Labour to fine buyers who pull out of house purchases under plans to end 'nightmare' delays

It would prevent either side from withdrawing without consequences unless there is a legitimate reason.

Under the current system, buyers and sellers can walk away from a property transaction without significant penalties until contracts are formally exchanged, which often takes place only days before completion.

The Ministry of Housing, Communities and Local Government said the reforms would introduce "earlier binding agreements" designed to "stop parties walking away months into negotiations without a legitimate reason".

The Government intends to implement the changes by summer 2029.

Property website Zoopla estimates that around one in four house sales currently fall through before completion.

The average period between an offer being accepted and contracts being exchanged has increased to 134 days, representing a 50 per cent rise compared with 2019.

Transactions can collapse for a range of reasons, including buyers finding alternative properties, difficulties obtaining a mortgage or sellers accepting higher offers from competing purchasers in a process commonly known as gazumping.

When a sale falls through at an advanced stage, both parties are usually left responsible for legal costs that can run into thousands of pounds.

Buyers and sellers may also lose money already spent on surveys, removal services and other expenses that are not refundable.

The proposed binding contracts would establish clear obligations for both parties, with anyone breaching the agreement potentially required to compensate the other side financially.

Labour said it would work with industry representatives to determine the level of penalties and establish a dispute resolution process.

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The reforms would also reintroduce mandatory sales packs, similar to the Home Information Packs introduced under a previous Labour Government in 2007 before being scrapped by the Coalition Government in 2010.

Under the plans, sellers and estate agents would need to provide prospective buyers with information relating to the condition of a property, the status of any housing chain and leasehold costs where relevant.

The Government also plans to consult in 2027 on mandatory qualifications for estate agents, which could result in the profession becoming formally regulated in a similar way to financial advisers and accountants.

Bob Singh, founder of Chess Mortgages in Uxbridge, welcomed the proposals.

Mr Singh said: "Estate agents are the only unregulated players in the purchase process.

"It's about time regulation came in to stop the overvaluations we see."

Labour also wants to introduce digital property logbooks bringing together records held by the Land Registry and local authorities, alongside wider use of electronic signatures and artificial intelligence-assisted conveyancing.

Property expert Phil Spencer backed the plans.

Mr Spencer said: "I've seen first-hand the emotional and financial toll that a failed transaction can take.

"Anything that helps buyers and sellers move with greater confidence and fewer obstacles is to be applauded."

Henry Jordan, Nationwide's group director of mortgages, said making key property information available when homes are first listed "has the potential to transform the process reducing unnecessary delays."

However, David Smith, a partner at Bishop & Sewell, warned that the proposals could increase costs for estate agents and consumers.

Mr Smith said the additional requirements could prove "a bit of a pointless exercise" if they fail to alter buyer behaviour.

Housing Secretary Steve Reed said: "Buying or selling a home should be one of life's great moments and not a drawn-out nightmare of delays, hidden costs, and failed deals.

"These changes will make the system faster, fairer, and more secure."