UK Government plans to ban ‘Gazumping’
Gazumping in the UK housing market could become a thing of the past. The UK Government are considering banning “gazumping” by bringing forward the point at which the sale of a house becomes legal.
Gazumping occurs when a property seller accepts an offer on their property from one potential buyer, but then accepts a higher offer from someone else.
According to the Daily Telegraph, policymakers at the Department for Business Innovation and Skills (BIS) held a meeting with officials from the National Association of Estate Agents in which they laid out plans to put an end to the practice of gazumping in the UK.
The aim will be to protect thousands of home buyers by cracking down on those who pull out of buying or selling a house at the last minute.
The Government plans to introduce a system where the sale of a property becomes legally binding at the point where an offer is accepted by the property seller, preventing the buyer from being outbid at a later date. The new system also means neither party can withdraw without being liable for the losses of the other party. This type of system already exists in Scotland and in Europe.
This new system, if it was to be introduced, could prevent millions of house sales falling through because at the moment according to the Land Registry around 18% (which is 200,000 transactions) collapse every year. One of the main causes of this is the practice of gazumping.
Mark Hayward, managing director at the National Association of Estate Agents, said: “The English system for buying and selling property dates back to the 1920s and has not been updated for nearly 100 years. It is an archaic system which doesn’t allow for modern technology. It needs updating to allow for as much work to be done before the point of offer as possible.”
While these plans to ban ‘gazumping’ using a Scottish-style system will favour UK homebuyers, it could ultimately put off property sellers and prevent them from selling their homes.