Category: Sales

Is A Leasehold Property A Good Buy-To-Let Investment?

Posted on by Tim Hill

[Image source: Deposit photos]

When investing in a buy-to-let, there are countless considerations to make, but one that often gets overlooked in discussions is whether looking at leasehold properties is a good use of an investor’s time. When you buy a freehold building, you own the building and the land it’s on until the time comes to sell it, but leasehold means you only own the building for a set period. So, what does this mean for landlords, and are leasehold properties a good investment?

What is a leasehold property?

A leasehold property means you own the property in question for a specific length of time, which is the term of the lease. When the lease expires, the ownership transfers to the person or entity that owns the land. For a landlord, the idea of the investment simply being lost can be a frightening prospect and can put people off wanting to invest in a leasehold home.

Leases can range from 99 or 125 years all the way to 999 years, the latter of which is as good as a freehold. Theoretically, the closer the lease expiry date is, the less valuable it becomes and it can be harder to recoup your investment if you’re looking to sell. If the remaining term falls to 80 years or less, it can be hard to obtain a mortgage on the property, which is something potential investors need to bear in mind when looking for buy-to-lets.

The key differences with a leasehold property

Most leasehold properties are flats, though a leasehold can apply to any property. Properties purchased through the shared ownership scheme may also be leasehold. Because a leasehold means you don’t own the land the property sits on, you don’t have any ownership of communal areas in the case of a flat, meaning stairs, hallways and gardens are not your sole responsibility.

However, while leaseholders usually pay a set fee to the freeholder which goes towards the maintenance of these areas, from June 2022, new legislation on ground rent charges means these rents will be banned on new residential leases to avoid future rent increases, which makes leasehold properties more affordable.

What to consider before investing

The first question an interested landlord needs to ask is ‘does the lease permit letting?’. Not all leases will allow you to sublet the property, so if your intention is to purchase the home as a buy-to-let, this is a critical question to ask. If you go ahead with your buy-to-let without checking this first, you could find yourself in breach of your lease and that can come with fines and complications later on, so it’s important to check first.

Landlords also need to ensure they take into account the cost of maintenance and repairs for the property, as with any buy-to-let, which some leases enforce via a sinking fund to cover any unexpected repairs. Investing in a property as a buy-to-let means landlords need to think about the saleability of the property for the future, as it’s not their primary residence. Problems can occur, as previously stated, if the lease is less than 80 years, so extending a lease may be beneficial when purchasing the property but this can be a costly endeavour.

The benefits of leasehold buy-to-lets

It’s not all bad news when it comes to a leasehold property, especially when it comes to finances. Because of the challenges that you need to face when you buy a leasehold property, you can often find great bargains on the property market as they’re less appealing for many investors. If you’re willing to overcome these hurdles, you could find yourself getting a great deal upfront compared to a freehold.

There are some restrictions with this type of property, because you’re effectively renting space from another landlord who is the freeholder, so you’re at their mercy in terms of what you can do to the property. However, from a landlord’s point of view, the likelihood is you only want to make the property presentable and won’t be investing in any large-scale renovations, so this may not be an issue at all.

It may be possible to extend your lease if you’ve owned the property for at least two years, or if it only has 80 years or less left. Extending sooner rather than later is the best option, as the shorter the remaining lease is, the more expensive it will be to extend. Lease extensions are usually for 90 years, and the cost is typically 50% of the ‘marriage value’ of the property, or the extra value the property would gain from the longer lease, as well as legal fees, Land Registry updates and property valuations.

Is investing in a leasehold the right decision?

The process of investing in any property is complex and time-consuming, and it requires in-depth research to ensure you’re making the right choice. A leasehold may seem more complicated than buying a freehold to rent out, but it can still be a highly valuable investment depending on the buyer’s circumstances. Of course, this might not be the case if it is sat on the market with a short lease and you need to sell it fast.

The trick to investing in a leasehold is finding an agreement that suits the needs of the investor. If it’s an affordable property with agreeable lease terms and you aren’t in any rush to sell the property on, it can be a great way to save money upfront and grab a bargain. There’s certainly nothing wrong with investing in a leasehold property, if it meets the criteria you need from it – you simply need to be aware of the differences that a leasehold property has to a freehold.

There are also some unique perks, such as not needing to worry about the upkeep of communal areas, which frees up your time when you’re managing your buy-to-let portfolio. The best advice for landlords looking to buy a leasehold to rent out is to seek professional advice and speak to local buy-to-let agents who can offer advice based on the potential yields for the surrounding area. This will ensure the best returns, whatever the type of property bought.

Helping Viewers See The Full Picture: How Agents Can Highlight Potential

Posted on by Dakota Murphey

[Image source: Deposit photos]

When your agency or property management company is tasked with selling a home, it often goes one of two ways; the property is in great condition, has been renovated and practically sells itself or it’s time to get creative as there’s not much to shout about. In scenario two, the best way to sell the property is to highlight its potential, but sometimes it can be difficult to see where that potential lies.

If you’re struggling to see it, then there’s a good chance that viewers are going to encounter the same problem. To help viewers see the full picture of your property portfolio, here are some helpful tips to share as you show people around.

Increasing the property’s footprint

Most people want as much space from their new home as possible, perhaps because they are looking to move to something bigger or they are simply trying to move up the property ladder. Building outwards is one of the easiest and most common ways to improve the footprint of any property, with rear extensions being favoured as most people are happy to lose some of their gardens to improve their indoor living space.

According to CheckATrade, the average cost of a 20m2 extension is £44,000 while expanding a home can add between 10 – 20% to its value. So not only can you use adding an extension as a way to improve potential buyers’ lives and living spaces but also it can be a way to improve their returns when they come to sell.

Adding extra storeys

If the outdoor space is already limited or there isn’t much scope for a rear extension, consider whether an additional storey is a viable option. This could be a loft conversion which can be a quick way of increasing space and adding value, or perhaps a basement with lower floor conversions, which can be a great way to improve the energy efficiency of a home as there are fewer directly exposed external walls.

Of course, there is also the potential for a double-storey extension which will greatly increase its capacity but will require substantial funds. As an agency or property company, you can check whether a house is suitable for extension or additional storeys by asking for pre-planning advice from the relevant council.

Having an informal discussion can give you enough scope to know whether an extension is viable and if it’s a smart marketing strategy as you show viewers around. It requires some additional groundwork on your part but can be worth it to paint a better picture of the property’s potential to viewers who may otherwise be unsure about an extension.

Decluttering and cleaning

House viewers want to be able to imagine themselves living in the property they are being shown around but one filled with clutter and that needs cleaning can be a distraction from those thoughts. For starters, a decluttered home allows viewers to better understand how much space there is in the property they are viewing.

It is also much harder for them to envision how they would live their lives in a house if someone else’s clutter is everywhere to be seen. Sure, it’s not possible to remove the vendor from the home but encouraging them to make their home as aesthetically appealing as possible is a great boost to their chances of selling.

Similarly, a viewer who goes into a home and is met with visible dirt or dust, or perhaps some unsavoury smells, is going to have to work hard to overcome those issues to imagine themselves living there. It might be fine for a buy-to-let buyer but if you are selling the property as a home rather than an investment then it must be set up to succeed, rather than fail.

Acquiring nearby land

Sometimes an opportunity presents itself that allows a buyer to invest in more than they initially think. Consider whether there is any adjacent land available, whether it’s from a neighbour or even just a bit of extra land a freeholder is willing to part with.

This can greatly improve the prospects for potential buyers as they can expand their home, add an outbuilding, add electric car charging or look for further investment opportunities. A quick enquiry with the Land Registry can let you know who owns the land and whether it’s possible to approach a sale.

Updating doors and windows

Doors and windows can be an important selling factor when it comes to buying a home. With old doors and windows, the buyer knows the time they have until they need replacing is limited but again this is an opportunity to highlight the value of upgrading.

Whether it’s the front door, side door, or garage door, security shouldn’t be overlooked and the same goes for insulation levels, where you can show the EPC potential can enjoy a sharp rise with some new doors and windows.

Reconfiguring the layout

Open-plan living is very popular at the moment and while you won’t be able to reconfigure the layout yourself, exploring the options ahead of showing people around can help put the home’s potential into perspective.

Homes with dated kitchens are a great opportunity to showcase the potential in an open-plan layout as people will already be feeling as though they want to update it. Similarly, outdated bathrooms are a great selling point and shouldn’t immediately be something to try and gloss over.

Spending time layout out and describing what improvements are possible and how they could be easily implemented is useful information that viewers can take with them as they think about their options. Updating both rooms will not only represent a great investment but provide real value to the people who live there.

Other layout considerations to point out to potential buyers include installing a downstairs loo, adding a room in the garden as an office or creating a kitchen diner to free up another room in the house.

Are Top Floor Flats Harder For Estate Agents To Sell?

Posted on by Dakota Murphey

The sale of flats and apartments makes up around 1 in 5 homes in the UK (and about half of all property transactions in London). Recent price inflation has lagged behind the growth enjoyed by houses and many factors have contributed to slower capital growth for leasehold flats, among them the leasehold and cladding scandals of 2017 and the COVID-19 pandemic.

However, in 2023, the demand for flats and apartments in the UK is expected to strengthen. Urban living is gaining traction again post-covid, while budget-squeezed households and high mortgage rates mean property buyers are looking for affordability and value for money.

Of course, it’s easy to make sweeping statements and predictions, but don’t forget that demand is also majorly affected by property specifics. Flats come in all shapes and sizes and can be found in a wide range of locations, sited on different floors in purpose-built blocks or converted buildings. Some are new-builds and are assumed to be in pristine condition, while others are charming period flats with original features. And that’s before their leasehold status is taken into account…

In this article, we’ll take a look at the desirability of top floor flats. Is it easier or harder to sell a property on the highest floor of the building? What are the advantages of living on the top floor? Are there any perceived drawbacks of this type of property and how can estate agents address potential buyer concerns and allay any fears?

What are the key selling points of top floor apartments?

Top floor flats have several obvious advantages over properties on lower floors, and these selling points provide excellent opportunities for marketing the sale:

Great views

One of the main attractions of living in a flat on the top floor is the views over the neighbourhood. Depending on location, this could be a panoramic sea view, a sweep of the eye across the city’s rooftops or a glimpse of greenery in a public park on the opposite side of the road. Urban property buyers, in particular, will be looking for great views, with London’s iconic cityscape being top of the list of desirable vistas.

Natural light

Abundant natural light is high on homebuyers’ wish lists, especially in smaller properties where it can add a sense of space. In a recent survey, nearly 85% considered this the most important criterion when buying a property. Compared to ground floor or mid floor accommodation, top floor apartments have a natural advantage when it comes to light. Maximise the effect by opening curtains and window dressings to let the light flood in and show off the bright and airy feel that buyers love.

Greater privacy

Privacy and seclusion are also highly prized, particularly among city dwellers who tend to be looking for a peaceful sanctuary to retreat from the urban hustle and bustle. Moving to the top of the building means less traffic noise from the streets below, less commotion on stairways and lifts and generally fewer disturbances. With nobody living above and the windows ideally not overlooked by nearby buildings, a top floor flat combines the convenience of urban living with the ultimate in privacy.

Good security

Being the least accessible property in the building has definite advantages when it comes to home security. Most burglaries are initiated by thieves spotting an opportunity such as valuables left in plain sight, an open window or unlocked door to gain entry. It is the reason why ground floor and basement flats are at greater risk of break-ins. None of this applies with a top floor flat, which is inherently the safest place to be.

Adding value

While it is much more difficult to add capital value to a leasehold flat compared to a freehold property, there may be an opportunity with a top floor flat. It may be possible to develop the unused loft space above, subject to the lease and the necessary consents being obtained. If the attic does not form part of the demise, could the freeholder be approached with an offer to buy the space in the loft? It’s worth pointing out the possibilities to any interested buyer.

What are the potential drawbacks of top floor properties?

Top floor apartments can be an excellent purchase, and the best properties should have no difficulty achieving the optimum price. In some cases, people prefer a low-rise flat because they are scared of heights or are worried about the re-sale value. Flats on a short lease might be even tougher to sell if they are on an unpopular floor in a building. That said, agents need to be prepared to address some of the downsides potential buyers may identify and counter any negative perceptions.

Too many stairs

A flat at the top of the building means many flights of stairs to climb, unless of course there’s a lift. Older properties and period conversions may not have one, which could be a real problem for young families with babies in prams, elderly people and those with mobility issues. Even fit and healthy buyers may feel uncomfortable having to go beyond the second floor to carry the shopping up or the bins down, and bulky deliveries such as furniture could also be an issue.

Roof leaks

It goes without saying that properties on the top floor, with no one living above, will be most vulnerable to any damage caused by roof defects and water leaks. Most top floor flats will be absolutely fine and unless there’s any evidence to the contrary when buyers come to view, there’s no reason to draw attention to issues that don’t exist. In any event, should water start leaking through the ceiling, the freeholder is typically responsible for any roof repairs.

Lack of outdoor space

Ground floor apartments and basement flats may have the benefit of a patio or private garden, which constitutes a valuable asset that top floor accommodation simply cannot provide. In fact, outdoor space is much harder to come by in apartments at the top of the building, but usually, the abundance of natural daylight and great views make up for it. Top floor flats with a balcony, a roof terrace or even a roof garden, and luxury penthouse apartments, are clearly premium properties and need to be marketed as such.

Conclusion

In the end, there’s unlikely to a simple answer and most often it will come down to the individual apartment you are trying to sell. Whilst many of the negatives to top floor flats are self evident to potential buyers, it’s important to check for all the positives as well, know the positives as some might be more easily missed. This should help you to achieve maximum value for your clients.

Sustainable Property Maintenance Jobs Agents Shouldn’t Ignore

Posted on by Dakota Murphey

Property maintenance doesn’t just improve the aesthetic quality of a home, it also helps to retain value, or even significantly increase it. Regular maintenance could increase a home’s value by at least 1% per year while neglecting it can cause properties to depreciate.

Any home is a valuable asset and when it comes to selling, those in better condition understandably tend to fetch a higher price. That’s why it’s essential to carry out regular maintenance on a property or asset, yet some remedial projects are easier to work on than others.

Running the vacuum cleaner around and trimming the hedges is one thing, but grabbing a ladder or some heavy-duty equipment isn’t something most people can do on a whim. Here are our essential green property maintenance tasks that agents shouldn’t ignore when talking to their clients.

Upgrading insulation

Insulation is essential all year, not just in the winter. Effective insulation can help to regulate temperature during the summer months and retain heat when the chill hits. Insulation materials come in many forms and if you are looking for sustainable materials we recommend natural wool, cork, hemp or cellulose.

Using natural materials to insulate a property rather than synthetic or man-made ones does mean that they have a relatively limited lifespan, however. For example, cellulose insulation is typically good for 20 to 30 years but can begin to degrade by the 15-year mark.

Upgrading a property’s insulation provides an energy efficiency boost and makes it more sustainable as fewer resources are required to maintain a comfortable temperature. From cavity walls to the roof and floors, there are plenty of opportunities to upgrade the insulation in a home to improve energy efficiency. And, with the cost of living crisis pinching wallets, being energy efficient is more important than ever.

Gutter cleaning

Perhaps one of the most common household maintenance tasks that gets forgotten or neglected is cleaning out the guttering. They can get clogged with leaves and debris that blows in throughout the year and this causes a blockage.

It is a relatively simple fix but often requires the assistance of a long ladder or a high-level platform to give you the access you require. Without the gutters diverting any rainwater away from the home you are putting your property at risk of water damage.

That water can pool in places which causes leaks that seep into the roof as well as the frames and fascia of a property. If left unattended this water can lead to mould, rot and mildew which risks your tenants’ health and can cost thousands to repair.

General roof surveys and maintenance jobs

The roof is often a property’s first level of protection against the elements, be that the wind, rain or even the sun. But, unlike other areas of a property, it’s difficult to check on the status of the roof due to how high it is.

You just can’t see the roof well enough from the ground so it’s important to gain a better perspective, particularly following a heavy downpour or strong storm. High-access equipment hire allows you to inspect any roof damage from a better vantage point.

Having the right high-level equipment allows for other maintenance tasks to be completed, such as:

  • replacing any broken or missing roof tiles

  • cleaning the outside of windows

  • repointing the chimney breast

  • repairing the roof and gutterings

  • painting elevations and chimney pots, and

  • inspecting solar panels (if the property benefits from having them installed).

Having a safe platform in place to make these comprehensive maintenance checks can also help you to oversee whether a property’s renewable energy sources are running effectively.

Creative and sustainable landscaping

Landscaping and gardening is a job that many people put off but once completed can transform how a home looks and feels. Not only will the outdoor space be easier on the eye, but it can also be more welcoming to residents’ guests and encourage local wildlife to flourish if you take an eco approach.

Many people are opting to include a wild zone in their outdoor space to promote any wildlife to move in, and potential tenants looking for outdoor space may wish for an eco-friendly environment outside their rental home. Ideas include ponds, allowing a patch of grass to grow wild and uncut and composting facilities. It’s important to reclaim as many materials as possible for any landscaping project to help make it as environmentally friendly as possible.

Also try to consider using plants that are native to your area. For example, bell heather is prominent in Kent and adding some to your wild garden will help boost the numbers of bees, moths and butterflies that thrive on it.

Install rainwater collectors

Countries like the UK experience plenty of rainfall throughout the year, even when it’s summer and the sun is meant to be shining. Rainwater harvesting allows homes to conserve water by collecting it throughout the year and using it for common household chores. For instance, harvested rainwater is ideal for flushing toilets, washing cars or watering flowers during hot and dry spells.

This allows residents to cut down on their water consumption, which is not only good for the planet but also helps reduce water bills. Modern toilets use as much as five litres per flush, while older models made before 2001 use up to 10 litres per flush. Depending on how much space you are working with, rainwater collection barrels can collect as much as 210 litres.

Electric car charging point

Perhaps one of the most important upgrades property management companies can make to a modern home concerns transport. Electric cars are very much the future of the automotive industry and with the sale of new petrol and diesel cars to end by 2030, that future is rapidly approaching.

Requiring a qualified electrician, electric car chargers are an important upgrade due to the prominence of electric vehicles on our roads. Zero emissions cars continue to grow in popularity and an electric car charger at home is beginning to be a must-have.

With homes that have an electric car charging point installed selling for 30% more than those that don’t, it is a significant consideration to make. Electric car chargers can cost up to £1,000 to install but considering the value they add to a home, and the convenience they provide, they are a worthwhile and sustainable home upgrade.

Snagging Report or Home Survey – Which Option Should Agents Recommend?

Posted on by Dakota Murphey

A property purchase is a major financial commitment and most residential home buyers are in need of professional help to understand whether the asset they have their eye on is indeed a good investment. Stories abound of ‘nasty surprise’ building defects or issues that can cost thousands of pounds to remedy after the transaction is completed.

Independent home surveys and snagging surveys can be invaluable to help prospective purchasers gain valuable insights into the condition of the building, providing the necessary facts for informed decision making. But with so many different types of surveys to choose from, which one should estate agents recommend?

What is a snagging report?

A snagging list is typically drawn up at the end of a construction project. As such, it is associated with new-build properties, where building issues are identified by the prospective buyer to be addressed by the developer as a condition of sale. It’s not a survey as such, but rather a list of defects that can be passed on to the builder for remediation either before or after completion.

A snag is simply a defect that needs repairing – usually a minor or cosmetic issue such as a cracked tile or chipped paintwork. However, it could also apply to substandard workmanship such as faulty window and door installations, leaking pipes or poorly installed insulation, and could even include structural defects. The snagging list will cover everything, from ensuring that heating systems and smoke alarms operate as they should, to highlighting decorating defects or poorly finished joinery, to checking that Building Regulations have been complied with.

The snagging survey can be carried out by any building expert; they don’t have to be Chartered Surveyors. Ideally, they should operate independently of the housebuilder, so that an unbiased assessment can be provided.

What is a home survey?

A home survey is an independent property survey carried out by a RICS Chartered Surveyor. There are currently three types of inspection endorsed by the RICS:

  1. A basic Condition Report

  2. A mid-level HomeBuyer Report, and

  3. An in-depth Building Survey (formerly known as a full structural survey).

Prices for surveys start from around £300 and vary depending on the level of investigation as well as the value of the property.

  • Level 1 Condition Reports average from around £350+

  • Level 2 HomeBuyer Reports cost about £500, and

  • Level 3 Building Surveys cost approximately £900.

Here’s a useful overview of costs.

A Condition Report provides a snapshot overview of the condition of the building on the day of inspection, without adding much detail. An intermediate HomeBuyer Report consists of a visual inspection of the property inside and out, checking the condition of all building elements and identifying issues, such as damp, subsidence and other potentially serious issues. It will also advise on possible causes of such issues and will recommended any repairs and possible maintenance required. A RICS Building Survey is suitable for older and larger properties and those with complex surveying requirements, and delivers a comprehensive analysis of the condition of the property alongside ample professional guidance.

Who is responsible for repairs?

If the property in question is a new-build, the housebuilder is responsible for rectifying all the agreed snags for as long as the property is still under warranty, which is normally up to 2 years after completion. This puts the onus on the buyer to find all and any issues as soon as possible.

For resale homes, the seller is not obliged to repair any issues detected, whether these are flagged up via a snagging report or home survey. However, if issues of concern are identified, the buyer may ask for the valuation to be revised downwards for the sale to proceed or they may pull out of the transaction. If the property is a fixer-upper, it would be unwise for the seller not to disclose known faults.

Which type of survey is most appropriate?

Estate agents are likely to be asked for their professional advice and recommendations regarding the best survey for the property. Buyers will assume that you have a clear idea of the condition of the property and if you wish to maintain your reputation and ongoing trust of buyers, it is essential that you are transparent about known flaws of any property you are marketing for sale.

Recommending any kind of pre-purchase investigation is therefore a prudent move that can protect you from any accusations that you hid what you knew about the property and potentially poor reviews for your agency.

A snagging survey is the obvious choice for new-build homes or properties that fall under warranty. Even if there are additional costs associated with a snagging survey, it is an excellent opportunity for the buyer to ensure that problems are fixed by the contractor before signing on the dotted line. There is no risk in recommending that buyers spend their money on a snagging survey. What’s more, you may even be able to benefit from building a network of qualified and trusted snagging surveyors to recommend.

Essentially, the right survey to recommend will depend on the type, age and apparent condition of the property and the buyer’s plans for it. For a new build, a snagging list is likely to be the best option, although a RICS Condition Report may also be an excellent choice. Potentially, both types of survey could be carried out alongside each other for a comprehensive check and peace of mind for the buyer that no unforeseen issues will emerge.

For resale homes, older buildings and period homes, the choice won’t be as straightforward. While a RICS home survey is likely to be the better option, there are different levels of investigation available that only a qualified surveyor should be able to recommend directly to the buyer. Your best bet is to have the names of one or two experienced local surveyors to hand that you can pass on to prospective buyers, and let them take it from there. As estate agents, it is your job to provide buyers with the available options so they can choose what’s best for them.

Why do more than a quarter of property sales fall through and what can agents do to stop it?

Posted on by Dakota Murphey

Buying and selling property in England and Wales is a complex process that most homebuyers actually know very little about. Property investors with multiple assets may be more clued up, however the majority of residential buyers and sellers rely on the expertise of their estate agent and conveyancer to guide them safely through the transaction.

What’s more, moving home is reportedly one of the most stressful life events, right up there with getting divorced or losing a loved one. With emotions running high and huge financial commitments on the line, it is perhaps little wonder that property transactions don’t always go smoothly.

According to recent findings, around one in four residential property sales falls through every year before completion. In 2021, these figures may be nearer 40% as a direct result of the high-pressure property market we’ve been experiencing. With demand for properties to buy at an all-time high, there are plenty of things that can go wrong between an offer being accepted and contracts being exchanged.

About our guest blogger:
Dakota Murphey has experience in property management with her portfolio of properties expanding in the South of England. Her passion for renovation and home improvement projects is shared through her writing to help educate and inspire others.

A property sale or purchase falling through before the transaction becomes legally binding is not only inconvenient, it can involve substantial financial losses too. In general, it is useful to see if anything can be learnt that might help estate agents avoid sales falling through at all. Let’s, therefore, consider the main reasons for a failed property transaction.

Bad survey results

Once an offer has been accepted and the conveyancing process initiated, most prudent homebuyers will arrange for an independent home survey to be carried out. Having a RICS-accredited building professional inspect the property’s condition and provide valuable feedback is an important due diligence step. And while every buyer will obviously be hoping that the building will be given a clean bill of health, the news is not always good.

The survey report plays an important part in the purchasing process. Building defects and issues of varying degrees of severity may be identified, and while some of these can be easily rectified by the seller before exchange, or a price discount negotiated to cover the cost of repairs after completion, others may represent a deal breaker. The main culprits relate to structural issues such as subsidence and heave, damp issues, timber decay, roof defects, asbestos containing materials, outdated services and invasive garden species such as Japanese knotweed.

No funds available

The vast majority of residential property purchases are funded by way of a mortgage. In a competitive market, a buyer who has an agreement in principle in place is in a stronger position than one who doesn’t, and many estate agents won’t even put forward an offer unless it is backed by an AIP. However, a lender’s decision ‘in principle’ is just that. Before the funds can be released, mortgage companies carry out a variety of checks and obtain their own valuation to assess the risk. There are numerous reasons why a mortgage offer may not be approved after all. From problems with the building itself to irregularities in the application form, a recent job or other changes in the applicant’s personal circumstances, the buyer could unexpectedly find themselves without the funds to proceed.

A growing number of UK properties are bought without the help of a mortgage, which removes the uncertainties explained above and should reduce the chances of a sale falling through on the basis of no funding. However, cash buyers are just as likely to walk away from a poor survey result, or change their mind for all manner of reasons.

Property chain collapse

Property chains are commonplace in residential property transactions. Since most buyers require the proceeds from the sale of their current home in order to purchase their new home, a line of buyers and sellers are linked together in this way, all working towards exchanging contracts on the same day. The chain has a beginning (perhaps a first-time buyer with nothing to sell) and an end, someone who is selling but not buying.

It is the interdependence caused by the ‘linking’ of transactions that can be a problem. Effectively, the chain will only progress as fast as the slowest link in it, and any problems occurring anywhere along the chain will have a knock-on effect for everybody else. Clearly, the longer the property chain is, the higher the risk of something going wrong somewhere.

Property chains can collapse for all sorts of reasons, but there are warning signs that should alert you to urgent action, and plenty of things you can do to keep the chain moving.

Gazumping or gazundering

When buying and selling property in England and Wales, the signing and exchanging of contracts that gives the transaction legal status comes rather late in the conveyancing process. There is typically a delay of several weeks (or longer) between an offer being accepted and contracts being exchanged, during which period the property survey is conducted, local searches are carried out and mortgage offers are finalised. This can be a nail-biting time for buyers and sellers, and anything can still happen.

Unfortunately, gazumping (initiated by the seller) and gazundering (initiated by the buyer) are not illegal practices despite debates over the years arguing that they should be. As it stands, there is nothing to stop the seller from choosing a different buyer if contracts have not yet been exchanged, or to stop the buyer from suddenly dropping the offer price at the last minute. It goes without saying that these unscrupulous tactics go against any sense of fair play and carry a high risk of one or the other party pulling out from the deal.

Change of personal circumstances

Sometimes, there’s no other reason for a property transaction to be aborted than life happening and things changing. Perhaps the seller has good personal reasons for taking the house off the market, or maybe the buyer has found a better property somewhere else or has decided to stay put.

A change of heart could be the result of a job loss, family break-up, illness or countless other personal reasons that may never be fully explained. While it can be incredibly disappointing to lose a property because someone along the chain has simply changed their mind, there’s nothing much that can be done about it.

Can a fall-through be prevented?

Abortive transactions are always frustrating, especially when a failed mortgage application or a horrendous survey report makes any chances of rescuing the deal pretty much impossible. However, more than half of failed property sales are preventable and can be rescued. If delays or inactivity threaten to derail the sale, the key to keeping the momentum going is good communication.

This is where estate agents and conveyancers need to step up to do the best for their clients especially in a booming property market. Reputable agencies will appreciate that it is in their best commercial interest to bring the sale to a successful conclusion, and many have dedicated sales progressors to jolly everyone along and reduce the risk of feet getting cold or minds being changed. Solicitors will also recognise the need for steady progress towards an exchange of contracts within a reasonable timeframe, and should take responsibility for ensuring no undue delays in the conveyancing journey.