A survey of more than 500 UK homeowners by Market Financial Solutions (MFS) found that 31 per cent of homeowners have been gazumped by a rival bidder while trying to buy a property in the last decade.
Over three quarters of those questioned, 79 per cent, were in favour of the government introducing laws to ban gazumping in England and Wales, as are in place in Scotland.
However, MFS found that 47 per cent would consider gazumping a rival buyer in the future if it meant getting the property they wanted.
The London-based specialist lender commissioned an independent survey of 524 people who have bought a property in England or Wales since 2012. It said the number of those who had been gazumped rose to 52 per cent among those who bought in London.
MFS’s research found that 68 per cent of UK homeowners felt the property market was competitive, with 79 per cent believing that gazumping and gazundering have become more common in recent years due to high demand and limited supply.
Gazumping happens pre-contract when a seller has already agreed a purchase price with a buyer, but then pulls out in favour of another prospective buyer who has made a higher bid for a property.
Delays and long property chains
Of those who have been gazumped, 17 per cent said they ended up buying a property they liked less.
Elsewhere, the study found that a quarter of homebuyers were gazumped because they were stuck in a long property chain and took too long to complete the purchase. Another 20 per cent admitted that they were gazumped due to delays and long waiting times in getting a mortgage.
Almost a quarter, 23 per cent, said that they lost money in intermediary fees as a result of being gazumped. This is noteworthy, given it is estimated that homebuyers lose an average of £2,700 when a purchase falls through.
Paresh Raja (pictured), chief executive of MFS, said: “With demand for UK property constantly high, buying a home has become very competitive. Consequently, despite wanting to ban gazumping altogether, many buyers clearly fear that they will lose out on their desired property at critical closing stages if they don’t partake in gazumping tactics.
“Aside from the obvious financial costs of being gazumped, missing out on a property can be the source of a great deal of frustration and emotional damage. MFS’s research shows that long property chains and time-consuming mortgage applications often leave home buyers open to gazumping. So, preparation is key – sourcing the right lender and product ahead of time, and working with service providers who can act quickly, could prove crucial in ensuring a deal is completed with no complications.
“More generally, it will be intriguing to see if the government does indeed bring about any legislation or reform to crack down on the practice of gazumping, which evidently remains prevalent in the English and Welsh property market.”
