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Uncertain property market prompts more sellers to pull out at the last minute, sparking new phenomenon to join gazumping and gazundering
After gazumping and gazundering, the property market has identified a new danger for would-be homeowners: gazanging. Volatile house prices and a lack of available property is driving the phenomenon of sellers pulling out at the last minute.
Research from the legal property website In-Deed suggests that sales fell through at the last minute for more than 54,000 homebuyers in the first half of 2011 because sellers changed their minds and opted to stay put.
The website, which has coined the term gazanging, said the incidence of sellers pulling out had risen by 20% over the first half of last year and was now more likely to affect buyers than gazumping – an unwelcome feature of the last property boom when sellers accepted an offer, only to accept a higher offer from another buyer.
Home information packs (Hips), introduced in 2007, were supposed to speed up the homebuying process and reduce gazumping and gazundering, where buyers threaten to pull out unless the price is reduced, by giving buyers further details about the home they hoped to buy. Hips meant that, if a sale collapsed, local authority searches were not being paid for more than once, but critics argue they failed to help prevent chains from collapsing. The government withdrew Hips in May 2010.
Uncertainty about the property market and an under-supply of suitable homes are the biggest drivers of gazanging, according to the website, with 12% of sellers who opted to stay put in the first half of 2011 blaming "cold feet" and 28% claiming they could not find a suitable home.
According to the National Housing Federation (NHF), just 105,000 homes were built in England in 2010-11 – the lowest level since the 1920s. The NHF recently predicted a slump in homeownership to the levels of the mid-1980s, while Land Registry figures indicate housing transactions fell by 10% year on year in May 2011. This suggests gazanging could rise if the number and range of property coming on to the market does not improve.
The signs are not promising. House sales dropped to a two-year low in August, according to the Royal Institute of Chartered Surveyors, with two-fifths of surveyors claiming buyers were staying away because they were worried about future falls in house prices. The NHF recently announced a huge shortfall in planning permissions for new homes. Just 25,171 residential planning permissions were granted in England in the second quarter of 2011 – the second lowest quarterly number for five years and a 24% drop on the first quarter of the year.
Harry Hill, founder of Rightmove and former chief executive of Countrywide estate agents, said: "What we're seeing at the moment is uncertainty in the housing market and poor consumer confidence giving sellers cold feet. Buyers can't do much about the economy, but regardless of the state of the market, poor property legals continue to compound such problems, though this is easily avoided."
The three 'Gs'
Gazumping: when the seller accepts one offer from a potential buyer, only to accept a higher offer from a rival bidder at the last minute. Gazumping tends to happen in a rising market, where sellers are able to ruthlessly exploit desperate buyers amid rampant house price inflation. Gazumping is legal in England and Wales but rarely seen in Scotland, where offers become legally binding once accepted in writing.
Gazundering: where the buyer threatens, just before contracts are exchanged, to pull out of a house purchase unless the price is reduced. In this scenario, which usually takes place in a falling market, the buyer holds all the power. Gazundering is legal in England and Wales but is outlawed in Scotland.
Gazanging: coined by In-Deed, gazanging is when sellers change their minds and drop out of the sale at the last minute, often due to market uncertainty or a lack of a suitable home to move to. The rise of gazanging is being fuelled by a shortage of housing, caused by falling transactions and the lowest number of new homes being built in England since the 1920s.
Mark King
guardian.co.uk © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds
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Uncertain property market prompts more sellers to pull out at the last minute, sparking new phenomenon to join gazumping and gazundering
After gazumping and gazundering, the property market has identified a new danger for would-be homeowners: gazanging. Volatile house prices and a lack of available property is driving the phenomenon of sellers pulling out at the last minute.
Research from the legal property website In-Deed suggests that sales fell through at the last minute for more than 54,000 homebuyers in the first half of 2011 because sellers changed their minds and opted to stay put.
The website, which has coined the term gazanging, said the incidence of sellers pulling out had risen by 20% over the first half of last year and was now more likely to affect buyers than gazumping – an unwelcome feature of the last property boom when sellers accepted an offer, only to accept a higher offer from another buyer.
Home information packs (Hips), introduced in 2007, were supposed to speed up the homebuying process and reduce gazumping and gazundering, where buyers threaten to pull out unless the price is reduced, by giving buyers further details about the home they hoped to buy. Hips meant that, if a sale collapsed, local authority searches were not being paid for more than once, but critics argue they failed to help prevent chains from collapsing. The government withdrew Hips in May 2010.
Uncertainty about the property market and an under-supply of suitable homes are the biggest drivers of gazanging, according to the website, with 12% of sellers who opted to stay put in the first half of 2011 blaming "cold feet" and 28% claiming they could not find a suitable home.
According to the National Housing Federation (NHF), just 105,000 homes were built in England in 2010-11 – the lowest level since the 1920s. The NHF recently predicted a slump in homeownership to the levels of the mid-1980s, while Land Registry figures indicate housing transactions fell by 10% year on year in May 2011. This suggests gazanging could rise if the number and range of property coming on to the market does not improve.
The signs are not promising. House sales dropped to a two-year low in August, according to the Royal Institute of Chartered Surveyors, with two-fifths of surveyors claiming buyers were staying away because they were worried about future falls in house prices. The NHF recently announced a huge shortfall in planning permissions for new homes. Just 25,171 residential planning permissions were granted in England in the second quarter of 2011 – the second lowest quarterly number for five years and a 24% drop on the first quarter of the year.
Harry Hill, founder of Rightmove and former chief executive of Countrywide estate agents, said: "What we're seeing at the moment is uncertainty in the housing market and poor consumer confidence giving sellers cold feet. Buyers can't do much about the economy, but regardless of the state of the market, poor property legals continue to compound such problems, though this is easily avoided."
The three 'Gs'
Gazumping: when the seller accepts one offer from a potential buyer, only to accept a higher offer from a rival bidder at the last minute. Gazumping tends to happen in a rising market, where sellers are able to ruthlessly exploit desperate buyers amid rampant house price inflation. Gazumping is legal in England and Wales but rarely seen in Scotland, where offers become legally binding once accepted in writing.
Gazundering: where the buyer threatens, just before contracts are exchanged, to pull out of a house purchase unless the price is reduced. In this scenario, which usually takes place in a falling market, the buyer holds all the power. Gazundering is legal in England and Wales but is outlawed in Scotland.
Gazanging: coined by In-Deed, gazanging is when sellers change their minds and drop out of the sale at the last minute, often due to market uncertainty or a lack of a suitable home to move to. The rise of gazanging is being fuelled by a shortage of housing, caused by falling transactions and the lowest number of new homes being built in England since the 1920s.
Mark King
guardian.co.uk © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds
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