According to research by Phil Spencer’s consumer service Move iQ, gazumping – the practice of offering a higher price on a property already sold subject to contract – is alive and well across the UK.
The analysis included over a million property transactions and was undertaken by the site in conjunction with PropTech firm Gazeal. This is despite slow growth, and even falling property prices in some areas.
The UK average of gazumped sales in England and Wales is 16%. But in Sheffield, the rate is more than double at 35%. Maidstone comes in second place with a rate of 32%.
This is despite a fall of 1% in house prices. At the bottom of the league table is Carlisle, with a gazumping rate of just 5%, followed by Blackpool, where the rate is 6%.
Gazeal stated that at least 33% of sales fall through, with a cost to buyers and sellers of around £270 million per annum.
Phil Spencer’s view
‘For anyone who thought gazumping vanished with the runaway price rises of a few years ago, our findings will come as a reality check. Gazumping is alive and well, and still causing heartache for tens of thousands of buyers across England and Wales’ claims Spencer.
‘Britain’s fragmented property market is throwing up huge regional extremes. In hotspots where prices are still rising fast, sellers can be tempted to go back on their word to a buyer if they get a better offer elsewhere. Meanwhile, in slow markets, the lack of homes for sale can lead sellers to leave would-be buyers in the lurch if they get a last minute offer from someone else.
‘But whatever the market conditions, the real culprit is the legal blind spot in the way homes are bought and sold in England and Wales. A legal system that lets sellers leave buyers high and dry weeks, or even months, after accepting their offer is clearly not fit for purpose.’
At present, either the buyer or seller in England and Wales can pull out of a sale as late as the day before the exchanging of contracts.
Last week Spencer spoke out in favour of legally binding reservation agreements and digital legal packs to help prevent this happening. His website has teamed up with Gazeal to produce such packs.
Speaking in support of the idea, Spencer said: ‘Whatever the market conditions, the real culprit is the legal blind spot in the way homes are bought and sold in England and Wales. A legal system that allows buyers or sellers to abandon a sale a day before the exchange has always been a point of contention.
‘That’s why Move iQ has teamed up with Gazeal, who offer a legally enforceable contract at the very start of the process. Allowing sellers and buyers to agree a deal that has legal force right from the start; can spare weeks of uncertainty and prevent frustration and expense – all symptoms of gazumping and gazundering’ he added.
‘Not only that but it’s also good for the traditional estate agent who can often be left with no fee despite committing huge amounts of time and effort on behalf of their client.’