Report finds Britain's homebuying process 'outdated', half a million transactions fail each year

A report from Santander and consultancy WPI Economics has concluded that Britain’s homebuying and selling process is "outdated" and that about 530,000 property transactions fall through across England and Wales each year, imposing direct costs of roughly £560 million on home movers and contributing to an estimated £1.5 billion hit when wider economic losses are included.

The study found that 23 percent of people have experienced a property chain failure and that 85 percent of those saw direct financial losses from failed deals. The average loss per failed transaction was about £1,240, while one in five people who experienced a collapse reported losses exceeding £2,000. Santander estimated the wider economic impact at about £950 million a year through lost productivity, missed work and reduced leisure activity, bringing the combined cost to consumers and the economy to roughly £1.5 billion annually.

The report identified several points of failure throughout the transaction process. The single most common cause of collapse was a seller accepting a higher offer from another buyer, known as gazumping, which accounted for 25.5 percent of failed transactions. Lengthy transaction times caused 19.3 percent of collapses, while survey problems accounted for 16.3 percent and unexplained seller withdrawals for 15.7 percent. Santander’s research also found that 47 percent of movers said finding the right property was difficult and 38 percent said they encountered problems during conveyancing and the legal process.

Buyers’ expectations about timing were frequently unmet. Half of respondents expected the purchase process to take less than three months, but only 41 percent completed within that timeframe. Just 9 percent anticipated a process longer than six months, yet 17 percent reported being involved in a transaction for more than six months.

The human cost was also documented. Santander reported that 54 percent of buyers were ‘‘constantly or frequently stressed’’ during their transaction. Among those who experienced a failed purchase or sale, 64 percent reported elevated stress levels, 57 percent reported increased anxiety, 49 percent cited sleep disruption and 26 percent said the experience strained relationships. Santander’s head of homes, David Morris, said the homebuying system was operating within a framework established a century ago and called for reforms to reduce financial and emotional strain on consumers.

The report broke down the economic consequences of failed transactions in detail. It estimated a £380 million annual cost from people taking time off work to handle paperwork and calls related to property transactions that later failed, and a further £400 million lost to reduced productivity when stressed movers are at work. Leisure-time losses were estimated at £170 million a year. Santander described its figures as conservative and warned that the misallocation of homes and slowed chains also damage housing market liquidity and buyer confidence.

Industry voices quoted in the research echoed the diagnosis and recommended digitisation and better information flows. John Baguley, a mortgage policy expert at industry body UK Finance, said much key property data exists but is not joined up or digitised, meaning buyers often commit to purchases without full information. He argued that better digital access to property information could reduce points of failure.

Kate Davies of the Intermediary Mortgage Lenders Association highlighted the operational cost to lenders and brokers, saying many failures occur after buyers have been fully assessed and approved for mortgages. She called such collapses ‘‘wasted time, money and emotional energy for consumers, and wasted resource for lenders and brokers.’'

Santander proposed a range of solutions in the report, including measures to disincentivise gazumping and gazundering, greater digitisation of property records and processes, and a government-owned centralised property data system to make information available earlier in the transaction. The bank said these reforms would give buyers and sellers more confidence, reduce avoidable costs and make the market more efficient.

Government ministers have flagged housing market reform as a priority, but the report said the scale of process-related problems remains underappreciated. The findings underline tensions in the current system between incomplete information, long legal and conveyancing timelines, and competitive pressures that leave deals vulnerable to last-minute higher offers. Industry groups and lenders urged policymakers to consider policy and regulatory steps to modernise the transaction pipeline and reduce the frequency and cost of failures.

The report’s recommendations aim to address both consumer protections and structural inefficiencies. If implemented, they would seek to reduce the number of failed transactions, limit direct financial losses for buyers and sellers, and restore some of the market fluidity that proponents say would support economic activity linked to housing transactions.