How much could a failed house purchase cost you?
We speak to families, couples, individuals and landlords day-day-out and have been supporting homeowners (and those that are soon to be) for almost ten years, with homebuyers’ insurance and several other key products.
One of the most surprising things we’ve found when chatting with those either at the beginning of or nearing the end of their home buying journey is just how little people know about the financial impact of their property purchase falling through – an event that happens more often than you might realise.
The statistics tell you everything you need to know. A study by property platform, WiggyWam, shows that around one in four house purchases fall through – staggering to think, given that around 1.5m properties are sold every year in the UK.
What’s more, this tends to happen due to reasons completely outside of a homebuyer’s control. Having the house move that you’ve set your heart on fall through – whether due to mortgage complications or being gazumped on price at the last minute – is bad enough, but the financial implications can be disastrous for freelancers, contractors and tradespeople.
Did you know that the average cost of a property falling through is nearly £2,500? Sadly it’s the case, as research by financial services firm, Aldermore, suggests. £2,500 can be the difference between having the deposit you need to buy your dream home and not having the money to get on the housing ladder.
But why might a property purchase fall through? And what – if anything – can you do about it? Let’s take a look…
The vendor withdraws
A common cause is that the vendor simply withdraws the property from being sold. Frustratingly, they don’t even need to provide a reason!
Gazumped on price
This one’s a nightmare. Another interested party puts in an offer higher than yours – one you can’t or won’t match – and their offer is accepted.
Compulsory purchase order
The local authorities search may find that the property is associated with a compulsory purchase order. This means public bodies – such as the government or local council – can purchase the property without consent from the owner.
Vendor not legally allowed to sell
There may be cases where the person selling the home is not actually legally allowed to sell you the property.
Change in circumstances
Sometimes, your own situation might change. Whether it’s due to redundancy and financial problems, family issues or simply a change of heart.
Another potential speedbump is when the mortgage lender’s valuation of the property is less than the sum you’ve offered for the house. This often leads to a transaction falling through.
Cost of repairs
Mortgage lenders could insist that rectification work needs to take place on the property before they agree to release the funds for a mortgage. Again, this can lead to complications and the end of a deal.
There are plenty of other reasons why a property purchase might collapse – something that happened over 300,000 times in the UK in 2020, according to homemover data agency, twentyci. And just to make matters worse, this was a 12% increase compared to 2019.
What can homebuyers do about it?
You can carry out as much due diligence as you like, but the fact of the matter is that some things are beyond your control. This is why many people choose to take out homebuyer’s protection insurance, which offers peace of mind should the worst happen.
Rhino Home Protect has supported homebuyers for almost a decade, offering essential insurance to cover nearly every eventuality that may lead to your house purchase falling through. This comprehensive policy starts at just £69. Click here for your instant quote.
One of the issues for older buildings is that the valuer or surveyor thinks it needs a damp survey report, which recommends injection dampcourse and replastering inside with modern plaster. These don’t work on pre-1922 buildings and actually cause damp problems. So the next time the house is sold it has a “failed dampcourse” to add to its woes.
Getting a valuation from a surveyor who specialises in old buildings is easy. Getting the lender to accept that is hard