Reservation Agreements set to become part of the buying process


Published : 24th January 2019

News

Politicians and officials are studying a ‘model’ two page reservation agreement drawn up by a law firm as a possible way of slashing fall throughs and speeding up transactions.

The news has been revealed by Matt Prior, the lead officer at the Ministry of Housing, Communities and Local Government, working on ways of improving the sales process.

In a contribution to a debate at the Council for Licensed Conveyancers’ annual conference in London yesterday, Prior confirmed that Philip Freedman QC, chairman of law firm Mischon de Reya, has already drafted the model agreement.

Prior told conveyancers at the event that the government is “looking at the parameters” of reservation agreements including “how much money should be put down” and what circumstances - “such as bereavement or loss of a job” – would allow a consumer to pull out of a reservation agreement without penalties.

He says the government wants to work with estate agents and conveyancers to iron out any practical issues connected with operating such agreements, and assessing how the concept could be accepted into a modified and simplified house buying process.

At the same event junior housing minister Heather Wheeler gave political endorsement to the reservation agreement idea.

She told delegates that there are many sellers who don't think their sale will go through and who worry that a buyer pulling out will cause a chain to collapse.

As a result, some 50 per cent of buyers and 70 per cent of sellers say they are happy to enter a reservation agreement to reduce the risk of a fall-through according to a survey conducted by the Department for Business, Innovation and Skills.

A formal announcement on the introduction of reservation agreements is expected later this year.

Wheeler also announced at the same event that, in another part of the government’s agenda to make the house sales process more transparent and accountable, agents’ referral fees would be the subject of new Trading Standards guidelines to be issued next month, alongside a new code on the issue from The Property Ombudsman.

Source:- https://www.estateagenttoday.co.uk/breaking-news/2019/1/reservation-agreements-set-to-become-part-of-the-home-buying-process