Gazumping rates in Britain reveal London at the top

As demand for property across Britain rises and stock levels fall, the number of people getting stung by gazumping is also increasing, research finds. The last two years have shown an increase in gazumping nationwide, jumping from 13 percent in 2015 to 36 percent in 2017.

Gazumping happens when a potential buyer has their bid accepted on a property, yet during the process of buying, another buyer comes along with a better offer, and the original buyer is ‘gazumped’ from the purchase as the seller chooses the highest bidder.

The frustrating, but legal process of gazumping typically arises on properties in high demand, whether it be because of the desirable location, the quality of the home itself, or the price range. Peter Wetherell, CEO of Wetherell, notes that this is usually either ideally priced starter homes or top of the range luxurious designer properties – both of which buyers will do anything to get their hands on.

Gazumping is increasing in line with market values and demand

Due to Brexit and other political matters at play in the UK currently, the real estate market has almost come to a halt with potential sellers wary of entering their property onto the market until they have some certainty of the future. This decrease in stock is a major factor to the increased demand and subsequent gazumping trend.

A recent investigation revealed that London has the highest frequency of gazumping during the property sales process, with a notable 35 percent of potential buyers having been gazumped over the past two years. Second place was given to the South East region, which although high at 16 percent, is less than half the frequency experienced in the capital.

Although there is quite a difference between the two, third place drops even further to nine percent, and it is not unexpected that London and the South East have the highest numbers of people being outbid past the offer acceptance stage due to being home to the most expensive and in demand properties in the UK. The average house price in London is currently £481,345 and in the South East is £315,807. These are significantly higher values than the £220,084 average found across the rest of the UK.

The North West experienced the third highest rate of gazumping at nine percent, followed closely by the West Midlands and Yorkshire at seven and six percent, respectively. Typically, property values are substantially lower in these areas compared with the south.

At the bottom of the list is Scotland with one percent, where gazumping is commonly thought to be illegal. However, that is not quite the case. Scottish law and practice prevent a solicitor bound by this to represent a seller who wishes to accept a higher offer on their property, following accepting an offer from another buyer as this would be misconduct. However, solicitors not bound by this law – located in England or Wales – could represent the seller in this case and this is why gazumping, although very rare, can still happen in Scotland.

How can a potential buyer avoid being gazumped?

Avoiding being gazumped is simple, but not necessarily easy. Here are some points to consider when buying a property to ensure all that can be done is:

– A cash purchase will always stand a better chance as there is no waiting around for mortgage applications and money to come through to complete the sale. However, if a mortgage is necessary, ensure a mortgage in principle has been agreed, so you are in a position to make an offer immediately and then complete the application as soon as possible after your offer has been accepted as this entire time is a risky period for being gazumped.

– Make a realistic offer. This may seem basic, but a seller who has accepted an offer, but thinks they may be being slightly ripped off, is much more likely to accept another offer should it come along quickly enough.

– Sell your own property as fast as possible. Long chains can begin to develop if a buyer has a property of their own to sell and some sellers will not wait around. If a better offer comes along while they’re waiting, be prepared to be gazumped.

– Be friendly and open. It doesn’t hurt to build a good rapport with your potential seller, they may be selling you their home, and they are likely to want it to go to someone who will look after it and who will benefit from it. If the seller knows your situation and how much you and your family will love living in this new home and how well looked after it’s going to be, they’re much less likely to accept a higher offer when it comes along if they’re happy.

David Jackson

David is a personal finance expert, a professional male model, and an entertainment writer.