Santander report: Failed property transactions cost buyers and sellers £560m a year and dent the economy

A report from Santander and consultancy WPI Economics found that more than 530,000 housing transactions across England and Wales collapse each year, costing buyers and sellers an estimated £560 million annually and producing a wider economic hit of about £950 million — bringing the total annual cost to the economy and consumers to roughly £1.5 billion.

The study, published by the high street lender, said 23% of home movers had experienced a property chain failure and that 85% of those whose deals fell through incurred direct financial losses. The average loss per failed transaction was £1,240, while one in five buyers or sellers reported losses in excess of £2,000. Santander said common causes included competing higher offers (gazumping), lengthy transaction times, survey issues and sellers withdrawing from sales.

The report set out the main reasons transactions collapse: 25.5% of failures were attributed to a seller accepting a higher offer, a practice known as gazumping; 19.3% collapsed because delays left buyers having to find another property; 16.3% failed after survey problems; and 15.7% ended when sellers withdrew without giving a reason. The analysis also highlighted a mismatch between expectation and reality on timing: half of respondents expected a purchase to take under three months, but only 41% completed that quickly and 17% were involved in transactions lasting more than six months.

Santander said the knock-on economic effects were substantial. The report estimated lost productivity at £380 million a year from people taking time off work for sale-related activity that proved fruitless, a further £400 million from reduced performance while at work due to stress and distraction, and £170 million from lost leisure time. The bank cautioned that its figures were conservative and did not attempt to quantify the impact of misallocated housing or longer-term effects on market fluidity.

The emotional and health toll of a failed transaction was notable in the research. While 46% of people reported feeling positive during a move, 54% said they were constantly or frequently stressed. Among those who experienced a failed purchase or sale, 64% reported elevated stress levels, 57% said anxiety increased, 49% suffered sleep disruption and 26% reported strained relationships. Santander said 28% of people were less likely to move again after a stressful buying experience, whereas 88% of recent movers said they would be more likely to move again if the process were more streamlined.

David Morris, head of homes at Santander, called the current system "antiquated" and urged reform. "The homebuying journey is still operating in the confines of a framework that was established a century ago. This antiquated system is an increasingly heavy anchor weighing on the economy and fixing it must be key," he said, urging changes to reduce financial and emotional strain and to bolster buyer and seller confidence.

Industry figures and trade bodies represented in the report backed calls for greater digitisation and better data sharing. John Baguley, a mortgage policy expert at industry body UK Finance, said key property data were not joined up or digitised, leaving buyers to make decisions without a complete picture. "The current homebuying process can be long, complex, and challenging, with many points of failure which lead to aborted transactions," he said.

Kate Davies of the Intermediary Mortgage Lenders Association said lenders were frustrated that so many failures occurred after applicants had been approved for mortgages. "We see cases where buyers are perfectly creditworthy, the funding is in place, but the transaction collapses because of avoidable problems further down the chain," she said.

Santander proposed a package of reforms including measures to disincentivise gazumping and gazundering, accelerated and more transparent conveyancing, and the creation of a government-owned centralised property data system to make the process smoother and more digital. The bank argued such changes would reduce points of failure and lower the financial and emotional costs borne by consumers.

Policymakers have repeatedly listed housing market reform among priorities for improving economic productivity and social mobility. Ministers and regulators have previously backed steps toward greater digitisation and faster conveyancing, but the pace of change has been gradual and fragmented. The Santander report adds an economic and wellbeing cost perspective to longstanding industry calls for reform and quantifies the scale of transaction failures and their impact on households and the wider economy.

Reform advocates say that improved data sharing and digital processes could give buyers clearer information earlier in the journey, reducing the number of offers accepted in ignorance of problems that later cause collapse. Lenders and brokers have also urged clearer rules around binding offers and the point at which a transaction becomes legally or financially committed, to reduce the incentives for late-stage higher bids or withdrawals.

The report’s findings are likely to intensify pressure on government departments and regulators to accelerate existing digital conveyancing pilots and to consider statutory changes to the timing and certainty of offers and contracts in residential property sales. For now, the analysis sets out a quantified case that market frictions beyond house prices are extracting a measurable toll from consumers and the economy.

(Reporting by Lucy Evans; financial and survey data from Santander and WPI Economics.)