Andrew Diamond, our Head of Residential Property believes that ‘subject to purchase’ bids hold the potential for unlocking opportunities to bring more homes on to market as well as greater buying power.
The introduction of contract clauses which make home sales subject to the seller buying their next property could help break the bottleneck in Edinburgh’s housing market. Andrew believes such a move could bring forward homes which might otherwise not end up for sale because their owners are worried about their next move as prices remain high.
Offers to purchase subject to sale have become an increasingly familiar feature in Edinburgh’s housing market over recent years. But - with a lack of supply fuelling high property prices and strong demand in and around the capital - Andrew believes turning such clauses on their head could help unlock more homes, potentially handing sellers more buying power in the process.
Andrew said: “Sales subject to purchase could bring many more homes to the market than might otherwise be the case. That’s a significant plus for buyers, who find themselves with more options.
“For sellers, not only does this give them an added level of comfort and greater control over timing and circumstances once they agree to a potential sale, it also gives them a true assessment of the capital they have to invest in their next home.
“And, in the majority of cases currently, that may well be more than they might have expected. This means many sellers have greater buying power. The whole market benefits by increasing supply and easing demand.”
These deals would lay out a timescale for the seller’s next purchase to be made, providing a clear roadmap for both parties.
Andrew added: “We are currently caught in a vicious circle. A shortage in supply is fuelling competition and price increases. More homes on the market would take some of the heat out of the demand, but we know there are people reluctant to sell owing to the fact they’re unsure about their ability to purchase.
“Sales subject to purchase deals with that. There’s real logic to people considering this, taking good legal advice into consideration. It’s something we’re having conversations about with some of our clients.”
In the last financial year (2021/22), the value of homes sold through Lindsays was £207m - an increase from £177m in 2020/21 (+17%). Sales in Edinburgh accounted for £129.6m of that total, up from £129.6m (26.4%) in the previous 12 months. The average Capital house prices through sales with the firm was £314,798. Across Scotland, average house prices have risen by 20% since March 2020 - £151,856 to £181,415.
Article published 19 August 2022.
