The UK’s antiquated homebuying system is draining the economy of at least £1.5 billion every year, according to new research commissioned by Santander.
The report – Fixing the Broken Chain – produced in partnership with WPI Economics and JL Partners, paints a stark picture of financial waste, stress, and inefficiency caused by a property process that “remains rooted in a framework established a century ago”.
Every year, more than half a million housing transactions collapse in England and Wales, the research found. Nearly one in four buyers (23%) will experience a chain failure.
The direct financial hit to consumers is estimated at £560 million annually, 40% higher than government figures published earlier this year. This is made up of mortgage arrangement fees, solicitor costs, and other unrecoverable expenses when a sale falls through.
On average, buyers lose £1,240 per failed transaction – with one in five reporting losses of more than £2,000. In total, 85% of people affected suffer some form of financial loss.
But the impact extends beyond buyers’ wallets. WPI Economics calculated an additional £950 million blow to the wider economy every year, caused by lost productivity during work hours (£380m), damage to wellbeing (£400m) and wasted leisure time (£170m).
The report highlights how the stress and inefficiency of the current system discourage future housing activity. More than a quarter of buyers (28%) said they were less likely to move again because of the negative experience.
By contrast, 88% of those who had moved said they would be more likely to do so again if the process was modernised. Santander warned that reduced housing mobility creates “misallocation” in the property market – leaving families stuck in unsuitable homes, limiting larger homes for growing families, and reducing workforce mobility.
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, not just to ease the financial and emotional strain on buyers, but to create a housing system fit for today’s consumers and economy.”
The research also documents the emotional toll. More than half (54%) of homebuyers reported being constantly or frequently stressed during the process, while just 46% said they regularly felt positive.
Among those whose purchase collapsed:
• 64% reported heightened stress levels
• 57% suffered increased anxiety
• 49% experienced sleep disruption
• 26% said it strained personal relationships
The survey also found that 35% of buyers felt the process was worse than expected, particularly in the later stages. Nearly one in five collapsed transactions (17%) failed after a month, while almost half (43%) failed after three months or more. Even at the final hurdle, more than a third (38%) of buyers found exchanging contracts and moving home “difficult”.
Santander argues that while the government has put housing high on its policy agenda, the scale of the challenge is “underappreciated”.
With 530,000 failed transactions every year and buyers losing thousands of pounds in the process, the bank says reform is not only a matter of efficiency but also one of economic necessity.
