Struggling house sales in the UK economy are costing approximately £1.5 billion, according to Santander; strategies to revamp the real estate market
In the UK, the homebuying process remains entrenched in a century-old framework, causing financial and emotional strain for consumers and the economy. According to a report by Santander UK, this outdated system is costing at least £1.5 billion annually.
The report, titled "Fixing the Broken Chain," estimates that around half a million home sales collapse each year, with direct costs to consumers amounting to £560 million annually. The average cost of a failed recent transaction stands at £1,240, and one in five people report losses in excess of £2,000.
Common issues in the UK property market include gazumping (higher offers at the last minute) and gazundering (cutting the asking price at the last minute). These practices can leave both sides of a deal with a large legal bill and wasted time.
Santander UK is calling on the government to take action to fix the broken housing market. The banking giant suggests the creation of a government-owned, centralised property data system to make it easier to find information on properties. More upfront information and digitisation are also proposed to improve the homebuying process.
Another issue highlighted by Santander is the lack of transparency in the property market. Despite rules, many estate agent listings in the UK do not display property risks and material information. This lack of transparency can lead to unexpected costs and complications for buyers and sellers.
The repercussions on the broader economy include the loss of work output due to stress and the time taken to buy a property (£380 million per year), the cost of people's reduced wellbeing (£400 million), and wasted leisure time (£170 million).
Santander also wants illegitimate gazumping and gazundering to be disincentivised. The bank's suggestions could potentially ease the financial and emotional strain on consumers, create a housing system fit for today's consumers and economy, and address the criticism of high house prices and poor supply in the UK property market.
Interestingly, the report also reveals that almost one in four people have experienced a property chain failure in the UK. This highlights the need for urgent reform to modernise the homebuying process and protect consumers from unnecessary financial losses.
In conclusion, Santander UK's call for action to fix the broken housing market in the UK could bring much-needed change to the antiquated home buying process, benefiting both consumers and the economy.
