Half a million failed transactions annually leave buyers out of pocket and weigh heavily on the wider economy, according to new research from Santander.

ECONOMIC DAMAGE

Santander’s Fixing the Broken Chain report, produced with WPI Economics and JL Partners, found that failed housing transactions in England and Wales cost consumers £560m a year – 40% higher than the government’s estimate earlier this year – while a further £950m is lost to the wider economy.

The study suggests that over 530,000 sales collapse annually, with 85% of affected buyers reporting financial losses. The average hit is £1,240 per failed deal, though one in five lose more than £2,000 through unrecoverable costs such as solicitors’ fees and mortgage expenses.

Beyond the direct financial losses, the research highlights wider economic repercussions. It estimates £380m is lost each year in reduced work output due to stress and time off, £400m from the impact on wellbeing, and £170m from wasted leisure time.

SOCIAL COSTS

Nearly one in four buyers has experienced a collapsed property chain, and Santander’s findings suggest the stress of the process is taking a severe toll. More than half (54%) of those surveyed reported feeling constantly or frequently stressed while moving home, while only 46% regularly felt positive about the experience.

Among those who had seen a transaction fail, 64% reported elevated stress, 57% said anxiety had increased, 49% experienced disrupted sleep and more than a quarter said the process strained personal relationships.

The drawn-out nature of transactions is a key factor. While early stages such as securing a mortgage are relatively smooth, 17% of deals collapse after a month and 43% at or beyond the three-month mark. Even at completion, 38% of respondents said exchanging and moving remained difficult.

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, 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.”

CALLS FOR REFORM

The bank is urging government and regulators to overhaul the system with measures including faster digitisation, curbs on gazumping and gazundering, better up-front information for buyers, a centralised property data system, and wider use of AI in the housing process.

Santander argues that reform could not only save consumers money but also improve mobility in the housing market. Almost a quarter of homeowners told researchers they had considered abandoning plans to move altogether, while 28% said they were less likely to move again after a negative experience.

By contrast, 88% of those who had moved recently said they would be more likely to do so again if the process were streamlined. The bank warns that without reform, the current system risks perpetuating housing misallocation, reducing workforce mobility and leaving families stuck in unsuitable homes.