Home Sellers Face Seven-Month Wait for Contracts to Exchange

Home sellers are now facing an average wait of seven months to exchange contracts, a substantial increase from previous years, according to new data from analytics firm TwentyCi. The firm reports that 61 percent of all property sales are currently taking longer than six months to move from listing to the exchange of contracts, up from 54.4 percent last year and 36 percent in 2019. The national average wait time for a transaction from listing to exchange now stands at seven months, compared to five and a half months in 2019.

In England and Wales, property transactions are not legally binding until contracts are exchanged, with keys typically handed over only upon completion. The current market is characterized by a surplus of homes listed for sale compared to the number of active buyers. This imbalance gives buyers more leverage, increasing the likelihood of transaction pull-outs or revised offers. Owners of flats are particularly experiencing difficulties, with reduced interest from first-time buyers and a decline in demand from buy-to-let investors.

The seven-month national average comprises approximately 2.5 months from listing to agreeing a sale, followed by nearly 4.5 months from the sale agreement to the exchange of contracts. Scotland presents an exception, where 72 percent of sales exchange within three months due to a legally binding agreement at an earlier stage. In contrast, outer London sees only 31 percent of sales exchange within the same three-month period.

Transactions exceeding six months can create complications, as most property searches are valid for only six months. Lenders generally require updated searches or indemnity insurance for expired searches before releasing mortgage funds, potentially leading to additional costs and further delays.

Proposed Reforms to Expedite Sales

In response to these protracted timelines, the government announced a package of reforms last month aimed at accelerating the home buying and selling process. These proposals include requiring sellers and estate agents to provide crucial information upfront, such as property condition, chain status, and deed documents. The reforms also aim to introduce earlier binding agreements with potential penalties for withdrawal, intended to minimize failed transactions.

Colin Bradshaw, chief executive of TwentyCi, noted that these reforms propose the preparation of upfront information, including property searches and eventually a property condition report. "These property details, provided to buyers and their advisers upfront, should enable faster, more informed decisions and reduce delays, fall throughs and any late surprises," Bradshaw stated. He added that these proposals are expected to shift housing transactions from a buyer-led model to a front-loaded, seller-led one.

Strategies for Navigating a Buyer's Market

Property expert Phil Spencer advised that in the current buyer's market, setting the right price is crucial. He cautioned against overly ambitious initial asking prices, emphasizing that it is better to price a property competitively from the outset to attract viewings and offers. Spencer also recommended choosing an estate agent based on their tenacity and market comparison of valuations, rather than solely on commission rates or the highest valuation. He further advised sellers to declutter and depersonalize their homes to help potential buyers envision themselves living in the space.

Rising mortgage rates, influenced by inflation and geopolitical events, are also impacting the property market, increasing costs for those remortgaging or purchasing a home. The article also highlights resources for comparing mortgage rates and finding suitable deals, in partnership with a fee-free mortgage broker.