Finding a new house is hard enough as it is without adding the anxiety and heartbreak of a house sale falling through. However, a new scheme called a ‘reservation agreement’ is set to be trialled by the government and could put an end to gazumping in house sales.
Gazumping is something that happens to between a quarter and a third of all house sales. It refers to when a house sale falls through because the owner or buyer pulls out, leading to buckets of stress and money loss – not ideal.
However, the government has announced that next year it will be trialling a revolutionary new scheme that could put an end to this.
It is not clear yet how the agreement will work, but it has been speculated that it will involve one or both parties putting down cash at the outset. You would then get some money back if the other side pulls out.
There is expected to be leeway for buyers or sellers with a suitable reason to pullout. These will likely cover a bereavement, loss of a job or an inability to obtain a mortgage. Crucially, unacceptable reasons will hopefully cover the more frustrating reasons for gazumping such as reducing an offer at the last minute or accepting someone else’s higher offer.
It’s still not clear if this new scheme will end up costing buyers and sellers more. A report from Estate Agent Today has suggested that some of the agreements being tested may involve a non-returnable deposit of £500 put down by the buyer. However, some may require £1,000, but some may not involve any initial payment.
The pilot scheme that will trial these agreements will be launched in a few areas across the UK as early as the beginning of next year.
‘This research, which is still underway, will help inform our decision on whether to roll out reservation agreements as part of a trial, potentially as early as next year, ‘ the Ministry of Housing, Communities and Local Government told The Guardian.
There are already private schemes like this in places such as Gazeal, a property technology company that offers legally binding reservation agreements to buyers and sellers.
So if you are currently looking for a home in the next year be sure to look into whether the scheme will be offered in your area, or if there is another version you can use.