Gazumping sweeps Britain

Laura Williams thought the flat was hers. She had agreed a price, spent nearly £400 on a survey, and arranged a mortgage. But her plans collapsed when a curt phone call informed her that the owner had received a higher offer and the deal was off.

'I was gazumped,' she said. 'I was really upset about it. I knew it went on, but I never thought it would happen to me. Everything seemed to have gone smoothly.

'I'd been looking at curtains and everything. It came as such a shock, I thought I'd never manage to get on to the property ladder.'

It might sound like a bad dream from the days of the late 1980s property boom, but gazumping is back. As the housing market continues to boom, buyers are becoming more ruthless in attempting to secure a home.

A survey by the Yorkshire Bank shows one in 10 house buyers will gazump rivals to buy a property. According to the National Association of Estate Agents, one in three agreed sales does not make it to exchange of contracts.

Unlike in Scotland, a buyer's offer is not legally binding in England and Wales, even if accepted by the vendor. Although the Government has pledged to reform the system, it has failed to find time in the legislative programme for its proposed alternative since it published a White Paper in 1999.

Buyers' desperation has been fuelled by a strong housing market where big money can be made by getting hold of the right property. Some 61 per cent of homeowners polled for the study were confident their homes would rise in value over the next year. A report last month by the Royal Institute of Chartered Surveyors found the turnover of house sales was at its highest level since the late 1980s.

One of the main causes of gazumping is the time it takes to plough through the paperwork. Buyers have to wait an average 10-12 weeks to get the deeds to their property in England and Wales.

Graham Harris, past president of the National Association of Estate Agents, said buyers were losing out because demand for property was moving faster than the process of arranging surveys and confirming mortgages.

'People are becoming far more cynical as the market gets more competitive,' he said.

'The problem is that the time lag is so great between agreeing a sale and exchange of contracts. When prices are rising so quickly, there's plenty of room for a gazumper to step in and offer the buyer a better deal.'

With demand for housing far outweighing supply, particularly in London, buyers are scrambling to get hold of the right home.

Karen Raby, a negotiator with Woodland Payne estate agents in Battersea, south London, revealed last week that even scrupulous sellers and agents were besieged by would-be gazumpers. 'Most vendors would be reluctant to accept a higher offer when money has already been spent on a survey. But there are some fairly desperate buyers out there,' she said.

'When a bid has been agreed for a house, we put up a notice next to it and on the website saying "Under Offer". But we'll still get plenty of people ringing up to inquire about it. I think it's because there's such a shortage of property that buyers feel they have to do this.'

The practice is not limited to London. Researchers found that househunters in Yorkshire, Devon and Cornwall were the most ruthless.

Banks and insurers have profited from the trend. Brittania, Barclays and Legal and General are among firms that offer cover against gazumping.

Cautious buyers can make pre-contract deposit agreements, whereby each party hands over a cash sum which is lost if they renege on the deal. But until the law is changed, or the market slows down, the temptation to gazump will remain irresistible to some buyers.