In recent weeks the Ministry of Housing, Communities and Local Government has become increasingly vocal about a Reservation Agreement concept, suggesting that a trial in the New Year could see some buyers in two pilot regions of the country being obliged to pay £500 to £1,000 in the form of a non-returnable deposit.
It is obviously not totally clear yet how the agreement will work, but it has been suggested that it will involve one or both parties putting down a reservation fee at the outset. If one party then pulls out the other side would retain the money paid on reservation.
There is expected to be some leeway for buyers or sellers with a suitable reason to pull out such as a bereavement, loss of a job or an inability to obtain a mortgage (i.e.the property is deemed unmortgagable) – otherwise, there would be a lost deposit or some other financial penalty.
Crucially, unacceptable reasons will hopefully cover the more frustrating reasons for gazumping such as reducing an offer at the last minute or accepting someone else’s higher offer.
In addition to this proposed Reservation Agreement, the Government has made it clear that it wants the current 20-week average between a home being marketed and a buyer moving in, reduced to between six and eight weeks and are considering other reforms Buying and Selling Property Information which would include key information about the property and would be provided at the point of marketing a property.