Talk to most property professionals and the bane of their life will be transactions that fall through – unfortunately the UK system is overly prone to these sorts of cases with thousands of deals falling through every year, costing millions of pounds in lost fees and wasted time, effort and resources.
This predilection for pulling out of a deal can often be traced to the fact many potential purchasers only receive relevant information weeks or months into a transaction. It’s something that the property market has simply had to accept over the years, although it is also positive to see many within the sector and government working towards solutions which should hopefully cut these fall-throughs to a minimum.
In essence, we simply can’t go on like we have. The stress of a purchase or sale is heightened when those involved feel the process could collapse or they will not be reimbursed if a fellow party simply decides to pull the plug.
To that end, there needs to be much better information delivered upfront to potential purchasers at the marketing of a property, particularly around the state of the property itself/searches, etc, which means they are clear about what they are potentially putting an offer on and the costs and responsibilities that come with it.
At the moment, that information is delivered some way down the track and, quite frankly, fees will have been paid/costs will have been incurred, resulting in all that being lost if a party feels the need to exit the transaction.
That ‘aborted transaction’ concern is not just for agents or conveyancers or the client themselves of course. In a business where many advisers don’t charge fees, instead relying on the transaction completing before securing their payment, it’s essential that ‘wasted mortgage work’ is kept to a minimum.
Add in the current environment for potential borrowers, particularly around impacts to credit reports and potential hits to income during lockdown, and you can see why advisers – as much as anyone involved in the transaction – need upfront clarity about their client’s financial situation before they can proceed towards any kind of lending solution.
This need is heightened when advisers have such a moveable mortgage feast to contend with – changes to how lenders view borrowers in light of furloughing/income are rife, affordability measures constantly shift, acceptable income does likewise, and clients themselves may be simply unaware of the exact state of their finances and what issues might have arisen during 2020, especially if they have taken mortgage holidays or other payment breaks.
Much like in other areas of the property transaction, the adviser needs clarity and the correct upfront information if they are going to be able to choose the right lender/product first time, rather than potentially moving down a route which is eventually closed to their client.
Having access to the credit report is one thing, but the added benefits of also having an instant view of the client’s income, expenditure and disposable income via Open Banking data, is likely to make all the difference in terms of setting a direction of travel and then being able to move that client to their destination.
Ensuring advisers have a complete overview means that the chances of finding some particularly nasty surprises down the track are greatly diminished, and means, even if the client has (either purposefully or not) hidden some of the financial detail, the adviser knows the true nature of the case and where best to place it.
In any environment, the last thing advisers will want is to see hard work going unrewarded, especially if such an outcome could have been avoided just by simply having total information. That information is available, via a product such as Credit Assess, and could ultimately mean the difference between successfully completing a mortgage (and the other products required) or having another enquiry wither on the vine after a considerable amount of work has been put in. I know which outcome I would rather have.
David Jones is director of Click2Check