Gazumping is on the rise, according to mortgage lender Market Financial Solutions Group, leaving buyers thousands of pounds out of pocket and sparking calls for change.
Their poll found that 37% of homebuyers have been gazumped (losing out to a higher bidder after having an offer on a home accepted) in the past 10 years, up 6% since 2022.
Of those who were gazumped, 59% said they lost money in the process, covering solicitor’s fees, surveys and other expenses. And the costs aren’t only financial: starting again from square one makes a long homebuying process even longer, causing significant distress, and 60% of affected buyers said they ended up with a property they liked less.
Could gazumping be banned?
Banning gazumping would be a popular move, judging by MFS Group’s poll. A sizeable 78% majority of homebuyers want to see it made illegal.
Politicians have looked into banning gazumping in the past. In 2017, the Conservative government consulted with estate agents on making the practice illegal and introducing lock-in agreements to reduce fall-throughs. Reapit has also submitted evidence to a government consultation on the homebuying process, calling for reforms to the sales process that would make gazumping more difficult, including more up-front information and a cooling-off period for sales contracts.
But for now, the law is on the gazumpers’ side (at least in England and Wales – buying a home in Scotland works very differently, and gazumping is less common). Estate agents must pass on all offers to the seller right up until contracts are exchanged, leaving the door open for last-minute bidders. Organisations like the HomeOwners Alliance have lobbied the government to reform the home buying process and outlaw gazumping, but the issue isn’t on the political agenda at the moment and doesn’t appear in any of the major party manifestos ahead of next week’s election.
And while buyers might be in favour of a ban, they’re also not above gazumping rivals themselves. Almost half (45%) would consider gazumping a rival bidder, according to the survey, and 29% have actually done it. The MFS Group didn’t ask sellers what they thought of gazumping, but they may also be glad to receive higher offers.
Signs of life
A rise in gazumping could be a sign that life is returning to the housing market and competition for homes is heating up, which would be welcome news for estate agents. This is backed up by official figures from the Office for National Statistics showing house price growth and transactions are increasing.
But according to MFS Group CEO Paresh Raja, there are also less desirable reasons behind gazumping, including lengthy chains and delays in the mortgage and conveyancing processes. The shortage of houses is also a factor, increasing competition between buyers. Unless these issues are solved, buyers will still have to contend with last-minute bids.
Other home buying headlines
- What income do you need to buy a house in 2024? – Zoopla
- 2024 home buying sees 18.7% increase in conveyancing fees, now averaging £1,567– Today’s Conveyancer
- Row over first-time buyer help as parties trade blows– BBC
