A chronic shortage of homes for sale has led to an increase in buyers being gazumped, a trend which is affecting tens of thousands of buyers across England and Wales, research has revealed.
Gazumping occurs when a seller who has already accepted an offer on a property retracts on the deal by agreeing to a higher price from a third party.
It tends to occur most commonly in busy markets where there is intense competition amongst buyers. This can lead to bidding wars and the temptation for sellers to leave potential buyers in the lurch.
According to homemovers website Move iQ and proptech firm Gazeal, which carried out the research, current low numbers of homes for sale has led to high levels of gazumping, even in areas where prices were falling.
Hotspots
The firms’ research found there were certain ‘hotspots’ in the UK where gazumping was particularly prevalent. This included Sheffield, where more than a third of buyers, or 35%, were gazumped out of the property on which they had their heart set.
Maidstone was not far behind. In the Kent town 32% of potential buyers had been gazumped according to research despite the fact average prices fell in the area by 1% in the year to January 2019.
Phil Spencer, TV property expert and co-founder of Move iQ, said the findings would come as a reality check to anyone who thought gazumping had vanished with the runaway price rises of a few years ago.
“Gazumping is alive and well and still causing heartache for tens and thousands of buyers across England and Wales,” Spencer said.
He added: “Britain’s fragmented property market is throwing up huge regional extremes. In hotspots where prices are still rising fast, sellers can be tempted to go back on their word to a buyer if they get a better offer elsewhere.
“Meanwhile, in slow markets, the lack of homes for sale can lead sellers to leave would-be buyers in the lurch if they get a last minute offer from someone else.”
The real culprit
According to Spencer, the market conditions were not the real culprit behind gazumping. In fact, he said, the way homes were bought and sold in England and Wales, was the problem. He explained the system allowed sellers to leave buyers ‘high and dry’ for weeks or even months after accepting an offer was not fit for purpose.
This is because offers made and accepted on a property for sale in England and Wales were not legally binding until contracts were exchanged. But the process of drafting and exchanging contacts could take, on average, 102 days, according to a survey by Gazeal.
What’s more, over a third of property transactions fell through within the first three weeks and UK estate agents collective reported more than 800 transactions fell through a day.
Official figures from the treasury estimated buyers and sellers collectively lost £270 million a year on failed property transactions.
England and Wales’ gazumping hotspots (Source: MoveiQ and Gazeal)
| Rank | City / town | % of buyers suffering gazumping | Average price change, year to January 2019 | Average property price |
| 1 | Sheffield | 35% | 7.0% | £166,959 |
| 2 | Maidstone | 32% | -1.0% | £290,916 |
| 3 | Cambridge | 28% | 4.0% | £446,713 |
| 4 | Birmingham | 26% | 5.8% | £188,254 |
| 5 | Manchester | 25% | 7.6% | £183,992 |
| 6 | Norwich | 24% | 5.1% | £209,244 |
| 7 | Nottingham | 22% | 3.2% | £142,561 |
| 8 | Cardiff | 20% | 5.2% | £210,803 |
| 9 | Leeds | 20% | 3.8% | £185,198 |
| 10 | Bristol | 19% | 1.3% | £278,872 |
| 11 | Outer London | 19% | 0.2% | £425,588 |
| 12 | Brighton and Hove | 18% | 4.5% | £371,819 |
| 13 | Swindon | 17% | -0.2% | £217,208 |
| 14 | Leicester | 17% | 5.9% | £175,350 |
| 15 | Plymouth | 16% | 3.2% | £177,621 |
| 16 | Newcastle | 16% | 2% | £159,389 |
| 17 | Central London | 16% | -1.9% | £567,864 |
| 18 | Southend-on-Sea | 16% | -0.7% | £278,084 |
| 19 | Liverpool | 16% | 5.9% | £135,089 |
| 20 | Southampton | 16% | 3% | £215,448 |
Spencer announced his firm Move iQ had teamed up with Gazeal, which offered a fast-track service aimed at cutting down the time between the offer and exchange.
In this process, sellers and buyers agree to a legally-binding deal right from the start, which can take out some of the uncertainty or fears of gazumping or gazundering, where buyers ask for a discount on the price at the eleventh hour.
