Lisa Mannion, Senior Associate in our Residential Property team in Dundee was featured in the Courier commenting on current property trends. In the article Lisa advised that ‘subject to sale’ clauses by would-be buyers means home sellers are being caught up in needless property chains which are hampering the housing market.
However, Lisa does believe that will ease as people begin realising they are losing out because of a legal detail causing complexity in some deals.
Home purchases which are “subject to sale” - meaning a buyer will not complete the purchase of their next property until their current one is sold - became almost standard practice in the intense heat of the post-pandemic market. It was a clause designed to give buyers the guarantee of knowing where their next home will be before selling their current property.
Now, however, with a market which property professionals consider more tradeable, the clause is holding people back by tying them up in sometimes lengthy property chains. Sellers are sometimes rejecting the higher offer - when that is subject to the same of another property - so that they can move chain-free.
Lisa said: “While demand still outstrips housing supply across Tayside, our market locally is currently pretty stable and simply not as intense as the one we were in when buyers sought certainty from subject to sale clauses.
“That means purchases subject to sale are the wrong tool for the current market. People are beginning to cotton on to the fact that they are inappropriate, ineffective and holding them back. Those who realise this now are going to get ahead and have more buying power.
“There are cases where sellers would rather accept less money for their current property than face the added complication of their deal being dependent on an unknown sequence of other transactions which could fall apart if any one in that chain fails.
“We are finding that those who have sold their homes are then getting the pick of properties because they have money immediately available.”
Chris Todd, Partner in Residential Property in Dundee, believes the market has largely turned on its head from buyers seeking certainty to sellers now wanting to know they can move on without having to wait for their buyer to sell.
He said: “Bidders trying to use subject to sale are being handicapped - and may find that being the top offer is no guarantee of success because of this. Those who are not restricted by this clause are going to find themselves in a far stronger position going up against those who are slower to realise that this is happening.
“In many ways, offers subject to sale had become a habit. They were fine for the market in which they grew, but not now.”
This article featured in the Courier on 23 September 2024.
