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Gazumping, house buying, and stress

It has long been said that buying a house is second only to having a child in terms of the stress generated, which is not surprising as it probably represents the largest financial transaction that a person will make in their life.

“In simple terms, the stress is caused by virtue of the fact that, until contracts for sale are exchanged (which is near the conclusion of the process), the seller can pull out of the deal with you without penalty. The seller could simply change their mind and decide to stay put, but the most likely reason is that they have accepted an higher offer from another buyer, which is called ‘gazumping’, “says Edwina Ashworth of Kirkham Legal, “but this does not happen very often in a settled housing market, as most sellers are happy to proceed with the first buyer, simply to get the house sold sooner rather than later. Gazumping is more likely to happen where the local market is very competitive, in say London for example, and where house prices increase quickly”.

It is not just buyers who get stressed either, as the seller is also in the vulnerable position that the buyer could pull out of the deal at any time until contracts are exchanged.

It is against this backdrop that the Government has now targeted the conveyancing process, and has threatened to introduce rules to ban gazumping and to introduce “lock-in agreements” so as to provide some protection to both parties in the transaction. The Government also wants to streamline the process by using more technology so as to speed up the process. Edwina comments, “This is all well and good but there aren’t any actual proposals on the table to deal with these issues yet. Any changes will have to be well thought out, and then implemented carefully. Most conveyancing firms already use a streamlined, computer-based system, which allow their clients online access to their files, which makes the process as transparent as it can be. It is important for the firm to progress the case without delay, and to deal with any issues that arise quickly, which, if done, lessens the possibility of the deal falling through. We ourselves rarely experience cases of gazumping”.

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Kirkham Legal

Kirkham Legal