Gazumping may soon be a thing of the past
Plans to ensure both buyers and sellers enter legally binding agreements earlier in negotiations could benefit buyers hugely, but leave vendors in a less promising position.
Compared with other European countries, the house buying process in England is a long drawn-out affair with most transactions taking between 14 and 16 weeks to be completed. As a result, many who are in a position to buy or sell can be left out in the cold if the opposing party pulls out of the agreement at the last minute. ‘Gazumping’, where a new buyer can offer the seller a larger amount than the previous buyer, has been a large part of the house selling process since the system was first introduced in the 1920s – and has become wildly unpopular with those looking to purchase.
Under current English law, the transaction is not legally binding until ownership deeds are traded manually by each party’s solicitors, but it is hoped that new plans drawn up by the government will secure the legal agreement earlier in the house buying process to prevent a sale falling through. In 2014 alone, almost a fifth of purchases collapsed, many as a result of gazumping.
Whilst benefiting buyers, some UK house buying experts believe the new plans could take too much negotiating power away from sellers, as well as transferring fees traditionally paid by the UK home buyer to the vendor, strongly influencing a home owner’s willingness to place their house on the market.
“Bringing more security to the buying process through more upfront information would give welcome clarity to potential buyers while also retaining flexibility,” said David Hollingworth, a spokesman at mortgage broker London & Country.
“Of course, that will raise the questions of who pays for the upfront costs like surveys and legal fees, and that could put some homeowners off marketing their property altogether.”
With the government looking to issue a ‘call for evidence’ in upcoming weeks to evaluate the benefits of the proposed changes, many sellers looking for a quick house sale are looking at alternative ways to market their homes. Another possibility for vendors is to use property buying companies who buy any house for cash without needing to incur such fees, as well as speeding up the entire process.
Hoping to sell your home fast? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.