The issue of greedy house sellers asking buyers for more cash has spread outside the capital. Julian Knight reports
Some would argue that gazumping never went away in some of the posher parts of the capital, but outside of these small enclaves the practice – where buyers are asked for more cash by greedy sellers at the last possible minute of the transaction – has not reared its ugly head for many years. Now though, property market professionals say that gazumping is not only back but is spreading across many parts of the UK.
A new nationwide survey carried out by online estate agency eMoov.co.uk has found that 7 per cent of property transactions that fell through in the past year have done so due to gazumping. “As the property market continues to pick up, we are certainly noticing an increase in the number of buyers being gazumped across the UK at the final hour,” said Russell Quirk, founder of eMoov.co.uk. Some cases encountered by the website highlight the very worst aspects of the hot UK property market. “We have come across sellers accepting five or six offers on a property in order to get the best price possible for their home,” he said.
“Nearly 100,000 potential buyers lose out on properties every year as a result of gazumping, resulting in an average of £1,752 being lost with each failed transaction, not to mention the huge emotional toll. Introducing a set time frame (for example, six weeks) for the sale to take place would dramatically reduce cases of this happening,” he added.
It seems that the better economic news and easier mortgage availability as well as an uplift in transactions caused by the government’s Help to Buy scheme lies behind much of the current impetus in the market. As a result, sellers outside the perennial London property hotspots, who had just been grateful to find a buyer over the past few years, are now flexing their muscles.
They can see demand being fuelled by a “wash-out” effect from the capital, where London owners are selling up and moving out to commuter towns, where the schooling may be better and the speed of life a little slower. One leading Hertfordshire estate agent, who did not wish to be named, said the market was “injected again with greed”.
“People read about how there are all these cash buyers in London, and there is such competition for property, that they are getting bold and see once-precious buyers as a cash cow to bring others into the mix and start a bidding war,” he said. “These people are being egged on by some estate agents who believe this is the way to achieve a sale.”
Camilla Dell, managing partner at property search company Black Brick, recounts a recent story of a family looking to relocate to Surrey facing just this “injection” of greed into the market. “During one week alone, we received three enquiries, all from British buyers who had suffered gazumping – one of the most irritating and stressful outcomes a buyer can face,” she said.
“One client was a UK expat family, planning to relocate back to Britain later this year. They have been looking for a family home for the past six months and have been gazumped on three properties.”
And it is not just in the London commuter belt that the curse of gazumping is returning. Some highly desirable properties in Cheshire, central Manchester, Bristol and historic centres such as Bath are also becoming embroiled in gazumping. The only place that is free seems to be areas such as Wales and Northern Ireland where the market is still weak and in Scotland, which operates an entirely different sales system.
However, north of the border, particularly in affluent parts of Edinburgh, solicitors report that many properties are achieving far more than expected at sealed bid stage – a very good indicator of a market in take-off mode. Caspar Harvard-Walls, also a partner at Black Brick, said: “It looks like gazumping is well and truly back, and with a force. The last time we experienced a market like this was back in the heady days of 2007.
“The difference now is that gazumping is happening much further outside of the traditional core market of prime central London. This is partly down to buyers being priced out of super-prime and looking further afield for better value, and partly down to a constant lack of supply of sensibly priced, well-located properties that aren’t in some way compromised.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, reckons some of this frenzy is caused by concerns that interest rates – currently at historic lows – have only one way to go and that is up. “There is now growing panic that interest rates might actually rise next year, rather than 2016 as the Governor’s Forward Guidance previously indicated.
“But with inflation falling close to its 2 per cent target and the economy still in recovery mode, it is unlikely that the Bank will risk hiking interest rates too soon. Even if targets are met, there will still be good reasons to keep interest rates at 0.5 per cent. We still believe the first rate rise may not be until 2016.” But this may be little comfort to a buyer having to navigate a market that is noticeably tilting towards the seller.
Mr Harvard-Walls advises chivvying along any sale, which means staying on top of the legal work, agents and mortgage providers. “Be prepared – ensure your finances are in place and solicitors are instructed,” he said. “The quicker you can get from the point of the deal being agreed through to an exchange of contracts, the better. No one can get gazumped after exchange. You can also try offering the seller a non-refundable deposit to try to get the property removed from the market and have a period of exclusivity, however often by the time lawyers have finished drafting exclusivity agreements, you could have exchanged contracts.”
For some, they have the finances sorted, though that means having sold their home and be a cash buyer, which is only for a chosen few with greater flexibility to their lives.