OVER A THIRD OF PROPERTY PURCHASES SECURED BY ‘GAZUMPING’ ANOTHER BUYER’S OFFER

Published: 30/06/2021
  • Gazumping is the most common reason for house sales falling through, accounting for 38% of failed deals in the past year
  • 81% of people waiting for their purchase to complete are worried that another potential buyer might come in and outbid them
  • 38% of people who bought homes over the past year paid above the asking price
  • Buyers paid an average of £16,000 over the asking price to secure their purchase
  • Over two-thirds (68%) of potential home buyers would support making gazumping illegal

30 June 2021 – The leading reason for property sales falling through is gazumping, according to new research from comparethemarket.com. Over the past year, nearly two-fifths (39%) of buyers admitted they had successfully secured their home by outbidding another offer which had already been accepted- also known as gazumping.

Of those that tried to buy in the last year, but had their purchase fall through, gazumping is to blame for 38% of failed transactions, and the research suggests this is becoming far more common in the housing market: three-quarters (75%) of prospective house-buyers would consider gazumping if their dream home was already under offer with another buyer.

The prospect of being gazumped is adding to stress for many homebuyers. Over three-quarters (81%) of those who are waiting for their house purchase to complete, expressed concern that another potential buyer might come in and use the method of gazumping.

Another reason for transactions falling through is failure to meet the fast-approaching stamp duty holiday deadline on 30th June, which has accounted for almost a fifth (18%) of sales falling through. Failing to meet the deadline for the stamp duty holiday would leave many buyers with a hefty tax bill that could make the purchase of a house unaffordable. In addition to this, over one in 10 (15%) had a transaction fall through due to a member of the household being furloughed, leaving them ineligible for a mortgage.

Over the past year, 38% of house-buyers paid above the asking price of the property in order to secure the deal, paying more than £16,000 on average.

Gazumping is currently legal in UK as the ‘agreement of purchase’ only becomes legally binding once contracts have been exchanged. If a buyer is gazumped after their initial offer had already been accepted, they may also lose out on fees already paid on surveys, solicitors, and obtaining a mortgage for the property.

This has created concern in the market, and comparethemarket.com’s research reveals that more than two-thirds (68%) of people who have bought or tried to buy a house in the last year, or are looking to, would support a law that made gazumping illegal, or ensured better protections are in place to prevent this happening.

Mark Gordon, director of mortgages, comparethemarket.com, said:

“The race to meet the first stamp duty deadline on 30th June has led to an increase in demand for homes, meaning many buyers are willing to pay above the odds and even gazump homes which are already under offer. This has left many prospective buyers significantly out of pocket and adds additional stress to the homebuying process, given the average sale takes about three months to formally exchange contracts.

“Whether you are a first-time buyer or moving home, prospective homebuyers should be as prepared as possible before making an offer to ensure that the process runs smoothly and quickly. It’s important to make sure you shop around online to compare mortgage rates and have all your finances lined up before putting in an offer.”

ENDS

Notes to editors

Study based on 2,002 UK respondents who have bought or tried to buy a house in the last 12 months, or are looking (either actively or passively) (14th-15th May 2021)

About comparethemarket.com

comparethemarket.com was launched in 2006 and has grown rapidly over the past fifteen years to become one of the UK’s leading price comparison websites.

comparethemarket.com provides customers with an easy way to make the right choice for them on a wide range of products including motor, home, life, travel and pet insurance as well as utilities and money products such as credit cards and loans.

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comparethemarket.com is a trading name of Compare The Market Limited. Compare The Market Limited is authorised and regulated by the Financial Conduct Authority for insurance distribution (FRN: 778488) and is registered with the Financial Conduct Authority under the Payment Services Regulations 2017 (FRN: 911617) for the provision of payment services.