Yahoo Finance Spiralling legal delays and council red tape are costing home buyers thousands
Property-buying chains are collapsing as record conveyancing delays spiral out of control.
Transactions are dragging due to a mass shortage of lawyers and high levels of bureaucracy, exacerbated by working from home. As a result, buyers face having tens of thousands cut off their loans, as logistical delays mean sales are dragging well beyond mortgage offer expiry dates.
The average time for a property purchase from accepted offer to completion in the year to date hit 133 days, according to Landmark Information Group, a property data company. This was the longest wait time on record, even higher than during the market boom when there was a conveyancing collapse due to high demand. It is 60pc higher than a decade ago.
For sellers, it took 157 days from listing to completion, also the highest on record. Beth Rudolf, of the Conveyancing Association, an industry body, said: “It is absolutely ridiculous how long people’s lives have to be on hold. It is a nightmare.”
Max Armstrong, of North East Property Investment, a buy-to-let specialist, said in the past 18 months, the average time to complete a transaction in the North East has jumped from six or seven weeks to 17.
He said: “Solicitors have got too much on. The local authority searches are taking double the time. Nobody is back at work and nothing is happening.” Mr Armstrong told of a client who is selling a buy-to-let property to fund his cancer treatment. “It took so long that eventually the buyer pulled out after waiting for four and a half months.”
The delays could trigger house price falls, experts warned. The market has so far been largely shielded from the impact of rising mortgage rates because the buyers transacting today are purchasing with mortgage deals agreed several months ago, when rates were cheaper.
However, as transactions drag on, these deals are expiring, and buyers are having to get new mortgage deals at much higher rates. Between November and May alone, the average two-year fixed-rate deal for a 25pc deposit mortgage jumped from 1.53pc to 2.63pc, according to Pantheon Macroeconomics, an analyst. This was the fastest increase in any six-month period since 2003 and will cost a typical buyer an extra £1,980 a year.
Lenders are also adjusting their affordability criteria and assessments of borrowers’ outgoings as the cost of living crisis deepens. Buyers can suddenly find that they can no longer get a mortgage for the amount they had previously agreed.
Aaron Strutt, of Trinity Financial mortgage brokers, noted a borrower whose mortgage offer was cut by £30,000 after his offer expired, from £350,000 to £320,000.
Simon Brown, of Landmark, warned that more sales could fall through as transactions drag on. “Or the price will come down. The buyer will still be there, but they might just only be able to buy at a lower price.”
Half of all sales in the UK in the year to date have taken more than three months to complete, a record high and roughly double the share in 2017, according to Hamptons estate agents. For mortgaged buyers, the share taking more than six months to complete has hit a record high of 13.9pc. One in seven will therefore have to renew their deals before they can move house.
Purchase wait times ballooned during the pandemic property boom. But they have not improved since lockdown ended, or even as demand has cooled. Instead, they have worsened.
In June 2022, the average wait time for a buyer was 130 days, according to Landmark. This was 19 days longer than in June 2021, when the pressure on the conveyancing process was particularly extreme due to the end of the stamp duty holiday that month.
Part of the problem is a chronic shortage of conveyancers, many of whom left the sector during the pandemic. “They were dealing with extremely emotional people and, frankly, a lot of them got fed up of being sworn at,” said Ms Rudolf.
The industry is trying to speed up the buying process by replacing manual functions but these improvements could soon be overtaken by a property downturn. “Nobody will be able to afford to move and we will see a reduction in property prices, which will spook people. Then, inevitably, properties will take longer to sell,” said Ms Rudolf.
