The UK’s “flawed” housing system costs the economy at least £1.5bn every year, a report from Santander has revealed.
The report, ‘Fixing the Broken Chain’, which analysed a survey of 2,000 customers, highlighted that 23 per cent of respondents have experienced a property chain failure.
This alone is costing consumers £560mn each year, with a further £950mn lost to the wider economy, alongside additional consequences caused by a complex and slow process.
Santander UK head of homes, David Morris, said: “Buying a home should be a moment of excitement and hope, but for too many people, it’s an uncertain and exhausting process that drains their mental, emotional and physical health.
“The homebuying journey is still operating in the confines of a framework that was established a century ago.”
“This antiquated system is an increasingly heavy anchor weighing on the economy and fixing it must be key,”
Santander’s report found that there are 530,000 failed housing transactions each year in England and Wales.
The economic analysis of these figures shows that the direct cost to consumers of this — through expenditure on elements such as mortgage and solicitors’ fees that consumers cannot recoup — is £560mn annually.
This is 40 per cent higher than the government estimate of £400mn used earlier this year.
Broader economic consequences
The report also cautioned that, beyond failed transactions and the costs associated with them, difficult and stressful processes “deter activity” which can cause housing misallocation and reduce the liquidity of the property market.
Santander warned that the buying experience is “so disheartening” that 28 per cent of respondents said they are less likely to move again.
By contrast, a more streamlined process would make 88 per cent of people who moved recently more likely to move again in the future.
“Misallocation of housing brings considerable socio-economic effects, reducing workforce mobility, fewer larger homes for growing families and slowing housing chains,” the bank added.
Action
To address this, Santander called on the government and regulators to expedite digitisation across all stakeholders.
It urged them to disincentivise illegitimate gazumping, and implement the coalition of better upfront information disclosure from all parties.
Santander is also calling for the creation of a government owned, centralised property data system, the improvement of data sharing through a Smart Data Working Group, the incentivisation of AI use, and a long-term approach to support market activity.
“This antiquated system is an increasingly heavy anchor weighing on the economy and fixing it must be key,” Morris pointed out.
Morris added that, while the government has put the housing market firmly on its agenda, the scale of the challenge remains largely “under-appreciated”.
“That’s why we’re calling for powerful reforms to give buyers and sellers more confidence, ease the financial and emotional strain and create a housing system fit for the needs of today’s consumers and economy.”
Santander emphasised the importance of these actions by highlighting the impact the current system has on buyers.
It pointed out that, for many, buying a home is a significant milestone and represents years of savings and the realisation of a long-term life goal.
However, just 46 per cent of homebuyers regularly felt positive in relation to the transaction and, instead, 54 per cent said they were constantly stressed.
This was more acute among those who experienced a failed transaction, with 64 per cent saying their stress levels were higher than normal, 57 per cent reported increased anxiety, and 49 per cent suffered from sleep disruption.
tom.dunstan@ft.com
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