Q. I hear that gazumping is raising its ugly head again in some areas. Isn't it illegal? And if not, why not?
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A. The answer to the first part of your question is no. Gazumping – which is when a seller, having already accepted one offer, ditches it in favour of a higher one from another buyer - is not illegal. Indeed, it is one of the peculiarities of the English property transfer system that nothing is legally binding – on either party - until exchange of contracts.
So, should gazumping be made illegal? That, as they say, rather depends on your point of view. So, while the frustrated and disappointed buyer will tend to regard gazumping as nothing more than an exercise is naked greed, the seller is more likely to see it as a perfectly legitimate way of ensuring the best possible price for their most valuable possession.
That’s not to say that I condone the practice. Being gazumped is certainly no joke – particularly if you have already incurred expense on things like a survey. However, to make it illegal would seriously distort the whole buying ands selling process, not least by tilting the balance between buyer and seller hugely in favour of the former. After all, it’s worth remembering that the same legal leeway that allows the greedy seller to switch offers in mid-stream also enables the cynical buyer to renege on their earlier offer and put in a much lower one at the very last minute (the practice known as gazundering).
One defence against such abuses, and an idea that is often floated, would be to make everything legally binding much earlier in the process – for instance, from the moment the offer is accepted.
But then again…there are those who argue equally persuasively that when it comes to buying or selling our biggest and most valuable asset, we really ought to have the freedom to change our minds, if we want to.
Ultimately, then, perhaps the best approach (ironically enough) is the one originally championed by the Government as the raison d’etre for its much-trumpeted housing market reforms: i.e. to make the whole system faster and more transparent, in order to limit the opportunities for any abuse -- by either party.