Labour plans to outlaw gazumping

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The Independent Online
Gazumping - on the increase again as house prices begin to rise - would be outlawed under a Labour government, the party's environment spokesman said yesterday.

Frank Dobson announced that sellers who reneged on a deal because they had a better offer could find themselves facing the bill for their original purchaser's legal fees, survey costs and mortgage arrangement expenses.

Mr Dobson said yesterday that there was now evidence of increasing house prices bringing a return to the phenomenon which was common during the housing boom of the 1980s. There should be protection for buyers so that they did not waste their money and then lose the house of their choice, he suggested.

Under Labour's scheme, which is being put out for consultation, the "jilted" party would be paid compensation if an agreement was broken. This would apply even if the purchaser pulled out because of a bad survey report or because they had found themselves in a "chain" which collapsed.

The party says it is open to suggestions as to whether the programme should be voluntary or whether it should be legally binding, though Mr Dobson said he tended to think it should be statutory.

It has also yet to decide whether each side should be asked to lodge a deposit to cover costs if they should pull out, and if so, who should hold it.

Mr Dobson said the current government had no policies to help people to cope with negative equity, with mortgage arrears or with repossessions, and it was now failing to deal with gazumping.

"At the last election, John Major promised to make life easier for people buying their home. But his record shows he has no answer to the problems of house buyers, whether house prices are rising or falling.

"The process of buying a house is one of the most stressful things that a family can encounter. So the Government should try to have in place a system which keeps that stress to a minimum," he said.

A similar scheme was published by the Royal Institute of Chartered Surveyors, but it added that a seller or buyer who pulled out without good reason should be subjected to punitive fines. These would force them to pay interest at 5 per cent above base rate on the value of the property for the period from the deal being struck until it was broken.

However, a spokesman for the institute welcomed Labour's plans. "We think that anything which can improve the buying environment is a good thing. As everybody knows, the house-buying process can be extremely difficult," he said.