Newly released research from comparethemarket.com has found that 39% of buyers admitted they had successfully secured their home last year by outbidding another offer that had already been accepted.
Of those that tried to buy in the last year, but had their purchase fall through, gazumping is to blame for 38% of failed transactions, and the research suggests this is becoming far more common in the housing market: 75% of prospective house-buyers would consider gazumping if their dream home was already under offer with another buyer.
The prospect of being gazumped is adding to stress for many homebuyers. 81% of those who are waiting for their house purchase to complete, expressed concern that another potential buyer might come in and use the method of gazumping.
Another reason for transactions falling through is failure to meet the fast-approaching stamp duty holiday deadline on 30th June, which has accounted for 18% of sales falling through. Failing to meet the deadline for the stamp duty holiday would leave many buyers with a hefty tax bill that could make the purchase of a house unaffordable. In addition to this, 15% had a transaction fall through due to a member of the household being furloughed, leaving them ineligible for a mortgage.
Over the past year, 38% of house-buyers paid above the asking price of the property in order to secure the deal, paying more than £16,000 on average.
Gazumping is currently legal in the UK as the ‘agreement of purchase’ only becomes legally binding once contracts have been exchanged. If a buyer is gazumped after their initial offer had already been accepted, they may also lose out on fees already paid on surveys, solicitors, and obtaining a mortgage for the property.
This has created concern in the market, with 68% of people who have bought or tried to buy a house in the last year, or are looking to, would support a law that made gazumping illegal, or ensured better protections are in place to prevent this from happening.
Mark Gordon, director of mortgages, comparethemarket.com, said: “The race to meet the first stamp duty deadline on 30th June has led to an increase in demand for homes, meaning many buyers are willing to pay above the odds and even gazump homes which are already under offer. This has left many prospective buyers significantly out of pocket and adds additional stress to the home buying process, given the average sale takes about three months to formally exchange contracts.
“Whether you are a first-time buyer or moving home, prospective homebuyers should be as prepared as possible before making an offer to ensure that the process runs smoothly and quickly. It’s important to make sure you shop around online to compare mortgage rates and have all your finances lined up before putting in an offer.”
