Compensation for costs due to buyer delaying exchange

Asking_for_a_friend

Scenario: Seller accepted an offer on their flat 6 months ago. Buyer is a first time buyer and property has been empty for last 4 months waiting for exchange and completion, it’s a second home so no chain at all. 

It’s the simplest possible property transaction. 

If delays have been caused on the buyers side, either the purchaser or their solicitor how can the seller be compensated for the costs to them of the delays. 

These may include:-

Lost rental income

Communal Service charge on the flat 

Extra capital gains tax as it’s a second home

Council tax 

Electricity, Gas, Water, phone/broadband

House price appreciation. 

Each month of delay these costs will mount for the seller with the buyer bearing none of them which doesn’t seem fair. 

Is the only option for the seller to renegotiate the contract to be compensated for the above costs?

loubel

The seller has no right to compensation as they have not entered into a contract with the buyer.

If they want to renegotiate the price then they can do so. Of course, even if the buyer agrees to the new price, this will cause more delays as they sort a new mortgage offer. Or the buyer may pull out altogether and delay the sale even more.

Has the seller asked what is holding things up?

saajan_12

You can't get compensated for the buyer not doing something quickly when they don't have to do it in the first place. They could also (threaten to) pull out unless the price stays as is or reduces even, knowing the seller will suffer those costs for another x months that it takes to start again. 

Besides many of those costs overlap - if your logic is they should have exchanged and completed earlier, then 

Asking_for_a_friend said:

Lost rental income  - wouldn't have received anyway post sale. Arguably you do lose interest on the equity in the property, which it could be earning in a bank post sale. 

Communal Service charge on the flat - ok

Extra capital gains tax as it’s a second home - if the price isn't changing, then the Gain is unchanged.

Council tax - ok

Electricity, Gas, Water, phone/broadband - minimal just for the standing charges; phone/broadband should have been cancelled while empty. 

House price appreciation. - No, you get the amount you always bargained for. 

In terms of options, you could try to negotiate.. of course if it triggers a change in teh mortgage then the time and costs mount again; if the buyer pulls out then the costs mount even more. 

MattMattMattUK

Asking_for_a_friend said:

Scenario: Seller accepted an offer on their flat 6 months ago. Buyer is a first time buyer and property has been empty for last 4 months waiting for exchange and completion, it’s a second home so no chain at all. 

It’s the simplest possible property transaction. 

If delays have been caused on the buyers side, either the purchaser or their solicitor how can the seller be compensated for the costs to them of the delays. 

These may include:-

Lost rental income

Communal Service charge on the flat 

Extra capital gains tax as it’s a second home

Council tax 

Electricity, Gas, Water, phone/broadband

House price appreciation. 

Each month of delay these costs will mount for the seller with the buyer bearing none of them which doesn’t seem fair. 

Is the only option for the seller to renegotiate the contract to be compensated for the above costs?

No buyer or seller has rights to any form of compensation for delays before exchange, they would only kick in if completion was missed. No buyer is going to pay those costs, at best you might be laughed at, I imagine that the actual response would probably be far less polite. 

Put the house back on the market, tell the buyer they have until the property has another offer to complete. 

BungalowBel

We recently had a very similar  scenario :  a first-time buyer buying an empty flat that had been rented out.  It took six months to complete.  IMHO this was caused by solicitor's delays on both sides (ours left the company halfway through the conveyance and we didn't even know until the new solicitor phoned us - we had just wondered why we could never get our solicitor on the phone!).

Meanwhile we had to pay service charge, Council tax, insurance and utilities for the six months and had to pay CGT at the end.

I don't think six months is particularly unusual and you have no contract with the buyer until actual exchange of contracts, (in England),  which doesn't happen until near the end of the conveyancing process.

If you go with another buyer, you will have to start the whole procedure again, so it will take even longer.

I would just hold your nose and be patient.  You can try and hurry your own solicitor up, but there is nothing you can do about theirs.

DullGreyGuy

Asking_for_a_friend said:
Is the only option for the seller to renegotiate the contract to be compensated for the above costs?

You can attempt to renegotiate but the buyer can also say they aren't interested and walk away. Until exchange has happened no one is under any commitment to anything. 

You have other options though like readvertising the property and look for another buyer who wants to move faster

Albermarle

If you make it known to the buyer ( via estate agent or solicitor) that you getting very impatient and are seriously thinking about remarketing the property, it might give them more a sense of urgency to move forward more quickly.

Grumpy_chap

The Vendor can communicate, via their Solicitor, that they want to achieve Exchange of Contracts by a certain date and if that is not achieved they will have to give serious consideration to putting the property back on the market.

our_des

What delays has the buyer caused? or is this just hypothetical?

When we bought out house as FTB, delays came from the vendors side (errors in the deeds/management company pack) and even after the sale there were delays. Their solicitor failed to send forms to a utility company (our hot water/heating comes from a community heat pump) informing them of completion to activate the service agreement with us which meant I couldn't set up the account and my solicitor had to go chasing.

GDB2222

Have property prices gone up in the area, and if you remarket would you get a significantly higher price?

EssexHebridean

It is not the simplest possible transaction simply because it is a leasehold - almost invariably they take longer than freehold transactions, simply because there is more paperwork, and more parties, involved.