The Housing Select Committee has called for the legal overhaul in order to prevent estimated losses of £1.5bn per year from property sales falling through.

In a letter to the housing minister Matthew Pennycook last week, responding to the government’s consultation on the issue, the committee’s chair Florence Eshalomi called the current homebuying process “a painful experience”.

She said it “reduces motivation to move and slows down the housing market” and creates unnecessary costs for buyers, sellers and other stakeholders.

Following its enquiry, MPs on the select committee concluded that the government “must make property transactions more binding at an earlier stage by means of conditional contracts, such that both parties are legally bound to a transaction once certain conditions are met”.

Failure to follow through on transactions once the conditions are met should lead to financial penalties, they said.

The MPs also called on the government to investigate further ways of reducing the time between offer and completion.

Other recommendations include a code of practice and mandatory qualifications for different types of property professionals.

Eshalomi said: “The current homebuying and selling process in England and Wales is far more difficult, stressful, and gruelling than it should be.

“The path to homeownership is littered with delays and collapsed transactions due to gazumping and broken chains.

“In addition to the personal impact involved in each case, these hurdles only serve to exacerbate the affordability crisis and make getting on the housing ladder more challenging.”

The Conveyancing Association welcomed the committee’s findings.

Director of delivery Beth Rudolf says: “A number of these recommendations recognise the reality of the current system and the impact it is having on consumers, conveyancing firms and the wider housing market.

“There is a clear need to reduce delays, cut fall-throughs and improve certainty, and many of the measures outlined here would help achieve exactly that.

“Upfront information, including searches, is essential.

“If buyers and lenders have the data they need from the outset, we can remove a significant amount of delay and uncertainty from the process.

“This is the foundation for any further reform and must be implemented effectively and consistently across the market.

“Improving standards across the market is key.

“Consumers should be able to trust the information they are given is accurate, complete and provided at the right time.

“A clear framework for estate agents, supported by proper oversight, would help create a more consistent experience for everyone involved in the transaction.

“These issues go beyond individual transactions.

“The way the system currently operates is holding back movement across the housing market.

“If we can reduce friction and improve certainty, we can support more people to move when they need to, which benefits the entire market.

“The industry has engaged fully with the consultation process and we await the roadmap for implementation.

“There is clear alignment across the industry on what needs to change.

“The focus now has to be on delivery.”