Buyers could be fined if they pull out of a house purchase under Labour plans

Buyers could have to pay a penalty if they pull out of a house purchase after a certain stage, under sweeping property purchase reforms being planned by Labour.

At the moment, a buyer or seller can abandon a transaction without serious consequences right up until contracts are exchanged, which can be as little as a week before the purchase completes.

According to the property website Zoopla, about one in four home sales currently falls through.

It said the time between making an offer on a property and the exchange is now 134 days - which is 50 per cent longer than in 2019.

If a sale collapses at a late stage, both parties will still be obliged to pay the majority of their legal fees which can run into the thousands.

They will also have shelled out for other services such as surveys and removals, which may not be fully refunded.

The Ministry of Housing, Communities and Local Government said it would enforce 'earlier binding agreements' which would 'stop parties walking away months into negotiations without a legitimate reason'.

These binding conditional contracts could financially commit a buyer to purchasing a home as early as the stage of having an offer accepted.

Such contracts would set out terms for both parties which, if broken, would incur a financial penalty.

Labour intends for them to be implemented by the end of the current parliament in summer 2029.

It said it would work with the property industry to decide the size of the penalties and establish a process for resolving disputes that arise.

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Property expert Phil Spencer said of the plans: 'I've seen first-hand the emotional and financial toll that a failed transaction can take.

'Anything that helps buyers and sellers move with greater confidence and fewer obstacles is to be applauded.'

The Government previously launched a consultation aimed at understanding the measures needed to improve the home buying and selling process, which closed in December.

However, MHCLG said further consultation was needed before its full package of measures for the house buying process would be brought in.

It will consult on mandatory qualifications for estate agents in 2027, as well as publishing a 'code of practice' later this year.

Labour also plans to cut delays in the buying process by forcing sellers to provide more information about their property upfront, a topic which it will also publish 'guidance' on later this year.

It will mandate that sellers and estate agents must provide detailed 'sales packs' to prospective buyers, which will need to include information on the property's condition, whether the seller is part of a chain and information about the service charge and other costs if it is leasehold.

Henry Jordan, Nationwide’s group director of mortgages, said: 'Speeding up homebuying isn’t just about convenience - it’s about helping more people complete their purchases with less frustration and fewer surprises along the way.

'Giving buyers key information upfront, at the point a property is listed, has the potential to transform the process – reducing unnecessary delays and giving people greater confidence to move quickly.'

Homes advertised for sale are already meant to show certain details such as whether the property is leasehold or freehold, the council tax band and Energy Performance Certificate rating.

In 2007, the previous Labour government put in place a requirement for home sellers to provide a 'home information pack' including the terms of sale, evidence of title, copies of any planning documents, local searches, energy efficiency documents and other items.

However, these were scrapped by the Conservative-Lib Dem coalition in 2010.

Under the new reforms, Labour also wants to make property records more easily accessible by creating 'digital property logbooks' which would include information held by the Land Registry and local authorities.

However, concerns have previously been raised about the cost of digitising the Land Registry's vast paper-based archives.

MHCLG said it would also back 'digital identity checks, electronic signatures and AI-assisted conveyancing.'

Steve Reed, the housing secretary, said: 'Buying or selling a home should be one of life’s great moments and not a drawn-out nightmare of delays, hidden costs, and failed deals.

'These changes will make the system faster, fairer, and more secure - giving families and first-time buyers the certainty they need all while saving them time and money.'