There were fresh demands for action to stop gazumping last night after more than a third of house sales were hijacked by a higher bidder in the last year.
Two in five buyers admitted securing a home by putting in a better bid after a sale to someone else was agreed but before contracts were exchanged.
The practice, which is not illegal, was the leading cause of property deals not going ahead in the last 12 months, says comparison site Comparethemarket.com.
It comes amid a buying frenzy which began as the market reopened in May last year and was boosted by Chancellor Rishi Sunak’s stamp duty holiday.
Experts say the race to meet the deadline before the duty is reintroduced starting tomorrow has led to a big increase in gazumping of homes already under offer.
There were fresh demands for action to stop gazumping last night after more than a third of house sales were hijacked by a higher bidder in the last year
Three quarters of prospective buyers told Comparethemarket they would consider doing it to get their dream home.
And more than a third of buyers said they had paid over the asking price for a home, with an average overpayment of £16,000.
Gazumping is currently legal in the UK as the ‘agreement of purchase’ is not legally binding until contracts have been exchanged.
But ‘gazumped’ buyers often lose hundreds of pounds already paid out to surveyors, solicitors and mortgage brokers.
More than two thirds of people who have bought or tried to buy or planned to buy a house in the past 12 months want gazumping made illegal, the survey found.
Iain McKenzie of the Guild of Property Professionals said: ‘Many of our members would like to see the law in England and Wales updated to follow Scotland, where gazumping is much rarer.
‘In Scotland, an agreement becomes binding the moment a written offer is accepted. With the demand for houses outstripping supply, it was only a matter of time before gazumping returned.’
Gazumping, which is not illegal, was the leading cause of property deals not going ahead in the last 12 months, says comparison site Comparethemarket.com
Nicholas Morrey, of mortgage advisers John Charcol, added: ‘The Government needs to step in here. Gazumping is a huge source of stress and leaves a horrible taste in everyone’s mouth.
‘Money and resources end up wasted not just for buyers but brokers, lenders and solicitors.’
And Mark Hayward, of estate agent body Propertymark, said: ‘Gazumping should be discouraged as a practice but our current legal system would need to be radically overhauled to be able to allow for a total ban.’
The Conveyancing Association wants offers to become legally binding, with fines for those who pull out.
Nicholas Morrey, of mortgage advisers John Charcol, added: ‘The Government needs to step in here. Gazumping is a huge source of stress and leaves a horrible taste in everyone’s mouth’
Paula Higgins of consumer group the HomeOwners Alliance, said: ‘When an offer is agreed, there is absolutely no legal obligation of any sort on either side. We have called for more certainty.
‘At the point of agreeing the price, but before either side spends any money, the home buyer and seller commit to being “genuine” to proceed with the transaction – and to pay the other side £1,000 if they pull out.’
Fastest house price jumper in 17 years
By Matt Oliver, City Correspondent
House prices have surged by 13.4 per cent in just one year – the fastest UK growth since 2004.
The average price stood at £245,432 in June, an increase of £29,000 on 12 months earlier, says Nationwide.
The biggest jump in 17 years comes as buyers race to finish deals before the end of the stamp duty holiday, which starts to taper off from tomorrow.
Since last July, homes worth £500,000 or less have been exempt from stamp duty payments as part of Chancellor Rishi Sunak’s stimulus package during the pandemic.
And after months indoors under lockdown, families are seeking roomier homes with gardens and hope to take advantage of rock-bottom interest rates.
House prices have surged by 13.4 per cent in just one year – the fastest UK growth since 2004. The biggest jump in 17 years comes as buyers race to finish deals before the end of the stamp duty holiday, which starts to taper off from tomorrow
But lack of supply has driven prices, and Nationwide warns that it is now even harder for first-time buyers to enter the market because they need bigger deposits. Buyers on average wages now take five years to raise a 10 per cent stake, says the lender.
The rally in prices comes despite the UK’s biggest recession in 300 years thanks to coronavirus.
‘It has stimulated housing market activity rather than the shock holding back the market,’ said Robert Gardner, Nationwide’s chief economist.
The largest price rises came in Northern Ireland (14 per cent) and Wales (13.4) and the lowest in Scotland (7.1 per cent) and London (7.3).