Gazumping continues to be unpopular among buyers. Although huge swathes would be happy to engage with the tactic should if give them the upper hand. We shouldn’t be surprised by this apparent paradox. With the market being as competitive as it is, buyers will take any opportunity they can get.
Currently, there is believed to be 29 buyers for every property on the market. A lack of supply is hitting brits, with around two thirds feeling trapped in their properties, according to Yorkshire Building Society. The cost-of-living crisis, and a lack of options are preventing people from getting onto the property ladder or moving up the rungs.
It’s no wonder our recent survey on gazumping found while 79% of respondents want the act outlawed in England and Wales, 47% admitted they would consider gazumping a rival bidder if it meant getting the property they wanted.
Few will think of their impacts on the wider world when presented with a rare opportunity to get ahead of the curve. Especially when inflation is running rampant. Think about it, does a saver worry about the treasury’s coffers when they save on tax through an ISA?
To fully put an end to gazumping, we need to address the systemic problems. We’d need to resolve the supply and demand mismatch, or have the practice completely outlawed. It’s currently illegal in Scotland, and so buyers in England and Wales are likely wondering why it’s still allowed on their turf. This question has come up a few times in parliament, but buyers shouldn’t hold their breath for radical reform.
What does the Government have planned?
Christopher Pincher, the Treasurer of HM Household, said to mitigate the risk: “we have been exploring the adoption of voluntary reservation agreements. Buyers and sellers would make a legal commitment to proceed with the sale once an offer has been accepted and may include a financial commitment which would be surrendered to the other side if the party withdraws without good reason such as gazumping.
“In order to be widely taken up, reservation agreements need to be attractive to buyers and sellers, and promoted by estate agents and legal representatives. Following behavioural insight research, work is now continuing to develop the agreements to make them an effective tool in improving the efficiency of home buying and selling and we hope to be able to evaluate their effectiveness next year.”
What he didn’t say was: “we’re going to make gazumping illegal”.
Can supply and demand be evened out and what options are available to buyers?
Creating more supply, the other side of the coin, is also looking doubtful. In 2021, new home completions hit 181,810 according to Unlatch, some 40% lower than the Government’s target. There are fears an even tighter property market could be on the horizon too, as plans to update and extend right to buy emerge. As many as 2.5 million tenants could be on the verge of entering the housing market. No doubt, this will be good news for them but if new housing isn’t built to replenish stocks, an even tougher market could be on the horizon.
Fortunately, there are several options available to buyers to cut the chances of being gazumped or at least, limit the damage. Home buyer protection insurance can cover the costs where sales fall through, while lock out agreements will provide buyers with exclusive rights to a property.
Simply being a nice person can also pay dividends. Buyers who make the effort to get along with sellers may be less likely to be ditched for a better offer. Content sellers may even be willing to take a property off the market once an offer is accepted. If a property is no longer advertised, it’ll be much harder for rival bidders to swoop in.
Specialist finance can also help. Buyers often end up gazumped when they’re stuck in a property chain or face month long waits for a mortgage. Short-term funding can help buyers lock in a property before any rivals even get a look-in.
About Market Financial Solutions (MFSUK)
As one of the UK’s prominent independent specialist finance providers, Market Financial Solutions (MFSUK) provides a range of fast and flexible bridge loans as well as buy-to-let mortgages to all their intermediaries and clients. They have the ability to lend specialist finance to clients in a prompt and professional manner
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