Key takeaways from this guide: this guide breaks down the ins-and-outs of delayed completion and, more importantly, what you can do to prevent it from happening. We’ve aimed to highlight the key facts, possible causes of delays, common tips to resolve delays and much more.
The last step in buying a property is known as completion. After exchanging contracts, completion day takes place next, at which point the house will legally be yours, allowing you to move in.
Completion also represents the point when you pay the remainder of the house sale price (or agreed purchase price) less the amount of your deposit (which is typically around 10%-20%).
Sometimes there can be unforeseen issues that result in delayed completion. While a strategy that involves a delayed completion date may offer benefits to both the seller and buyer alike on occasion, it can still have some major drawbacks, particularly in financial terms that can have consequences for both parties involved.
Helpful tip: managing your property journey from start to finish can be made easy by using a property app such as Moovshack. Available for both iOS and Android devices.
This article takes a closer look at what delayed completion is, how it affects the buyer and seller, and how much the delay could cost you.
Read on to discover our expert guide to exchange with delayed completion and find our top tips and advice for dealing with it.
In this article, you’ll find:
- Why might exchange with delayed completion happen?
- Why might a delayed completion date after exchange of contracts cause problems?
- Tips for sellers if completion is delayed
- Tips for buyers when completion is delayed
Why might exchange with delayed completion happen?
Agreeing on a property purchase’s timing is often a helpful strategy that can be harnessed as an effective negotiating tool. Although exchange with delayed completion may be problematic in some cases, it can help make you a more attractive buyer to the seller if it is agreed upon in advance. Why is this the case?
At one time, parties with an interest in wanting to buy a property on the market would express that interest to the estate agent, make their offer, and, once the other party had accepted it, the selling price would be agreed, a mortgage would be arranged when necessary, and exchange of contracts by both parties’ solicitors would usually take place around 14 to 28 days before the completion date. However, there has been a shift in recent years.
Now, the buyer and seller often get their solicitors to exchange contracts two or three months before the completion date, and sometimes even longer.
This often happens because the seller is anxious about finding another house to buy on the open market to move to, particularly if they’ve lived in their home for an extended period of time. This is especially relevant for downsizers and older sellers who have to leave behind their lifelong home.
Read more: how long does conveyancing take?
Sometimes delayed completion happens because:
- Planning permission hasn’t yet been given, and the exchange of contracts has taken place after having been agreed as “subject to planning”. In such cases, the buyer doesn’t need to commit fully to the sale until they’re certain they can adapt the home to meet their needs.
- The buyer is relocating to the UK from overseas and has secured their chosen property by exchanging contracts but doesn’t want to complete the transactions and take full possession until they’ve returned to the UK.
- Buyers further down the property chain have asked for exchange with delayed completion as they’re waiting until they have the funds available from their own sale to complete their purchase.
- The buyer is moving areas but is unable to relocate until the school year has finished.
- The house you’re purchasing is currently on the rental market, and you must wait until the existing tenancy has ended.
- The seller requires more time to find a new property on the market to move into.
- You are purchasing a new build home, and the construction isn’t yet finished, or the snagging list has not yet been resolved.
Why might a delayed completion date after exchanging contracts cause problems?
Whether you’re buying or selling a property, a delay to complete could cause some obvious issues. They include:
- When you sell a property, you have a legal obligation to hand the property over in the same state that it was in when the contract was exchanged to the person who is going to buy it. Any issues or defects which occur between the time you exchanged the contract and the time you complete will be your responsibility, and you will need to pay to have rectifications carried out.
- It’s possible that delays could have serious implications for the buyer. A deposit of 10% is a lot of money to pay out when completion is held up by 6 months or more. In some cases, a lower deposit of 5% may be required under these circumstances.
- The seller may decide that they no longer wish to sell the property after an extensive hold-up. In legal terms, exchanging contracts should seal the deal. However, in some cases, they may try returning the deposit.
- If you’re buying the property with a mortgage agreement in principle from your mortgage lender, there are no guarantees it’ll stand once completion finally comes around should the value of the house alter in the meantime.
Both the seller and the buyer of the property have to agree on delaying completion since it has consequences for both, not to mention everyone else who is buying and selling in the property chain.
If you have to wait to sell your home, you won’t have the money to hand until everything finally goes through. Meanwhile, if you’re buying a property, you won’t be allowed to live in it, potentially for months which could lead to difficulties finding a temporary residential property to move into during this additional period of time. This will also involve extra costs and fees.
Read more: how long does it take to sell a house?
The longer transactions are held up, the higher the chance of an issue somewhere within the property chain.
This could result in a seller pulling out, the mortgage offer being withdrawn or, the entire sale falling through. It’s essential to take advice before you attempt to use this strategy.
Tips for sellers if completion is delayed
If you’re the seller of a property, follow these tips:
- Speak to a solicitor as soon as it looks like a hold up is occurring. Some signs of a potential problem include somebody at the property (such as a tenant) refusing to leave or a sign that the finance from the sale will be insufficient to pay off the mortgage on the house. Your solicitor will offer you advice about your legal position and help you to get things moving. If you’re the person causing the hold-up, you may face serious legal consequences, so it’s important to get advice about how you can get out of a difficult position.
- Speak to the estate agents quickly about possible delays. Your agent will be getting a large share of the commission, so they’re obliged to help you if you’re encountering difficulties.
- Contact the buyer and explain the possible difficulties so they can stay in the loop. You can help to prevent any hold-ups by checking everything is in order and ready for moving on the day that you agree for completing the sale.
- Ensure the keys have been handed over to the agents and make sure that you’ve met your obligation to give vacant possession to the buyer by not leaving any goods, furniture or rubbish at the property.
- If there’s any possibility that a long-term delay could occur, you should avoid exchanging on the property until the issues in question are resolved. Again, your conveyancing team will be able to give you the necessary advice about this.
- If the buyer is at fault for the hold-up (for example, if they lack the necessary finance to pay the balance of the purchase price), you have rights as the seller. You can serve a completion notice on them and claim any compensation that has been outlined in your contract.
- Also, the person who is buying will be responsible for payments to the conveyancer for legal costs incurred. Should the case go to court, you can also claim additional losses that you’ve incurred due to the hold-up.
Tips for buyers when completion is delayed
Here are our tips and advice for buyers who are experiencing hold-ups with their property purchase:
- Speak with your solicitor or conveyancer if you suspect a hold-up will occur, particularly if it will be your fault. This could be because you’re late in paying the balance of your agreed price, because your mortgage hasn’t come through yet or has been withdrawn, or because there is a problem somewhere in the moving chain.
- Contact the estate agents about a suspected hold-up and check whether you might be entitled to a benefit or concession for the losses you’ve incurred.
- Keep the other person informed about possible hold-ups to the transaction and share information with them to avoid the risk of acrimonious dealings.
- Ensure everything is in place in plenty of time before the agreed date, with all required payments having been made.
You have contractual rights that you can exercise should there be an unexpected hold-up. Ensure you check the conditions in your agreement thoroughly and be prepared to exercise those legal rights should a breach occur.
We hope that the comments and advice that we’ve given you here offer you extra value and will help you avoid the risk related to delayed completion so that you can move to your next property without undue hold-ups or extra costs to pay.