Andrew Diamond: Mindshift needed to break the housing market bottleneck
Andrew Diamond, partner and head of residential property at Lindsays, reveals how ‘subject to purchase’ bids hold potential for unlocking opportunities to bring more homes on to market as well as greater buying power.
Contract clauses which make home sales subject to the seller buying their next property could help break the bottleneck in Edinburgh’s housing market.
Such a move could bring forward homes which might otherwise not end up for sale because their owners are worried about their next move as prices remain high.
Offers to purchase subject to sale have become an increasingly familiar feature in Edinburgh’s housing market over recent years.
But - with a lack of supply fuelling high property prices and strong demand in and around the capital - turning such clauses on their head could help unlock more homes, potentially handing sellers more buying power in the process.
Sales subject to purchase could bring many more homes to the market than might otherwise be the case. That’s a significant plus for buyers, who find themselves with more options.
For sellers, not only does this give them an added level of comfort and greater control over timing and circumstances once they agree to a potential sale, it also gives them a true assessment of the capital they have to invest in their next home.
And, in the majority of cases currently, that may well be more than they might have expected. This means many sellers have greater buying power. The whole market benefits by increasing supply and easing demand.
Such deals would lay out a timescale for the seller’s next purchase to be made, providing a clear roadmap for both parties.
In the last financial year (2021/22), the value of homes sold through Lindsays was £207m - an increase from £177m in 2020/21 (+17%).
Sales in Edinburgh accounted for £129.6m of that total, up from £129.6m (26.4%) in the previous 12 months. The average Capital house prices through sales with the firm was £314,798.
Across Scotland, average house prices have risen by 20% since March 2020 - £151,856 to £181,415.
We are currently caught in a vicious circle. A shortage in supply is fuelling competition and price increases. More homes on the market would take some of the heat out of the demand, but we know there are people reluctant to sell owing to the fact they’re unsure about their ability to purchase.
Sales subject to purchase deals with that. There’s real logic to people considering this, taking good legal advice into consideration. It’s something we’re having conversations about with some of our clients.