It has emerged in recent weeks that the government could soon look to ban ‘Gazumping’. A fundamental move which will prevent millions of house sales falling through each year, and avoiding the disappointment faced by buyers.
What is Gazumping? The term ‘Gazumping’ is used when a seller accepts a verbal offer from a buyer on their property, however subsequently accepts a higher offer from another party. It can also mean when a seller decides to raise the asking price after the acceptance of a verbal offer. This practise results in the buyer either having to negotiate by offering a higher price or losing out on the purchase.
Currently banned in Scotland, the government are in discussions to introduce the ban across both England and Wales in order to crack down on those that pull out of buying or selling a house at the last minute. Currently 1 in 5 property transactions fall through each year in the UK.
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.”
Current proposals are to fall in line with Scotland and move forward the point at which a house sale becomes legally binding. Forcing people that pull out of a deal to pay the other parties fees or even buyers to lose their deposit if they pull out after signing legally binding documents such as a contract. The current system makes property transactions legally binding only at the point of contracts being exchanged which is costing around £270 million in wasted legal and surveying fees on failed purchases.
By adopting these new rules the Government hopes to alleviate the current problems faced by both buyers and sellers across the UK and make the process more straight forward as well as reduce the lengthy time frames and risks associated.