The government has created a questionnaire inviting estate agents, solicitors and mortgage lenders, as well as the general public, to share their views and experiences.
The “call for evidence”, open until 17 December, has been launched to try to make the process of buying property “cheaper, faster and less stressful”, with one of the issues on the agenda being gazumping – when someone makes a higher offer on a house than the one that has already been accepted, and succeeds in acquiring the property.
The document, available on the government’s website, says: “Buyers remain concerned about the seller continuing to market the property and accepting a higher offer from a new buyer (gazumping)… The government believes that the use of reservation and lock-in agreements may go some way to mitigating the incidence of gazumping but we would welcome views on this.”
A lock-in agreement could mean a financial penalty if either party backs out after an offer has been accepted. Although various lock-in or lock-out agreements, reservation contracts, cost guarantee agreements and registered deposit schemes do currently exist, the government believes consumer awareness of these options is low.
A binding agreement
“Our research suggests that 50 per cent of buyers and 70 per cent of lenders would be prepared to enter into a legal commitment. We believe that the routine use of these types of agreements would help to reduce the failure rate of transactions.”
It is estimated that gazumping can cost around £270m in failed transactions each year, and 16% of buyers are worried that the seller will continue to market the property and accept an offer from a higher bidder even after their offer has been accepted.
The government did a survey of 2,000 buyers and sellers from the past two years, and found that 62% of buyers and 69% of sellers had experienced delays, which caused them stress and worry.
In Scotland, parties are legally tied in earlier in the process, whereas in England and Wales people can pull out right up until they are due to pick up the keys. And while it normally takes several months in England to complete a sale, it can take as little as five days in Scotland.
Communities secretary Sajid Javid 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.”
Fill in the survey here.