Homebuyers are still being gazumped now as much as they were three years ago, with London seeing a 5 per cent rise in the practice.
Gazumping is when a seller accepts a verbal offer on a property, but then accepts a higher offer from another buyer or raises the asking price last minute after verbally agreeing to a lower one.
Outlawed in Scotland, the practice remains a common problem in England and Wales, where 31 per cent of people who have bought a property since 2012 have been gazumped at least once.
It is exacerbated by regular delays from mortgage providers.Paresh Raja, MFSThis is the exact same figure as in 2019, according to research by specialist lender Market Financial Solutions. In London, this figure has risen to 51 per cent, marking a 5 per cent increase on three years ago.
With around 29 prospective buyers for every residential property up for sale in the UK today, competition has not only pushed prices higher, it has also played a role in encouraging sales tactics like gazumping.
MFS found that 47 per cent of homebuyers would consider gazumping a rival bidder if it meant they got the property they want – up 4 per cent from 2019.
This is despite four in five (79 per cent) of those surveyed saying they would also like the government to act and outlaw gazumping like in Scotland.
Asked what they thought was driving gazumping, the majority of respondents (79 per cent) said it was down to the “highly competitive nature of the property market” – a notable increase on three years ago, when a lesser 66 per cent said the same thing.
MFS surveyed 2,000 UK adults in April 2022, 524 of which had bought a home in the last decade.
“For the most part, gazumping is a product of the high levels of competition among buyers, who are fighting it out over a limited supply of properties,” said MFS chief, Paresh Raja
“But it is exacerbated by regular delays from mortgage providers. Delays in securing a mortgage or loan is a common factor in people being gazumped.
“Estimates suggest that homebuyers lose an average of £2,700 when a purchase falls through. Clearly, gazumping carries serious financial and emotional ramifications.”
Raja said there is a bigger question to put to those in Westminster regarding what can be done.
“Just as in 2016 and 2019, MFS’s Gazumped Britain research has demonstrated a clear desire for government action – we have seen reforms in Scotland, and it is only logical that people will wonder whether the same can be done in England and Wales.”
While sellers are not explicitly guided against gazumping by the National Trading Standards Estate and Lettings Agency Team, they are guided against:
- “Misrepresenting the detail of an offer (for example whether the offer is conditional on something else, such as obtaining finance”;
- and “Failing to inform a potential buyer whose offer has been accepted that the seller wishes the property to continue to be marketed for sale up to exchange of contracts.”
ruby.hinchliffe@ft.com
