Help for home buyers with plan to end gazumping

GAZUMPING could be outlawed and estate agents given formal training under government plans to reduce the “stress” of buying a home.

Ministers today announce proposals to prevent sellers accepting higher offers following an agreement to sell, and create financial penalties for buyers who pull out of purchases and cause chains to collapse.

Professional training for estate agents is also being considered in order to raise standards across the industry, as well as ways to speed up the process of buying and selling, sources said.

The proposals are intended to bring Britain into line with other countries, such as the US, which are seen to have quicker and more efficient home-buying processes.

The announcement comes after a study published earlier this month showed that one in four of the UK’s one million annual home sales falls through before completion. Collapsing purchases often leave buyers hundreds of pounds out of pocket, leaving an annual total of £270million wasted on transactions that never take place, according to Treasury figures.

It is the most significant government move to reform the process of buying a home since ministers announced the end of Labour’s “home information packs” within days of the coalition government being formed in 2010.

Last night, Sajid Javid, the Communities Secretary, said: “We want to help everyone have a good-quality home they can afford, and improving the process of buying and selling is part of delivering that. Buying a home is one of life’s largest investments, so if it goes wrong it can be costly.

“That’s why we’re determined to take action to make the process cheaper, faster and less stressful. This can help save people money and time

so they can focus on what matters – finding their dream home.”

The consultation by the Department for Communities and Local Government (DCLG) will seek views from estate agents, solicitors and mortgage lenders on how to address “gazumping” – when a vendor accepts a higher price from a rival bidder at the last minute – as well as buyers dropping out of a purchase after making an offer or lowering their offer at the eleventh hour – known as “gazundering” – and collapsing chains

Currently, “reservation” or “lock-in” agreements are used in only a small number of purchases to prevent gazumping. Ministers believe that widespread use of the agreements could help guard against the problem. They could require buyers to make deposits and impose financial penalties on either party if they back out, with excep-

‘This can help save people money and time so they can focus on what matters – finding their dream home’

tions made in the case of a poor survey or the buyer being unable to obtain a sufficient mortgage. Buyers could also be prevented from making offers without more certainty of a mortgage offer.

The changes would effectively bring forward the point at which house sales become legal. They could bring England into line with Scotland, where an offer cannot be withdrawn once it is accepted.

The proposals would be likely to reduce the role played by agents and increase the involvement of solicitors in the buying and selling process.

Estate agents are regulated under the 1979 Estate Agents Act as well as trading regulations. The consultation will seek views on whether further steps should be taken, including the introduction of professional training to introduce a “minimum standard” of service across the industry.

Ministers are also seeking evidence on how to use “digital solutions” to speed up the dealings buyers and sellers have with organisations such as the Land Registry and local councils as part of a sale and purchase.

“You can now search for a home online, but the buying process is too slow,” a DCLG spokesman said.