Gazumping soon to be outlawed? - Palmers Solicitors

Gazumping soon to be outlawed?

Gazumping soon to be outlawed?

Talks appear to be underway to discuss the banning of gazumping, a practice which has plagued the residential property market for decades.

According to The Telegraph, Government officials have met with representatives from the property sector to discuss bringing forward the point at which house sales legally binding, a move which will bring England and Wales into line with current practices in Scotland. If introduced, this could potentially prevent many British housing sales falling through.

Current figures show that 18 per cent of purchases (200,000 transactions) per year fail to reach completion. In many cases would-be buyers, who have already laid out money paying for land searches and conveyancing fees, find they have been outbid or ‘gazumped’ by another buyer at the last minute, causing frustration and disappointment, not to mention being left out of pocket.

Nicola Tubbs, an Associate Executive with Palmers, explained: “Houses in Scotland are marketed on an ‘offers over’ system and potential bidders are asked to ‘note interest’, by way of a phone call via their solicitors.

When the seller, on the advice of their solicitor, feels the property has attracted sufficient interest a ‘closing date’ is set and bidders have until a specified time on that day to submit a formal bid. Assuming there is at least one bidder, the property is withdrawn from the market on the closing date.

Although this system of withdrawing a property from the market once a bid has been accepted is not a legal requirement, it tends to be adhered to by the residential conveyancing firms in Scotland and only once the closing date has passed do negotiations begin to conclude the contract for the sale of the property with the successful bidder.

Mark Hayward, managing director at the National Association of Estate Agents, told The Telegraph: “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.”

Nicola added: “It will be interesting to see what outcomes there are to these initial discussions between the government and the property industry, but in the meantime, buyers will be left keeping their fingers crossed that sellers hold true to their agreements when they sell ‘subject to contract’.”

For further information on Palmers residential property services including conveyancing, please contact us.