Experts at HBB Solutions have been in touch with some of the high street’s major lenders on their cut-off dates for receiving a Certificate of Title (COT) in order to complete on a mortgage by month-end.
HSBC/First Direct - 21 June 2021
Leeds Building Society - 23 June 2021
Halifax - 23 June 2021
Barclays Bank - 23 June 2021
Precise Mortgages - 25 June 2021
Meanwhile, Nationwide/The Mortgage Works has provided no deadline, but have said they will need five working days to send the funds by BACS and if the notice is less, they will deduct £20 for the CHAPS payment.
This effectively means anyone relying on mortgage funding has about a week left for their solicitor to complete their work, so the lenders can get the COT next week and release funds in time to beat the deadline.
This, in turn, means there could be many buyers and sellers, relying on the significant stamp duty savings they could make, pulling out late on and leading to the unfortunate but all too common situation of a chain collapsing like a pack of cards.
However, there are ways agents can prevent long chains and fall-throughs from disrupting their business, HBB Solutions insists.
Chris Hodgkinson, managing director of HBB Solutions and a former agent himself, says: “We all know how frustrating it can be when chains collapse. We’ve been fixing them for nearly 11 years now.
“We typically buy with a discount or alternatively charge a fee, starting from as little as 8%, for our service. But that cost doesn’t have to be absorbed by just one seller, it can be negotiated across the entire chain to make if affordable and keep the sale of every house together. Even if a sale falls through only days away from completion, we’re here to help and get it back on track.”
Fall-throughs and chains breaking down – how big a problem is it?
Data earlier this year estimated that one in four sales fall through before completion, costing homebuyers an average of £2,700 each time.
Research from property platform WiggyWam found that, in total, property transactions that fall through are costing UK homebuyers a massive £607 million every year. And there are fears that this number will inevitably rise further as the stamp duty holiday gradually comes to an end in two blocks.
On average, nearly a quarter of a million (225,000) fall-throughs occur each year in the property market, costing buyers, sellers and agents alike. There are a number of different reasons for property sales being cancelled before completion, which typically include mortgage issues, gazumping and gazundering, conveyancing delays, problems revealed in the survey, and broken chains.
Sales that are part of a chain – which is most sales – are especially vulnerable to fall-throughs, as it only takes problems with one part of the chain to cause major issues for everyone else. In particularly long and complex chains – it’s not unheard of for four or five sets of buyers and sellers to exist in a chain – the chances of fall-throughs and complications are naturally much greater.
It seems highly likely, given the extraordinary levels of demand at play in the property market right now, that the one-in-four statistic – which others elsewhere have previously suggested is as high as one-in-three sales collapsing – will increase by the end of the year.
Hodgkinson continues: “I think we all know the pressure lenders, solicitors, search providers and, in particular, agency sales progression teams will be under in June.
“We’re standing by and have our lawyers, resource and, quite importantly, cash funds all in place. We can give you a purchase price within just a few hours and provide a same day completion if it’s required. If you have a chain that’s not on track, then talk to us, we’re here to help.”
HBB Solutions believes that, even once the two-stage stamp duty holiday has ended, there could be issues with buyers walking away from a sale because they will no longer benefit from the stamp duty saving. In turn, sellers may be less likely to list – or withdraw their home from the market – if they start to panic about demand falling off a cliff.
The firm suggests that agents need to partner with a firm that can offer alternative solutions to be ahead of the game if the worst comes to the worst in terms of more chains collapsing.
The remainder of this month is likely to be incredibly busy for agents, conveyancers, surveyors and removal firms, Hodgkinson adds, and then again in the lead-up to the end of September.
Given the pressure on the system, it seems almost certain that there will be a rise in the number of chains collapsing and the number of transactions falling through, and it will be those agents who have an adequate plan B in place who will be best set to cope.
