A return to awe: We lost our £25,000 deposit – and our dream home

Clare and Steven George-Hilley think they’ve found their dream family home – a spacious four-bedroom townhouse.

So when the seller asks them to sign an exclusivity agreement they are obligated to, even though they have to hand over a £25,000 ‘holding fee’.

It means the property in South London will be reserved for four months. If the sale has been completed by that time, the deposit will be safe.

The delay took a toll on dear family: Clare and Steven George-Hilley with their children thought they had found their dream home – but ended up losing £25,000

For buyers who have no intention of withdrawing, this seems reasonable. But ten months after signing the contract, delays in the transaction left the family homeless – and £25,000 out of pocket.

They struck the deal at the height of the 2021 home buying frenzy as curiosity ran rampant. Still legal in England and Wales, this is when a sale of property is appropriated by the higher bidder.

It has led to an increase in real estate agents who require buyers to sign exclusivity agreements which, in principle, should also protect sellers from snooping – where buyers reduce their offer at last moment.

And the Government is considering a plan to require all buyers and sellers to sign similar contracts that could leave both vulnerable to losing large amounts of cash if they pull out.

In the case of Clare and Steven, the sale fell through due to a slight delay on their part, leaving the seller to search for a better offer.

When they asked for the deposit to be returned, the seller’s lawyer said: ‘While our customers sympathize, they refuse to return the non-refundable deposit’.

Since the couple had sold their house, they had to spend Christmas in a rented house.

Clare, 37, who runs a PR firm with her husband, said: ‘We were desperate to secure our new home.

‘After we were told the seller had accepted a higher offer, we assumed our deposit would be returned. We were intrigued when we were told they would keep it. We suddenly became homeless and had no money left. ‘

The seller is not obligated to return the fee as the contract clearly states the terms and conditions, which state that the fee is non-refundable, as required by the Property Ombudsman’s code of conduct.

Since the couple missed the deadline due to the delay in the sale of their property, they were held liable for the failure of the transaction.

George-Hilleys is calling for exclusivity deals not to be outlawed, branding the deals as ‘legitimate theft’. But some experts say it’s time for the entire market to be overhauled.

An estimated 300,000 property transactions in England and Wales collapse each year. More than 56,500 home sales have fallen in just the first two months of 2021, many homes to appalling levels. And when sales collapse, both parties could lose large sums of money in legal fees and survey fees.

Jack Shukie, of Think Estate agent in Merseyside, says: ‘The system in the UK is broken because people can cash out whenever they want.’

An estimated 300,000 property transactions in England and Wales collapse each year. More than 56,500 sales fell in the first two months of 2021 alone, many falling to astonishing levels

This problem is less common in Scotland as estate agents are prohibited from acting for anyone who tries to spy on another buyer. It is also common to reduce holding fees when buying a newly built property.

Housing Minister Christopher Pincher last month said his department was looking at rolling out voluntary arrangements more broadly.

He said: ‘Buyers and sellers will legally commit to continuing the sale once an offer has been accepted and may include a financial commitment. “

The new company Gazeal offers deals to more than 1,000 real estate agents. Fees start at £2,000 but can rise to £100,000 on some properties.

Unlike in the George-Hilleys contract, the full holding fee is not charged upfront. However, both sides agreed to pay a penalty if they withdrew.

Co-founder Bryan Mansell, said: ‘It ensures that there is a meaningful commitment to the real estate chain.’ He adds that only 2% of their transactions have ever been done.

Buyers and sellers don’t have to pay fees in some cases, such as when they lose their jobs or can’t get a mortgage.

A spokesman for the Homeowners Union (HOA), which wants deposit retention to be the norm, said: ‘While we are pleased to see bookings [or holding] agreements are in use, we are disappointed that on the current market they only protect sellers.

HOA believes £1,000 is a reasonable penalty, for either party, if they breach the terms of the contract. But mortgage broker Emma Jones, of Alder Rose Mortgage Services in Cheshire, added: ‘I am very wary about setting a holding fee.

‘You’re effectively betting on your purchase.’

Attorneys acting for Cantell and Co., which oversees George-Hilleys transactions, say: ‘We do not pay or receive referral fees and have always advised our clients to obtain independent advice. ‘

h.kelly@dailymail.co.uk

Record equity issuance worth £13m per day

Via BEN WILKINSON and SAMANTH PARTINGTON

Cash out: Susan Wilcox

Older homeowners could be forced to spend money from a £1 trillion home value boom to ease a cost-of-living crisis as inflation hits a 30-year high.

Last year, they pulled a record £13m a day off the property last year as the pandemic sent prices up.

In total, £4.8 billion were unlocked – with a one-time average total of £125,000.

Susan Wilcox, 73, is one of those who have switched to issuing shares.

Her newly built home in Aylesbury, Buckinghamshire, has increased in value by 35pc since she bought it in April 2014. A £66,000 increase could prove a lifesaver.

Divorced, she has no personal pension and her May 2020 departure from a payroll manager job leaves her living on a monthly state pension of £915.

So in 2021, Susan took £70,000 out of her home with an SWR Share Release. She used £28,000 to clear her credit and storage card, pay fees and increase her savings. The rest is there for emergencies, inflated bills, or treats like vacations.

She said: ‘My only option to increase my income is to release the money I have been tied up in this building. I might have to get my hands on it if my energy or food bills double this year, but I’ll try not to. ‘

Equity release allows homeowners 55 and older to receive tax-free cash from the value of their home. But loans – which are repaid on death or loss of care – have compound interest that can quickly erode the value of your home.

They can also come with heavy exit fees. Stuart Powell, of brokerage Ocean Mortgages, says there is ‘panic’ among older homeowners. Many people are using more than the original plan through a share issue to cope with the cost of living.

The lowest share issuance rate was 2.75%, up from 2.25% last year. The average rate is 4.10% – which will turn a £125,000 loan into £231,000 over 15 years.

Andrew Morris, of brokerage Age Partnership, says equity release is used to clear mortgages by homeowners who need more disposable income.

But Baron Ros Altmann, an aging campaigner, said: ‘The fear is that people … don’t realize how insidious the roll-up is.’

Jim Boyd, chief executive of the Equity Board, said: ‘Asset wealth will remain an important part of the retirement funding picture in the years to come.’

b.wilkinson@dailymail.co.uk