Thursday, 14 July 2011

How hard can it be to sell a house?

Hundreds of thousands of us do it every year - move house.

And it has been described as one of the three most stressful things that we might encounter in our lives, up there with bereavement and divorce.

One might be forgiven for thinking that it's an easy thing. You see a house you like, you want to buy it, and then you put in an offer which is accepted. And in the meantime you put your own house on the market, and a lovely buyer comes along, puts in an offer and you accept it, and in due course you all move into your new homes and live happily ever after. But in England and Wales this is not how it works.

If you have been through the house selling process, then you will know that the claims of the amount of stress it causes are not exaggerated. In England and Wales one in every four house sales falls through. It is not unreasonable to suggest that the reason for this is that the process is grossly unfair and hugely complicated.

In England and Wales the transaction is not legally binding until contracts have been exchanged, a process which can take several weeks or even months, during which time either party is free to pull out of the sale/purchase, or even to attempt to renegotiate the price.

Gazumping (a process where the seller sells the property to a new buyer at a higher price) is common practice, as is gazundering (a process where the buyer reduces his offer, often at the last minute, thus putting the seller under pressure to accept or risk losing the sale.

And the amount of paperwork required in order to complete the process is finominal. With solicitors having to send letters backwards and forwards to one another until, eventually, every piece of paperwork is completed and everyone can agree on a date for completion. On average, a house sale/purchase in England and Wales takes sixteen weeks.

So what could be done to make this process easier?

In Scotland the process is different. An offer is legally binding as soon as it is accepted, and the buyer is bound to proceed with the purchase just as the seller is bound to sell the property. Gazumping and gazundering does not exist, and as a result the process takes much less time (around eight weeks) and is far less stressful.

Surely the question needs to be asked as to why this process does not exist in England and Wales? And why buying and selling a house is still one of the three most stressful things we may ever have to do?

The housing market generates a significant amount of tax revenue, with stamp duty at 1% (for houses under £250000), 3% (for houses under £500000), and 5% (for houses over £1000000), therefore it is surely not unreasonable to expect that the process be simplified in order to ensure the housing market remains active, with the minimum amount of stress to vendors/purchasers.

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