Last reviewed: June 2026 | Source: GOV.UK and HM Land Registry
TL;DR- Exchange of contracts is the point at which a property purchase becomes legally binding.
- On exchange, the buyer usually pays a deposit, commonly around 10 percent of the price.
- Completion is when the balance is paid, ownership transfers and the keys are handed over.
- The gap between exchange and completion is typically one to four weeks, but can be the same day.
- After exchange, a buyer who pulls out can lose their deposit, and a seller who pulls out can be sued.
Key Facts
●Exchange of contracts: The point the purchase becomes legally binding
●Deposit on exchange: Commonly around 10 percent of the price
●Completion: Balance paid, ownership transfers, keys handed over
●Typical gap: Around one to four weeks
●Buyer pulls out after exchange: Risks losing the deposit
●Insurance: Buyer often responsible for insuring from exchange
Buying a home in England and Wales runs through two crucial moments: exchange of contracts, when the deal becomes legally binding, and completion, when ownership actually transfers. The period between them is when many buyers feel most anxious, because the commitment is firm but the keys are not yet in hand. This guide explains what happens at exchange and completion, the gap between them, what can go wrong if a party withdraws, and why insurance often becomes the buyer's responsibility from exchange.
What exchange of contracts means
Exchange of contracts is the moment a property purchase becomes legally binding on both buyer and seller. Up to that point, either party can usually walk away without legal penalty, but once contracts are exchanged, both are committed to completing the transaction on the agreed date.
At exchange, the buyer normally pays a deposit, commonly around 10 percent of the purchase price, although the exact figure can be negotiated. The signed contracts, held by each side's conveyancer, are formally exchanged, and the completion date is fixed.
Because exchange is the point of no return, conveyancers ensure that everything is in place beforehand, including the mortgage offer, searches, enquiries and the deposit funds. Once exchange happens, the focus shifts to preparing for completion on the agreed day.
What completion means
Completion is the day on which the balance of the purchase price is transferred from the buyer's conveyancer to the seller's, ownership of the property passes to the buyer, and the keys are released. It is the point at which the buyer can take possession of their new home.
On completion, the buyer's conveyancer sends the remaining funds, the seller's conveyancer confirms receipt, and the estate agent or seller releases the keys, usually around midday though the timing depends on the chain and when funds clear. The legal transfer of ownership takes effect on this day.
After completion, the buyer's conveyancer deals with post-completion tasks, including paying any Stamp Duty Land Tax due and registering the new ownership with HM Land Registry. These steps formalise the buyer's legal ownership following the practical handover of the property.
The gap between exchange and completion
The gap between exchange and completion is typically one to four weeks, giving both parties time to make final arrangements such as booking removals, transferring funds and organising the move. The exact length is agreed between the parties and set when contracts are exchanged.
In some cases, exchange and completion happen on the same day, known as simultaneous exchange and completion, which removes the gap but leaves less margin if anything goes wrong on the day. A longer gap gives more certainty and planning time but extends the period of commitment before the keys are handed over.
During the gap, the transaction is legally binding, so both parties are committed to completing on the agreed date. This is the period in which the buyer arranges the practical aspects of moving while the conveyancers prepare the final transfer of money and ownership.
What can go wrong
Because exchange creates a binding contract, withdrawing after exchange has serious consequences. A buyer who fails to complete can lose their deposit and may face further claims, while a seller who fails to complete can be sued by the buyer for breach of contract and may be forced to complete or pay damages.
Before exchange, the risks are different, as either party can usually pull out, which is why sales can fall through during the earlier stages. The binding nature of exchange is precisely what protects both parties from a last-minute withdrawal once they are committed.
Problems on the day of completion can also arise, such as funds not arriving in time, which can delay the handover. Conveyancers manage these risks carefully, and the contract usually sets out what happens, including interest or penalties, if completion is delayed by one party.
Chains and how they affect timing
Many transactions form part of a chain, where a buyer is also selling and a seller is also buying, so several purchases are linked and must usually exchange and complete together. A chain adds complexity because everyone in it needs to be ready at the same time.
In a chain, exchange typically happens for all the linked transactions on the same day, so that no one is left committed to one side of a move but not the other. This coordination is one reason exchange can take time to arrange, as every party must be in a position to proceed.
The longer the chain, the more parties there are who could cause a delay before exchange, which is why chain-free purchases are often seen as quicker and more certain. Once a chain exchanges, however, all the linked transactions become binding together.
Insurance from exchange
A key practical point is that responsibility for insuring the property often passes to the buyer from the moment of exchange, even though the buyer does not yet own it or live in it. This is because the buyer is contractually committed to completing and stands to lose out if the property is damaged before completion.
Buyers are therefore commonly advised to have buildings insurance in place from exchange, so the property is covered during the gap before completion. The exact position can depend on the contract terms, so the conveyancer will confirm when the buyer needs cover to start.
Arranging buildings insurance to begin on the exchange date avoids a gap in cover during the period when the buyer is committed but not yet in possession. Confirming the requirement with the conveyancer ensures the buyer is protected from the right moment.
Frequently Asked Questions
What is the difference between exchange and completion?
Exchange of contracts is the point at which a property purchase becomes legally binding on both buyer and seller, and the buyer usually pays a deposit, commonly around 10 percent. Completion is the later day when the balance of the price is transferred, ownership passes to the buyer and the keys are handed over. Between the two, both parties are committed to completing on the agreed date, but the buyer cannot yet take possession.
How long is the gap between exchange and completion?
The gap is typically one to four weeks, giving both parties time to arrange removals, transfer funds and organise the move, though the exact length is agreed when contracts are exchanged. In some cases exchange and completion happen on the same day, known as simultaneous exchange and completion, which removes the gap but leaves less margin if something goes wrong. A longer gap gives more planning time but extends the binding commitment before handover.
What happens if someone pulls out after exchange?
Because exchange creates a legally binding contract, withdrawing afterwards has serious consequences. A buyer who fails to complete can lose their deposit and may face further claims, while a seller who fails to complete can be sued by the buyer for breach of contract and may be forced to complete or pay damages. This binding nature is what protects both parties from a last-minute withdrawal once they are committed to the transaction.
When do I need insurance when buying a house?
Responsibility for insuring the property often passes to the buyer from the moment of exchange, even though the buyer does not yet own or occupy it, because the buyer is contractually committed to completing. Buyers are commonly advised to have buildings insurance in place from the exchange date so the property is covered during the gap before completion. The exact position depends on the contract, so confirm with your conveyancer when cover needs to start.
