While there are laws in Scotland which prevent gazumping, i.e. last-minute property bids after deals have been agreed, the rest of the UK can be a minefield. A new property survey by Market Financial Solutions took in more than 2000 adults across the UK. Among other things the survey highlights the cost of gazumping and the large variation across the UK.
Is gazumping really rife?
Whether we like it or not gazumping is an everyday part of life in the UK property market. Indeed if the figures for this survey were replicated right across the UK then around 1.5 million buyers lost out on their dream home after being gazumped. This type of activity is obviously more prevalent when markets are riding high and there is competition for houses. It would be interesting to know whether instances of gazumping have fallen since the Brexit vote with less competition for houses than there has been.
The survey highlighted a significant difference between the UK in general and the London property market. So much so that the rate of gazumping in the UK as a whole came out at 5% while it was three times this level at 15% for London. Those who follow the London property market might not be surprised by this when you bear in mind excessive demand for property, increased salaries and average house prices which are more than double that of the average across the UK. When people decide they want a London property they are prepared to pay that little bit more to secure the deal even if this means gazumping a previous offer.
The real cost of gazumping
In general, those who have been gazumped do not necessarily attract much sympathy as this is seen as a part of the UK property market. What often goes unseen is the cost of gazumping in cold hard cash which works out on average around £2899 in fees. If you replicate this right across the board, the total cost of being gazumped equates to around £4.4 billion. When you see these figures it does perfectly illustrate the enormous cost of gazumping. Any fees charged on failed property bids will need to be paid out of the buyer’s property pot thereby reducing their available funds going forward.
It has always been a bone of contention as to why the Scottish system prevents gazumping while the rest of the UK has not kept up-to-date with this issue. It is all good and well suggesting it is competition in the property market which leads to last-minute bids and failed offers, but as we mentioned above, there is a cold hard cost to this. Why should a potential buyer, who may have shaken hands on a deal, incur fees approaching on average £3000 and have nothing to show for this at the end of the day?
Gazumping is a major problem across the UK while indeed the Scottish market offers significantly more protection for buyers. When you see the estimated cost at around £4.4 billion this is money which has been “wasted” on failed bids through no fault of the potential buyer. Surely it is time for the authorities to step in, as their Scottish counterparts have done, and offer more protection for buyers who have shaken on a deal and agreed a purchase. Why should they be used as pawns in a long-term game to maximise the selling price of a property?