felt they could achieve a higher sale price by going back to market, resulting in many sales falling apart. 

“Now property growth is showing some slow down. We expect stabilisation, as sellers are less likely to pull out a deal to achieve a higher sale price.”

Lewis Shaw, mortgage adviser at Shaw Financial Services said fall-throughs were a permanent feature of the property market. He added: “However it’s likely to subside as the market starts to calm down and hopefully return to a little more normality.”