The first draft of the government’s proposed reservation agreement between buyers and sellers falls short of what the industry requires, law firm Hart Brown has revealed.
The reservation agreement should be signed by both buyer and seller with each placing a deposit with the selling agents.
However, the law firm found that the proposals would complicate matters and result in considerable extra cost.
If the parties should take legal advice before signing it, these hold up transactions while the terms are agreed and the additional legal costs of the advice will add to the costs of the transaction for the parties, it stated.
However, the law firm found that there is no guidance on the sum and a small one will not prevent gazumping if the seller is offered more money.
The firm also highlighted that presumably a chain will need to be complete before the agreements are entered into as there will need to be simultaneous exchanges of the agreements throughout the chain.
David Knapp, partner and head of residential property at Hart Brown, said that the first draft reservation agreement is based on the traditional lockout agreements.
He added: “Although the intention is well meaning as our residential conveyancing system is in great need of a real change, the first draft is sadly way short of what is required.
“As a firm we do not consider ourselves overly negative and are keen for a change of some form to benefit clients. As an example, once surveys were removed from Home Information Packs (HIPs) we were supportive of them if they were put together with full, as opposed to personal, searches.
“The proposals suggested do not seem to have been fully thought out and have perhaps been rushed. I also question who has been at the forefront of the drafting process.
“Various stakeholders from different sectors and the sharp end of the residential property market ought to be invited to a forum to put forward changes that will be of real value to the public and practitioners alike,” he concluded.
Research released last year by the Ministry of Housing, Communities and Local Government (MHCLG) found that around 50 per cent of buyers and 70 per cent of sellers would like to use the agreements if they were available.