Following the latest Government advice on home moving during the Coronavirus (Covid-19) outbreak, find out more on how we can support your conveyancing journey.
Home reservations agreements could bring an end to gazumping and gazundering in England’s property market.
The Government is to trial the legally binding agreements across England early next year.
The move aims to make property transactions more secure and stop the current third of all sales that fall through every year.
Right now any property sale in England hangs on a knife edge until contracts are exchanged, which could be weeks after an offer has been accepted.
That leaves both sides vulnerable to the other pulling out altogether, the buyer attempting to cut the price (gazundering) or the seller accepting a higher offer (gazumping).
In Scotland, neither gazumping nor gazundering are common because an offer, verbal or in writing, is binding on both sides once accepted.
Introducing home reservation agreements in England and Wales would have a similar effect in reducing the number of sales that fall through because one party pulls out.
It would also bring the sale of most property into line with the way new-builds are now sold. Developers insist on a reservation agreement and deposit that protects them when a buyer changes their mind.
Both buyer and seller would commit to the sale by signing the home reservation agreement and placing the deposit in an escrow account held by their conveyancing solicitors.
If one side pulls out and the other considers their reasons for doing so to be unreasonable, they could lose their deposit.
Fran is the content writer for Capital Conveyancing, producing articles on all aspects of the conveyancing process and around the UK property market in general. If there is a topic you'd like to see covered on these pages, please drop Fran a line on [email protected]