Calls to copy Scotland as report shows over a billion lost each year to inefficiencies
The outdated mechanics of the UK’s property market are exacting a steep toll, both in financial terms and on the wellbeing of buyers and professionals alike. According to a report from Santander, failed housing transactions in England and Wales are now costing the economy and individuals at least £1.5 billion a year.
Drawing on analysis by WPI Economics and consumer research by JL Partners, the study lays bare the scale of the problem: more than 530,000 housing transactions collapse annually. The direct financial impact on consumers through unrecoverable costs such as legal and mortgage fees totalling £560 million, while a further £950 million is drained from the broader economy through lost productivity, reduced wellbeing and wasted time.
For Jeni Browne, a mortgage broker at MFB, these figures mirror her everyday reality. “The current system is archaic and makes the process of buying and selling stressful, protracted and often expensive,” she told Mortgage Introducer. “Clients may be dealing with major life events - relocating for school catchment areas, expanding families, financial distress - only to face crushing disruption when deals fall through.”
Stress and setbacks: A broken process
The report, Fixing the Broken Chain, highlights a system riddled with inefficiencies. One in four buyers have experienced the failure of a property chain, while 85% of those affected reported some form of financial loss. The average cost of a failed transaction is £1,240, with one in five losing over £2,000.
Yet the financial impact only scratches the surface. Buyers describe the experience as emotionally draining, with more than half reporting frequent or constant stress throughout the process. Among those whose purchases fell through, 64% said their stress levels were higher than normal, 57% suffered increased anxiety, and nearly half reported sleep disruption.
Brokers, too, face financial exposure. “We will pour hours of work into an application for it to fall through,” Browne said. “We won’t get paid by the lender, so have worked for little or nothing. It’s part of the job, yes, but it’s undeniably costly to our businesses.”
Structural weaknesses and economic drag
The report’s findings point to a homebuying system that has failed to modernise. Many of its foundations date back over a century, unsurprising, perhaps, given that even the government’s £400 million annual estimate of transaction failures is some 40% below Santander’s calculation.
Delayed timelines and a lack of legal certainty continue to hinder progress. Of the failed transactions surveyed, 43% collapsed three months or more after the process began, with delays and uncertainty often compounding buyer fatigue and frustration.
In turn, this inertia creates wider economic distortions. Poor mobility reduces labour market flexibility, while housing misallocation, families stuck in properties too small or unsuitable, places a drag on broader economic efficiency.
Calls for reform: Lessons from Scotland and beyond
Santander is urging policymakers to take decisive action. Proposals include digitising the entire homebuying ecosystem, introducing a centralised property data system, disincentivising tactics such as gazumping and gazundering, and incentivising the use of artificial intelligence to speed up processing.
Other markets offer useful parallels. In Scotland, early legal commitment and enhanced disclosure significantly reduce the risk of late-stage collapse. “Moving to a Scottish system where a home report is available when marketed and contracts are exchanged early would avoid nasty surprises,” said Browne. “If all parties are fully informed and committed at an early stage, we’d see a spectacular reduction in failed sales.”
The way forward
While the government has signalled its intention to improve the homebuying process, pledging digitisation initiatives and better data standards earlier this year, Santander warns that these efforts remain too modest in scale.
David Morris, Head of Homes at Santander UK, said: “Buying a home should be a moment of excitement and hope, but for too many people, it’s an uncertain and exhausting process. This antiquated system is an increasingly heavy anchor weighing on the economy. Fixing it must be a priority.”
As housing affordability and accessibility remain perennial concerns, the growing recognition of the systemic failures in the transaction process may prove to be a pivotal lever for change. But whether the government and industry can align around a shared roadmap remains to be seen.
