Estate agents, who deplore the practice without being able to do anything to prevent it, quite naturally take the brunt of a victim's anger. Marc Goldberg of Hamptons says that if a vendor reneges on a deal, it is the agent who breaks the bad news to the buyer and is often regarded as guilty by association. "We are very unpopular at the moment and I would support any steps to bring an end to gazumping. But if it is to work, I believe there should be a financial penalty, such as a non-returnable deposit. When gazumping happens, the extra amount agents receive in commission is negligible compared to the damage done to our standing."
Hugh Dunsmore-Hardy, chief executive of the National Association of Estate Agents (NAEA) wants to see backing for a pre-contract deposit agreement which would be legally binding. Under the agreement, a buyer and seller would each put up 0.5 per cent of the value of the agreed price and commit themselves to an exchange of contract within a certain number of weeks. The jilted party would be paid the deposit, which should at least cover the costs of solicitors' fees and the survey. "I would support the Labour Party's proposals as long as they do not hamper the workings of the market. The compensation should be sufficient for both parties to be mindful of the penalty for breaking the agreement, but not so much that it ties up sales."
A pre-contract agreement has some of the features of the Scottish system, which many people look to as a shining example of how it could be done. But the NAEA believes the differences in the two systems would make it unworkable in the rest of the UK. John Brown of DTZ Debenham Thorpe in Edinburgh explains that even under the Scottish system gazumping occurs. Buyers have to be satisfied on a number of issues, including the survey, before they sign a contract. Unless the seller has all the documentation ready it can be a slow process. There is nothing to stop gazumping in this period, he said. "Also if legislation is to be even-handed it should apply to gazundering (when buyers re-offer at a lower price in a falling market) as well as gazumping."
The penalty for not completing on time is severe. "If you exchange missives, agreeing to all the terms, one of those conditions is likely to be a payment of 3 or 4 per cent above bank rate for every day you haven't paid for the house," says Mr Brown. "What I would really like the Labour Party to look at is the 1979 Estate Agents Act. The last part requiring anyone advising on property to be professionally qualified has not been implemented. That would make a difference."
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