The process of buying and selling a property can be stressful for all parties involved in the transaction and in recent years, more cases of ‘gazumping’ has only made matters worse.

A property is defined as being gazumped where it has sold at a higher price, 1% or more than that which was agreed at the point of Sold Subject to Contract.

 

A study from property data company TwentyCi has claimed that 12% of property transactions in England and Wales have been subject to gazumping this year. The increase in such a practice has led to the government stepping in to introduce measures to protect potential purchasers.

 

New rules to stop people from cutting their offer at an advanced point in a sale, and “time wasting” by bidders with no realistic hope of completing a purchase, are being examined as part of a review of the rules. There is also plans to look into the possibility of changing the point in which an agreed sale becomes legally binding.

 

Under the plans, ministers will also examine how digital solutions could speed up the process, and encourage buyers and sellers to gather more information in advance so homes are “sale ready”.

 

Another proposal put forward is a ‘lock out agreement’. This is a contract normally drawn up by the buyer’s solicitor, which confirms the price both parties have agreed, and that the property will be withdrawn from the market. The buyer then puts down a small deposit, typically between £2,500 to £5,000 although it does depending on the value of the property, which the buyer will forfeit if they fail to exchange, other than if there is a significant issue, for example if the property fails its survey.

 

The contract works both ways, so if the seller fails to exchange, then they would be liable to pay the buyer the same amount as the deposit.

 

The Government has asked for evidence against the practice of gazumping to be submitted up to 17 December 2017.