Do cash buyers need a deposit at exchange when moving home?

[Sandyhands]

Hi, I have just accepted an offer on my house and have had an offer accepted for one I want to buy. Early days. I’m just wondering, will I be expected to pay a deposit on exchange of contracts? I’m going to be a cash buyer from the proceeds of my sale and I don’t have enough money in the bank to pay a 10% deposit. How does it normally work?
I know it’s a question for the solicitor but it’s the weekend and I’m going to be thinking about it all weekend! Thanks in advance 🙏

We are in the process of moving now and all we had to do was agree with the solicitors that our deposit would come with the sale of our current house.
That was what they suggested (even though we are the middle of the chain so our FTB will have the deposit for ours I guess).

The person at the bottom of the chain usually pays the deposit, we bought cash from sale in 2021 we didn’t need to pay a deposit.

This post is key - hence me reiterating. It may be agreed that a 5% deposit can be paid on exchanged, but in the unlikely event that everything falls apart after exchange (but before completion) you may be liable for the normal 10%. Best to confirm with your solicitor and let your deposit situation be known early on.

You generally receive a deposit from the people to whom you are selling and then add a bit to get your deposit (if spending more on the new house.)

It’s no different to people who are using a mortgage; those who are doing that still need to find the 10% or so needed to exchange.

I general each buyer would add some of their own cash in to top it up to 10%.

It’s possible that other members of the chain would accept less but that relies on them being comfortable with it.

A buyer being unable to get the 10% together is a little bit of a red flag, I’d be concerned if a buyer had to ask me to accept less.

The discussion is about the deposit needed for exchange, not the mortgage deposit.

Generally the sale proceeds in a chain are not available at the point of exchange as it’s normal to exchange a couple of weeks ahead of completion.

No that’s not what happens. Conveyancers will access the amount of deposit being offered at each level of the chain, and form a judgment and advise their client if it is acceptable.

The buyer may be asked to top up at certain points in the chain. But each and every buyer in the chain being asked to top up to 10%? No that’s not standard practice.

i bought and sold a couple of years ago. Buyers paid a 10% deposit, which was passed up the chain to my sellers. It worked out about 8% of the property I was buying, and at no point was a need to top it up even suggested.

On what are you basing this? I’ve always paid 10%, whether buying without selling or when selling a cheaper property.

Everything I read on the web suggests that 10% is standard in England. Here’s a quote from one typical guide;

”Under the Standard Conditions of Sale, the standard exchange deposit is usually 10% of the property’s purchase price.”

https://www.bussmurton.co.uk/news-articles/understanding-exchange-deposits-when-buying-a-property/#:~:text=How%20Much%20Is%20the%20Exchange,deposit%20would%20be%20%C2%A325%2C000.

I’m basing it on my own experience, and the experience of most of the posters on here who are saying that they have never had to top up a deposit.

Yes that is what I was speaking to the OP about.

Where the confusion may arise is that normally when paying less than a 10% deposit, you would still remain contractually liable for the 10%. So whilst you might pay an actual cash deposit of say 8%, if you fail to complete the seller can keep the 8% and legally come after you for the other 2% as well.

As far as I am aware, you pay it to your own solicitor who holds it in a client account, pending completion.

It is different though because their 10% is likely to be tied up in their house.

So far example someone sells a house at 400k. First time buyer sends them 40k.

They are buying a house for 700k. So they need 70k. So they’d need an extra 30k in cash on top of their mortgage and fees.

So I expect it does go lower in % as it goes up the chain as others have suggested.

I know on our last house 10% was £35k but they let us put £20k down.

Good. This is what I was hoping

FTB paid £330k for my property and paid £33k deposit. That deposit was passed up the chain. I was buying a property for £550k but I did not add a further £22k to the deposit on exchange, however I would have been liable for that £22k should completion fallen through after exchange.

Thanks for all the helpful responses. I will call my solicitor tomorrow and see what she says but I think from your answers I can stop worrying that I’ll have go scrabbling around for a load of cash before the sale.