Information provided by House Buyer Bureau indicates that the average cost of a property fall-through, for the initial quarter of 2023 stands at £3,370 per transaction. In comparison with the final quarter of 2022, this represents an increase of 2.1%
With respect to fall-throughs, estimated figures suggest 63,970 fell in the opening quarter of this year. This represents a 16% fall compared to the last quarter of 2022, and an 11% fall on the annual comparison.
In the property market, a fall-through refers to a situation where a property sale, which was previously agreed upon between a buyer and a seller, fails to proceed to completion.
It can happen at various stages of the transaction process, including after an offer has been accepted or even after contracts have been exchanged.
There are many reasons a property deal collapses, including:
Financing issues: One common reason for fall-throughs is when a buyer fails to secure the necessary financing or mortgage approval within the agreed timeline. This could occur due to changes in the buyer's financial circumstances, failure to meet lending criteria, or an unexpected decline in property valuation.
Legal complications: Fall-throughs can be triggered by legal complexities, such as unresolved title issues, planning permission problems, or disputes over boundaries. These issues may surface during conveyancing, causing delays or prompting buyers to withdraw from the purchase.
Chain collapse: Fall-throughs can also occur when a property sale is part of a chain, where multiple buyers and sellers are involved in interconnected transactions. If any one of the links in the chain encounters a problem, such as a buyer or seller pulling out, it can lead to a collapse of the entire chain and subsequent fall-throughs.
Survey or valuation issues: During the sale process, a surveyor may identify significant defects or issues with the property, or the lender's valuation may come in lower than expected. These discrepancies can lead to renegotiations, delays, or even the buyer withdrawing from the purchase altogether.
Change in personal circumstances: Sometimes, buyers or sellers experience unforeseen changes in their personal circumstances, such as job loss, illness, divorce, or other financial or personal challenges. These factors can lead to a fall-through as individuals find themselves unable to proceed with the property transaction.
Buyer's remorse: In certain cases, buyers may have second thoughts or a change of heart about the property they intended to purchase. They may discover a more suitable property, lose interest, or simply decide not to proceed for personal reasons, resulting in a fall-through.
It's important to note that while fall-throughs can be frustrating and disruptive, they are not uncommon in the property market. Good communication, thorough due diligence, and working with experienced professionals can help minimise the likelihood of fall-throughs and navigate any challenges that may arise during the buying and selling process.
Managing Director of House Buyer Bureau, Chris Hodgkinson, said: “Market activity has been gradually declining since the closing stages of last year and we’ve seen these more subdued market conditions continue during the first quarter of this year. A silver lining to this notable reduction in sales volumes has been a consequential drop in the number of transactions collapsing and this, on the face of it, is a positive. However, the individual cost of a fall-through has actually increased and it’s also fair to say that while the total number of fall-throughs is on the slide, current market conditions are ripe for an increased threat of a sale collapsing.”
Chris concluded by saying: “Buyers are offering less, sellers are standing their ground, we’ve seen multiple interest rate hikes spur lenders into increasing rates and transactions are taking far longer to complete. All of these factors can increase the chance of a fall through and so while total numbers may be down, buyers and sellers should remain aware of the threat and do all they can to negate it in order to reach the finish line.”
If you are looking for support in the housing market, while minimising the likelihood of dealing with fall-throughs, please contact David Harris & Co.
We have assisted many Finchley landlords connect with tenants, and we know where these groups are looking for rental property. You can take the stress out of connecting with your ideal tenant by turning to a local letting specialist in Finchley.
If you want to make an informed decision in and around Finchley’s letting market, we are here for you. If you have any questions about the local market, or you need assistance, please contact David Harris & Co today. Call us on 0208 346 9122.
