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The government is reviewing house buying regulations, aiming to end time-wasting offers.
Gazumping
Gazumping, as it is known, is when when an offer has been accepted for the purchase of a property and the buyer proceeds with their purchase by instructing a solicitor and potentially pays for searches, surveys, valuations and the services of a mortgage lender. The seller then accepts a higher offer from another buyer, and the original buyer is no longer able to progress with the purchase.
Gazundering
Gazundering works in the opposite way and involves an offer being accepted on a property, the seller progresses with their sale process and plans to leave the property and is likely to cancel any further viewings of the home. Close to the point of contract exchange, the buyer significantly reduces their original offer, leaving the seller in the lurch. The seller is not obliged to continue with the sale at the lower offer but may need to in order to move on as planned.
Clamp down
The government is aiming to clampdown on gazumping and other tactics used which cause misery to buyers and sellers adding to the stress of buying a home.
Roughly one million homes are bought and sold in England each year, but around a quarter of sales fall through and millions of pounds are wasted.
What changes are being considered?
New rules to stop people from cutting their offer at an advanced point in a sale and time wasting by buyers with no realistic hope of completing a purchase, will be examined as part of this review.
- The most radical option could be moving the point at which an agreed sale becomes legally binding, which is currently at exchange of contracts.
- Another proposal includes ‘lock-in agreements’ which would tie in both buyer and seller, creating a financial penalty if either pulled out.
- Methods of encouraging buyers and sellers to pull together information so that homes are ready for sale in advance will be looked at.
- The review will also examine new digital solutions involving putting more data online to speed up the home-buying process.
Eight-week period of evidence gathering
Previous attempts by ministers to improve the process have come to little fruition. However, Sajid Javid, the Communities Secretary, is now launching an eight-week call for evidence from estate agents, solicitors and mortgage lenders and he says “This is an attempt to make house buying cheaper, faster and less stressful. We want to help everyone have a good quality home they can afford, and improving the process of buying and selling is part of delivering that.”
Frettens' Conveyancing Executive, Jennifer Smith, comments “Buying a home is one of life’s largest investments and everybody worries about what can go wrong. Under the Estate Agency Act, estate agents are obliged to pass on all offers that they receive, albeit a determined buyer would probably go direct to the vendor in any case. If a client does get gazumped, it can be costly and heartbreaking for buyers and equally disruptive for the vendor. We wait to see what the review will conclude but I would welcome any changes that can increase the safety of a transaction and reduce the tension for buyers and sellers.”
Our Conveyancing Team, based in Christchurch, also cover Bournemouth, Poole and the New Forest. If you have any questions, you only have to ask us at Frettens. Please call 01202 499255 and Jennifer or a member of the team, will be happy to chat about your situation and you particular requirements.
