Ministers are reportedly considering a crackdown on buyers and sellers who pull out of a deal at the last minute, or who try to gazump or gazunder each other.
They are considering making house purchases legally binding much earlier in the process – for example, at the stage where an offer is accepted.
If either the buyer or seller pulled out afterwards, they would have to pay the other party’s costs.
In the March Budget the Government said: “We will publish a call for evidence on how to make the process better value for money and more consumer friendly.”
It now appears that the Government is gearing up to call for that evidence, through a consultation on speeding up and improving the home buying process.
A spokesperson has ruled out simply importing the Scottish system wholesale south of the border.
In Scotland, deals are binding once missives are exchanged, which rules out gazumping and gazundering.
Mark Hayward, managing director of the National Association of Estate Agents, told BBC Radio 5 Live that other alternatives could be having a pre-contract agreement or charging the buyer a deposit, but warned these were unlikely to be popular solutions.
He also warned that the Scottish system, where gazumping is banned, is by no means perfect.
He said: “The Scottish system is sometimes referred to as the ideal system, but if you speak to people in Scotland they may disagree. The onus is on the purchaser who has to have carried out all the checks before making an offer on the off-chance that it would get accepted.
“We perhaps need a hybrid system. In France you have a ten-day cooling-off period after an offer is accepted.”
Hayward added that the whole ‘100-year-old’ legal process of buying a property needed an overhaul.
Agent Chris Wood, of PDQ Property, agreed with this stance. He told EYE: “Gazumping is a problem but it is not the main problem
“The problem doesn’t happen as often as people think.
“What is needed is a review of the process so there are minimum statutory time periods that parties like solicitors and mortgage lenders have to respond in.
“Banning gazumping won’t solve the problem of delayed or failed property sales. Some would say that is just how the price is tested.”
He said it would also help if all councils were online so searches could be done more easily.
Really good agents create written offers that are binding on both sides with a deposit being paid at the outset. Eg £1,000. If the seller withdraws they have to pay back double the deposit. You can include suspensive conditions such as survey or mortgage approval. This is how things are done in most other parts of the world and I have used it myself on many occasions. Come on guys, why are most agents so uncreative and just accept the status quo? Now, more than ever, you need to demonstrate value and this is an easy way to do so. And raise your fee while you’re at it! Have a great day.
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SSTC, survey, searches. At what point does the (sale holding) deposit go down, at what point does findings in the survey/searches/contract warrant that the buyer could pull out based on intel that came to light post securing deposit?
Equally, a holding deposit does what when the buyers over run/or delay 1. down to their fault. 2 down to their solicitor, mortgage or search fault and when in such instances can the sellers swop ships (rather than wait for unfair delays)
The suggestion is an old one, but a good one that many have suggested over the last 10-20 years.
But there are many variable, if’s and but’s that would need addressing to create a workable model.
All said, buyers and sellers putting funds down with the risk of being out of pocket for ******** others about can’t be a bad thing.
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Careful what you wish for. I’m Scottish but live in England. The stress,uncertainty,disappointment and abortive costs,all come at the early stages in Scotland They don’t go away. The Scottish system is not the answer to reduce all the negative events listed above.
We the agents are forever the bad guys in gaxumping,gazundering and any other ****** thing that goes wrong in the process. But most of the pooh is as a result of slippery, devious and downright lying bast***ds of buyers and sellers and yes if they can be stopped great.
Governent try a log book per property and reform how lending works. Or maybe give a property a fixed lending status. But please don’t use this to try and deliver a “satisfying” blow against estate agents. There is so much wrong with the system and it’s a full 360 degree view that is needed. Visit a few other countries and see how it’s done not just Scotland,because it’s flawed there already.
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A lot of time is wasted (in a legal sense) whilst a property is being marketed. That time could be used to collect and compile legal information etc. When a buyer is then found exchange could be much sooner. All we need is a name for that product and process. Any ideas?
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Does it begin with ‘H’?
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If it does, then I may have to start dusting off the Splinta files… 🙂
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Good estate agents qualify their purchasers before recommending a client accepts or rejects an offer. This will simply dumb down the profession even further making it possible for unqualified, self proclaimed experts to tie up sales that would ordinarily fall out of bed. Essentially this is a Spiv’s charter helping to facilitate those whose qualifications, experience and integrity make them passive intermediaries rather than fiduciary Agents.
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I am a conveyancing solicitor.
1. The Estate Agents secure the buyer. Do NOT focus on them, they are necessary.
2. But once the legal representatives take the baton, the problems begin, deals stall/abort/take months Focus on correcting these issues:
– I can ask our office cleaner to handle a person’s house move. You do not need any qualification or experience.
– As a result, not fit for purpose conveyancers litter the conveyancing process, and grind deals to a halt
– Referral fees are paid – so frequently by the volume outfits – to some estate agents who do not care who pays, provided they pay the most
– Estate agents can be owned by inadequate legal outfits, where they cross refer. Self-defeating
– Ask most conveyancers who their top 10 worst conveyancing outfits are. Many of the same names crop up. Tackle those organisations.
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The most sensible statement of the day – well done
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Must be April 1st all over again.
Yes it would be nice to have binding offers that cant be broken by either side. But even with buyer qualification and vendor signed fact find there can always be a third element that either puts the kybosh on the sale going through or creates unexpected interest with buyers falling over each other to acquire a particular property.
I’ve seen it all and no one has yet been able to find a pragmatic solution.
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Instinct is the best way to ensure it’s the right deal for seller and purchaser and online doesn’t have it, saying that neither do the majority of estate agents, high street or otherwise !
If it’s a serious seller have an exchange ready pack produced pre or during the marketing process
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Sole selling rights for agency agreements, not sole agency?
So what does a vendor do when they agree a sale and they can’t find a property to move to? Do you expect them to buy something for the sake of it? Put yourself in that position and you may come up with suggestions of temp accommodation but that doesn’t work for everyone. If they pull out they should expect the risk of having to pay the expenses of both the agent (who provided the service contracted) and the costs of the buyer … stop doing no sale = no fee. It created an environment which is one of the causes for speculative sellers to abuse.
How does one handle liability/costs if a chain collapses through no fault of anyone? (lender, survey or death!).
There are arguments for and against but no-one anywhere in the world has ever come up with a working solution that fits all scenarios.
Gazumping and gazundering is very simple to stop, accepted offer of intent subject to conveyancing/financial arrangements i.e survey and not status, as that should be sorted out before making an offer = loose deposit or pay deposit back x 2.
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Is that first “dislike” from a mortgage lender/solicitor/surveyor who is happy to have aborted sales so they can charge fees a second time around?
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Oooops should read …
“Gazumping and gazundering is very simple to stop, accepted offer of intent subject to conveyancing/financial arrangements i.e survey and not status, as that should be sorted out before making an offer”.
A penalty for other scenarios should be = loose deposit or pay deposit back x 2.
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Is it me, or have we ( agents ) just experienced the excellent turn of our pipelines at the end of March…Why, maybe due to the pressure on solicitors and lending sources from buyers and sellers. To me this may show that the main issue with the process in many cases is simply the lack of drive from the buyer / seller? Didnt March prove that transaction time can be sped up?….just a thought
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There will never be change with fossils running the NAEA. Time for new thinking and direction. Time to end the Old Boy Network.
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A high quality Notaire type system would slash timescales. The Notaire would have an equal duty of care to both parties. It would stop all the usual solicitor’s reasons as to why a sale is not progressing “the other side hasn’t replied to my latest letter or email” or “the other side has just raised a whole raft of additional enquiries immediately before anticipated exchange of contracts” (often irrelevant or completely spurious). But as “turkeys don’t vote for Christmas” it won’t happen.
Solicitors should behave like mature adults, not a petulant divorcing couple who wont speak to each other – This example is typical where a client calls me to say that “his solicitor has not heard back from the buyer’s solicitor and that was over a week ago – could you call the buyers solicitor or contact the buyer to contact his/her solicitor to respond to our solicitor”. Its farcical!
I was never in favour of HIPS and I never met a buyer who showed the slightest interest in looking at one. However, when the property goes on the market the required documentation for the transaction should start to be compiled at that point. A vendor should be required to instruct a solicitor and put them in funds and the solicitor complete their ID due diligence before putting a property on the market. Certain documents can always be updated if its taking time to find a buyer. This would stop the “only testing the market” non serious vendor and speed the process immensely. As a result, contracts could be exchanged much more quickly with a longer period until completion if needed, thus removing all the uncertainty.
All agents should be properly licenced and properly supervised by one governing body with the power to fine, sanction and revoke their licence to trade as an agency in serious cases of misconduct. This would eliminate a lot of the clowns, con-men and malpractice that goes with them.
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