Only way you can trump a gazump

MINISTERS sparked a pandemic property boom by temporarily increasing the stamp duty threshold from £125,000 to £500,000 just over a year ago.

Estate agents say they have never been busier but the highly competitive market has caused there to be more buyers than houses for sale.

This has led to a surge in gazumping – when a buyer has had an offer to purchase a property accepted but, before the sale is completed, the seller accepts a better one from someone else.

As a result, buyers are losing thousands of pounds in wasted searches and fees for surveyors and solicitors.

So readers have been asking me what their legal rights are in these sort of situations.

IS GAZUMPING LEGAL?

Unfortunately yes, as an agreement to buy or sell a property does not become legally binding until written contracts are exchanged.

Land laws provide that contracts relating to land can only be made in writing, meaning verbal agreements have no legal effect.

HOW CAN I AVOID BEING GAZUMPED?

The only way to legally stop the seller from accepting another offer before exchanging is to enter into a lock-in agreement.

These can be otherwise referred to as exclusivity agreements. They are a written agreement that is legally binding on the parties, where the prospective buyer pays a sum of money in consideration of the seller agreeing not to negotiate with any other parties within a fixed period.

This allows the buyer to arrange their survey, searches and mortgage without fear of being gazumped.

These agreements used to be fairly rare but as gazumping has become more common so have they and there is no reason why a serious and honest seller will not agree to enter into such a deal.

The amount paid under the agreement should be deducted from the purchase price, although some sellers may not agree to this.

The other option is for buyers to buy insurance that would pay an agreed sum to cover losses in the event of being gazumped.

These policies are not always easy to obtain and can be fairly costly.