What’s a 'No Sale, No Fee' Conveyancing Deal? • FJP Investment

What’s a ‘No Sale, No Fee’ Conveyancing Deal?

UK Housing Market

Buying and selling of property comes with a degree of risk. If a sale falls through due to unforeseen circumstances, you may still be left with costs like conveyancing and survey fees. Sales do fall through, and it may happen more often than you think. However, it is possible to find a ‘No Sale, No Fee’ conveyancing deal with some conveyancers if you shop around. This basically means that, if a sale or purchase of property falls through, you are then exempt from having to pay the legal costs.

It’s important to emphasise that you may still be liable for other costs if a property sale transaction fails to complete. Searches and surveys, for example, that have been carried out by third parties, the conveyancer hired on your behalf, will still likely have to pay.

In 2020, 306,198 property sales fell through in the UK, representing a 12% rise from the previous year. Particularly in current times with much economic uncertainty, any savings that can be made on the failed completion of a sale is welcome. Data from the final quarter of 2021 indicates that about 34% of property sales failed to complete, a rise of 11% from the third quarter of 2021.

How does ‘no completion fee’ work in practice?

This sort of conveyancing service, often known as “no completion, no fee” or “no move, no fee conveyancing,” shields the buyer or seller from financial harm in the case of a failed purchase. If you’re worried about losing money if the transaction doesn’t go through, this might ease your mind.

If you don’t have a ‘no sale, no fee’ arrangement in place, you’ll be on the hook for the entire conveyancing charge even if the sale doesn’t go through. This may be a significant financial setback for many first-time homeowners, leaving them with little to show for the several hundred pounds in legal expenses they paid.

How much does a ‘no sale, no fee’ cost?

Typically, conveyancing costs about £1,000, with buying perhaps a little more. For any sort of conveyancing, the costs will vary depending on how much you’re paying for the property, where it is located, and which conveyancing company you use. It’s a good idea to find out if your conveyancer offers a fixed-fee conveyancing service before hiring them.

Conveyancing costs may be greater in some situations when using a ‘no sale, no fee’ conveyancing solicitor. Fees will be raised across the field in order for businesses to regain lost revenue from uncompleted purchases so that they can provide this service. If a client buys this service, it might add up to an additional 15% to their final cost. Conveyancers might also ask for a deposit up front.

As noted above, costs and fees from third parties will still be liable for payment. A good example of this is with local authority searches, which the conveyancer arranges on your behalf. These fees can vary, but typically range between £50 and nearly £300. Whether the sale goes through or not, they will still need to be paid.

You will need to shop around to find a conveyancing firm that offers this service, as not all of them do. Furthermore, because of the 1995 Conditional Fee Agreement (CFA), the solicitor who decides on whether to accept you as a ‘no sale, no fee’ customer might decline to proceed on your behalf if it is evident that the transaction will not likely go through.

Pros and cons of ‘No sale, no fee’

There is no danger of losing a lot of money in legal expenses if the deal does not go through. But there are a number of additional things to keep in mind while using this sort of service, as there are both pros and cons to such conveyancing.

Pros

You are protected from losing hundreds of pounds in legal costs if the deal fails to be completed.
Because your conveyancer will also lose out in the event of a failed completion, they have a strong incentive to make sure everything goes ahead smoothly and stays on track. They don’t want to lose the fee, and you don’t want the sale to fall through.
In some cases, you may be able to transfer the deposit you paid on a failed sale into the deposit for your next purchase.

Cons

‘No sale, no fee’ conveyancing can be more expensive to use compared to traditional conveyancing agreements.
Deposits, fees that are not included in the main charge will all need to be considered. These might be charged whether or not the sale is successful.
Things like environmental searches etc. that your conveyancer arranged for you will still have to be paid, irrespective of whether the sale falls through or not.

Is this type of conveyance beneficial?

A ‘No Sale, No Fee’ conveyance might be advantageous or disadvantageous for you, depending on your individual circumstances, such as the state of your financial situation.

It may be worth considering if you are concerned about the possibility of a home sale going through and the loss of money for a full conveyancing service might be particularly detrimental to you.

In the event of a failed sale, this sort of conveyancing will save you money by preventing you from having to pay legal expenses if the deal falls through. On the other hand, your final fee may be more than it would be if you’d employed an ordinary conveyancing firm if the deal goes through. Based upon your personal circumstances, you need to weigh up your options.

In the event that the transaction does not go through, this conveyancing service does not free you from all of your expenses. If the conveyancer arranges for services like searches on your behalf, you’ll still be responsible for paying for them.

Why do property sales sometimes fail to complete?

We have looked at what ‘no sale, no fee’ conveyancing is and considered whether it’s going to be beneficial to you. Now it’s worth looking at some of the reasons why sales do fall through.

Before we do, a quick note on home buyer protection insurance. For those that think this type of conveyancing will not be exactly what they need to suit their finances and personal circumstances, they can alternatively consider taking out buyer protection insurance, which must be in place before hiring a conveyancer. In the event that the sale does not go through, this insurance coverage will reimburse you for part of the expenses incurred throughout the transaction, including fees for valuations, mortgages, and searches and surveys.

A break in the property chain

Most sales fail because of property chain breaks. There is a property chain when a group of buyers and sellers are connected together so that their property transactions all depend on each other. A good illustration is that a person who is both purchasing and selling a home will have to wait for the sale of their home to be completed before they can move on with the purchase of a new home.

Property sales often involve multiple parties in a long chain, and any hiccups can have a ripple effect on the rest of the chain. It’s possible that the buyers and sellers involved in a failed sale may be impacted in a cascading fashion.

One party changes their mind

It’s not uncommon for a buyer to change their mind about purchasing a house. Financial considerations, unexpected changes in one’s circumstances, or perhaps a shift in priorities are potential reasons for someone to change their mind before completion. It’s also possible that sellers will rethink their decision to list their home. They may decide they want to stay where they are instead of moving, or perhaps they have gotten frustrated with how long it’s taking for the sale to go through, such as if the buyer is dragging their feet.

Issues of concern flagged by the survey

Sometimes a buyer will be concerned by what the survey has flagged up, enough for them to pull out of the transaction. If the issue is a large one, like subsidence or woodworm, then the buyer may not want to negotiate the price down and have remedial work carried out. A major structural concern flagged in a survey may be enough for the buyer to be spooked and walk away.

Gazumping

As soon as a seller accepts an offer from another party that is greater than yours, you are pushed out of the transaction and forced to start the hunt for a new property all over again. This is called “gazumping” and is legal to do.

At any moment before you’ve signed a contract, you can be gazumped. Many times, this is because a higher bid has come in and the seller wants to maximise their profit.

Another potential reason for being gazumped is that the seller may choose to reject your offer in favour of one from another bidder who can move more swiftly if you take too long to get a survey done, sell your own property, or wait too long for your lawyer to get things moving. To help reduce the likelihood of this happening, the buyer is advised to be prepared as much as possible to move forward without any delays.

Delays or failures in securing a mortgage

Having a Mortgage in Principle at the time of an offer on a home does not guarantee that the lender will grant the buyer a mortgage. A buyer’s mortgage application may be denied or become more difficult to obtain if their financial situation changes (for example, if they get a pay cut or change in contracted hours). This may cause the sale to be postponed or possibly fail altogether.