Sunday, 15 December 2019

Calls for measures to stamp out gazumping

Calls for measures to stamp out gazumping

GAZUMPING was commonplace in the late Eighties and early Nineties, as the property market boomed and homes were snapped up as soon as they went up for sale.

It happens when a seller verbally agrees a price with a buyer but then switches to another buyer, before contracts are exchanged, who has offered a higher price.

The word gazumping is heard less often nowadays, with the property market being less frenetic than it was at its peak, but the practice does still occur.

A survey of 750 homeowners, conducted by finance provider Market Financial Solutions (MFS), has shown that 31 per cent of homebuyers in the UK have been gazumped in the past 10 years.

Moreover, 39 per cent have had to pay fees to intermediaries or agents, despite not completing on the property purchase — a sum that can run into thousands of pounds.

However, of those who said that they had been gazumped during the past decade, 34 per cent admitted that this was because they, or someone else in the chain, had not secured mortgage approval in time.

This number rose to almost half with buyers in the 18 to 34 age range.

The report also states that 43 per cent of respondents said that they would consider gazumping a rival buyer in the future, if it meant successfully completing on a purchase.

MFS has also found that two thirds of homeowners think the process of buying a property has become more difficult over recent years, as a result of increased competition and a lack of housing supply. A large majority — 80 per cent of respondents — are said to be in favour of new laws to prevent gazumping in England and Wales, as is currently the case in Scotland.

MFS chief executive officer Paresh Raja said: “With demand for UK property constantly high, the process of buying a home has become incredibly competitive.

“As a result, a significant number of UK homebuyers are losing out on deals at the critical closing stages.

“Not only is gazumping a cause for frustration and disappointment, it also can incur significant costs to the prospective buyer.

“Avoiding complicated chains and having immediate access to finance can reduce the chances of a prospective buyer missing out on a purchase.

“It is clear that further measures are needed to prevent gazumping in England and Wales. In the aftermath of the general election, let’s hope the elected government looks at measures to stamp out gazumping as a top priority.”