The frustration of thinking you’ve secured your dream home, only to be ‘gazumped’ by another buyer with more money, is still very common in the property industry. This is a major contributing factor to around 200,000 transactions, or 18% of house sales in the UK, collapsing each year.
The Telegraph has recently reported that the Department for Business Innovation and Skills (BIS) has been in private talks with the National Association of Estate Agents (NAEA) to discuss bringing forward the point at which house sales become legal. This would, in effect, ban ‘gazumping’ as a practice and bring the regulation around the industry in line with Scotland.
The Scottish system makes property sales are legally binding at the point where an offer is accepted by the buyer, instead of a the point of exchanging contracts, as is the case in England and Wales. This later stage leaves many house sales with the potential to be broken by other bidders offering more money or bigger deposits, whilst the original buyers have already spent money on solicitors, legal fees and searches. They may also have a buyer on their original property, which in turn brings difficulties or a collapse to that house sale.
Whilst this makes it look like banning gazumping could only bring positive effects to the property industry in England and Wales, experts have suggested that this would be unpopular with sellers and could slow the market. This is because they may have to take on the cost of legal and survey fees, which are currently the responsibility of the buyers.
Quoted by the Telegraph, Mark Hayward, managing director at the National Association of Estate Agents, said: "The English system for buying and selling property dates back to the 1920s and has not been updated for nearly 100 years. It is an archaic system which doesn't allow for modern technology. It needs updating to allow for as much work to be done before the point of offer as possible."