A reservation agreement allows a buyer to secure a period during which the seller cannot negotiate with other potential buyers. This gives the buyer time to finalize the transaction without the risk of losing the property to another party (gazumping).
However, it does not guarantee that the sale will occur but may lead to a much improved state of play once expectations are clearly agreed. Once the exclusivity period ends, the seller is free to sell to someone else, and any initial deposits may be forfeited based on the agreed terms which is a benefit of a reservation agreement.
Reservation Agreements are long overdue in the UK Property market. The Conservative Govt were looking into this in 2018 but had not completed the process by 2024. It looks as though the Govt were looking to a large degree at the sector for guidance.
Considering that in the UK anyone can be an estate agent as long as they sign up to one of the regulators. The regulators each offer a different set of rules and adjudicate over those who fund them – well that’s impartial then 😉
Read the full Govt article here
When two parties are agreed upon a course of action a decent agreement that both parties have signed should be all that is required.
If we continued to wait for our Govt to be do directed by unregulated parties we will wait forever whilst estate agents continue to protect their own interests. As the above report states.
Estate agents are currently regulated through the Estate Agents Act 1979 and enforced by a small national enforcement team, the National Trading Standards Estate Agency Team in Powys. They have the power to issue warnings and banning orders to rogue agents, and approve customer redress schemes.
There is currently no minimum professional standard requirement in order to operate as an estate agent, unlike our plans for letting agents. We believe that introducing a requirement to hold a professional qualification backed up with a programme of Continuing Professional Development would professionalise the industry, improve service and reassure consumers.
This builds on our consultation to strengthen consumer redress in the housing sector. We will:
• work with the National Trading Standards Estate Agency Team to strengthen enforcement of the existing regulatory framework for estate agents with a focus on ensuring all agents comply with consumer
protection regulations;
• launch a consultation on creating a mandatory professional
qualification for estate agents following engagement with industry and
regulators; and
• post-consultation, evaluate the responses and consider introducing
legislation where appropriate to ensure all estate agents are suitably
qualified.
