Exchange of contracts is the moment a UK house sale becomes legally binding. Both conveyancers confirm by phone that signed contracts are being exchanged, the buyer pays a deposit, traditionally around 10%, and a completion date is fixed. From this point, withdrawing carries serious financial consequences for either side.
What happens on the day contracts are exchanged?
Exchange of contracts is the formal moment when the buyer's and seller's conveyancers confirm by telephone that their signed contracts are to be treated as exchanged. At that point, the buyer's deposit is released to the seller's conveyancer, the completion date is fixed and written into the contract, and both parties become legally committed to completing the sale on that date. Withdrawing after this point results in the buyer losing their deposit, and potentially owing damages to the seller.
Why does exchange matter so much?
Exchange is the milestone that removes the uncertainty from the whole process. Before it, either party can walk away without penalty, which is unsettling for both sides. After it, the sale is proceeding to completion barring genuinely exceptional circumstances. For sellers, that means being able to plan your own move with confidence. For buyers, it means the property is legally secured, and no one else can buy it out from under you.
How much deposit do I need at exchange?
The traditional figure is 10% of the purchase price, though in practice it's often negotiated lower, sometimes to 5%, particularly for first-time buyers with a higher loan-to-value mortgage. This isn't automatic. It has to be agreed between the solicitors in advance, so confirm the exact figure with your conveyancer well before the exchange date and make sure the funds have cleared.
What's the difference between exchange and completion?
Exchange is when the sale becomes legally binding and the deposit changes hands. Completion, which typically follows one to two weeks later, is when the remaining balance transfers and you actually get the keys. Put simply, exchange commits you to buy; completion is when you own it. Ownership stays with the seller right up until completion, even though the sale is locked in from exchange.
What do I need to do before exchange?
As a buyer, get your deposit funds to your conveyancer well ahead of the exchange date rather than leaving it to the last minute, and arrange buildings insurance from the point of exchange, since responsibility for the property passes to you from that moment. As a seller, make sure you've signed your contract and returned it to your conveyancer ahead of the call. Both sides should confirm the completion date with everyone affected by the move, including removal companies, employers and schools.
| Stage | What happens |
|---|---|
| Before exchange | Searches, enquiries and mortgage offer all confirmed; contracts signed by both parties |
| At exchange | Conveyancers confirm by phone; deposit paid; completion date fixed; sale legally binding |
| Between exchange and completion | Typically 1 to 2 weeks; final funds and move logistics arranged |
| Completion day | Remaining balance transfers; keys released |
Frequently asked questions
- What actually happens at exchange of contracts?
- Conveyancers confirm by phone, the deposit is released, a completion date is fixed, and both sides become legally committed.
- How much deposit do I pay at exchange?
- Traditionally 10%, though it's sometimes negotiated to 5%, particularly for first-time buyers. Your conveyancer confirms the exact figure.
- What's the difference between exchange and completion?
- Exchange makes the sale legally binding and releases the deposit. Completion, usually one to two weeks later, is when you get the keys.
- Can I withdraw after exchange of contracts?
- Only with serious financial consequences, typically loss of deposit and a possible claim for further costs. It's rare in practice.
This guide is general information for home movers in England and Wales, not legal advice. Deposit percentages, timings and lender requirements vary by transaction, so confirm current detail with your own conveyancer.