A new phenomenon of “subject to purchase” house transactions will become commonplace in the property market in the next year, a law firm has predicted.
Lindsays says this year it has seen an increase in offers with a “subject to sale” clause written in, meaning the transaction can only go through once the buyer has sold their existing property. It believes that will be joined increasingly by a reverse clause caused by the shortage of supply in Edinburgh, which states that owners must find a new house to buy before they can sell.
Andrew Diamond, partner and head of residential property at Lindsays, said: “The ‘subject to sale’ trend is continuing in Edinburgh because of market uncertainty over supply. Owners are wary of selling their current property because they are nervous about being unable to buy a suitable replacement property from the limited options available.
“It’s a vicious circle which is gumming up the market, particularly for second and third time buyers, and it is likely that the market will react to this one way or another.”
Lindsays says the trend for clauses is most common amongst families and downsizers, who are under no pressure to move and will only do so once their own sale is assured. It says this is limiting the supply of available properties.
Diamond added: “At Lindsays we see the possibility of a new clause entering our lexicon – a sale ‘subject to purchase’. This would be a case of a seller – most obviously a downsizer or a family – listing their property and securing a sale conditional on them making a successful purchase. “In other words, the same groups of people who are placing ‘subject to sale’ conditions on a purchase could turn this dynamic on its head and expand the supply of available properties by listing their property ‘subject to purchase’. This could develop into a major trend in Edinburgh in 2020.”