Gazumped? Time to ban the practice
Gazumping remains a prominent issue in England and Wales that needs to be tackled head on, new research finds.
But just how many homebuyers have been gazumped and what are the implications? Market Financial Solutions (MFS) surveyed more than 750 people who bought a residential property in the UK over the past 10 years to find out how many have been gazumped, the reasons why it occurred and the effect it had on them.
The research found almost a third (31 per cent) of UK homeowners previously lost out on a property as a result of being gazumped in the past decade. The figure rises to nearly half (47 per cent) for those based in London, reflecting the competitive nature of buying property in the capital.
The implications of gazumping for a buyer are significant, and do not just involve losing out on a property. Buying a home can take up to four months and includes significant costs for the prospective buyer, such as conveyancing, survey, mortgage valuation and brokerage fees.
MSF found that two fifths (39 per cent) of homeowners have had to pay intermediary fees despite not completing on a property purchase. Research from consumer watchdog Which? shows that, on average, homebuyers lose £2,899 when a house deal falls through.
Despite widespread calls for the Government to clamp down on gazumping, England and Wales have no legislative measures to limit the practice. In Scotland, the situation is different. There, the binding contract is concluded soon after a verbal agreement has been made between the buyer and the seller.
Time for a change
A resounding 80 per cent of respondents in the MSF study said they would support measures to ban gazumping in England and Wales. That figure rose to 90 per cent for those aged 55 and over.
Last October, the Government said it was considering the introduction of a “reservation agreement” to bind buyers and sellers to a deal. A pilot version of the “reservation agreement” could be trialled in 2020, but no further details have been released yet. And there are also concerns that ongoing Brexit delays could further stall progress.
Despite the potential for significant financial loss, 43 per cent of those surveyed in MSF’s study said they would consider gazumping at some point in the future. A significant 66 per cent said they would do so because buying a property has become more difficult in recent years as a result of increased competition and a lack of housing supply.
Of those surveyed who said that one or more of their property purchases had fallen through in the past decade, more than a third said it was due to either them or someone in the chain not getting their mortgage approved in time. The number rises to half (49 per cent) for those aged between 18 and 34.
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