Should we take deposits for properties?
In the UK there is very little commitment for any purchaser to make on a property should they wish to purchase the property which gives the seller little security right up until exchange of contacts, the same for buyers… sellers can pull out at almost any point.
Some ‘new build’ companies, like take a deposit, recently a client of mine had to place down £500 as a non refundable deposit. which i feel is a great idea.
In Scotland it is common practice to put down between £500-£1000 as a ‘non refundable’deposit when purchasing a property… so why not the in England.
My thoughts are, a buyer can walk into any property, like the look of it and make an offer….
If this offer is accepted they can then have a survey done (some lenders provide one for free), they can go through the conveyancing process and the whole process could be running for 6, 8 or even 12 weeks or more and the purchaser (or even seller) can wake up one morning with a change of heart and pull out of the transaction having lost not very much financially….
I feel, when a property is on the marketing, a seller should be prepared to put £500-1000 deposit into a secure client account with the estate agent, once a purchaser is found that purchase should also do them same. This means ‘which ever’ party decides to walk away from the transaction automatically forfeits their deposit to the other party as some compensation.
although £500 isnt much, and in the scale of things could be as little as 10% what could be lost by a party in this situation but it is something and a start.
once exchange of contacts happen the deposit placed on offer acceptance should then be returned to both parties to prepare of the ‘big move’.
if i had it my way i would say £5,000 each, however i understand that most people will not have this amount to place into an account so £500 isnt really much to ask but it will help reduce the risk of another party pulling out as £500 to a first time buyer is quite a sum compared to their full deposit.
the industry is broken, there is no doubt in that! – it hasnt stepped forward for decades and if anything the process seems to be getting longer as times go on, with more checks, more hoops, more surveys, longer application processes a process which ‘should’ take 40-50 days can easily take 100+ if there is a lengthy chain.
but that’s a post for another day!
so, what are your thoughts? would you be open to put a deposit down to secure a property you want to buy? if so how much do you feel is reasonable?