“To make buying and selling homes cheaper, faster and less stressful”.
That was one of the Government’s promises at the end of last year. Sounded good and we were all ears. A clampdown on gazumping, a practice which often leaves the original purchaser with legal fees and surveyors’ costs in respect of a house they’ve lost out on.
It’s certainly a popularity winning style headline but is targeting gazumping really getting to the root of the problem? Or could it prove more painful than ever before for those moving home?
According to the Land Registry, nearly 18% (200,000) of all house sales fall through every year. A fact that is now widely accepted as one of the causing factors of the enormous stress and anxiety which often surrounds a house sale or purchase.
As a result, the government proposes to try and reduce this number by bringing forward the point at which a house sale/purchase is legally binding for both parties. More specifically, by making the transaction binding at the point at which an offer is accepted. Any parties who withdraw after the offer is accepted would be liable for the other side’s wasted expenses.
But surely there’s a flaw in the proposals?
The trouble with the proposals is that they take a naïve approach to why a sale may fall through. Of course, there are occasions when sellers just accept a higher offer but there’s a lot more to it than that.
The enormous pressure on the housing market means that:
- Buyers often make an offer almost out of a sense of desperation and often before they have any clear idea of whether and how much they can borrow or fund.
- The boom in marketing properties online may undoubtedly make a property much more widely available, but it also makes the competition even fiercer with queues of viewers and open house events, making the pressure and competition feel that much more intense.
- Unfortunately, not every estate agent is a property expert and some online portals will have very little to no interaction with the property itself. That means that faults in title deeds and paperwork or faults in the house itself may go completely unnoticed until quite far down the line. Of course, that, in turn, may affect borrowing.
- Most residential property sales become part of an ongoing chain where the buyers and sellers have little control over the overall timing. Sometimes, unsurmountable difficulties can be caused by an unrelated third party, further up the chain.
- If a sale is binding at the point an offer is accepted, this raises the questions of who pays for upfront costs like surveys and legal fees. And that on its own could be enough to put some buyers or vendors off altogether.
So, what is the answer?
It’s fair to say the house buying and selling process could do with a shake-up. After all, we’ve been using the same system for nearly 100 years. A ban on gazumping would be a popular policy and for a number of people, it would mean greater security and a great deal less stress.
But it would be wrong to think that this is a one size fits all solution. And it would be wrong to turn a blind eye to the additional and possibly much more distressing and expensive side effects that a ban could cause.
Pending a thorough overall of the entire system, my advice would be to be careful in your choice of professionals and don’t assume that a ban on gazumping offers complete protection. Choose an estate agent who is experienced, proactive and who understands property. Seek early advice about borrowing and instruct a conveyancer who is equally robust.
In recent years, too many people have paid the cost of trying to buy or sell with minimal assistance from professionals and with the current pressure on both the economy and housing, this is only set to get worse.
That said, at the moment the government haven’t announced how a ban would be policed and whether such a ban ever becomes law remains to be seen.
Graham Faulkner is Branch Director of EweMove Dorking
He’s bought and sold a lot of properties over the years and is also a portfolio landlord, as well as specialising in helping other landlords. Apart from his own experience and expertise, he can also recommend the right professionals, as tried and tested by him, to advise you.
Multi-award winning EweMove in Dorking is a residential property sales and lettings agency who pride themselves on being refreshingly different and standing out from the crowd. EweMove Dorking covers from Ockley to Oxshott.