Money Box Live: House Sale Nightmares

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0:30originally deposited, and any profit you might have made. This is not a recommendation or offer to buy, sell, or attain any specific investment or service. Fall tastes better with better ingredients from Whole Foods Market. No added growth hormones or antibiotics in their meat department means slow-braised short ribs are even more satisfying. All seafood is wild-caught, like their vibrant sockeye salmon or verified responsibly farmed. and all sweets, including fall-themed cookies, are made without high-fructose corn syrup. Spice up fall at Whole Foods Market. Hello. In today's Moneybox Live podcast, major reforms are planned that could shake up house selling in England, Wales and Northern Ireland and make the whole process less agonising.

1:17It was a total shock. I think I felt a bit sick. There was a moment of disbelief and not being able to process what it meant. The plans could end the upsetting practice of gazundering and gazumping and make buying and selling homes faster, cheaper and less likely to fall through. That's what the government is hoping. Listeners will probably be familiar with gazumping, where a seller switches buyer at the last minute, usually because someone else can pay more. But gazundering is less well known. It's where a buyer suddenly drops their agreed offer just before the contracts are exchanged. The Conveyancing Association told Saturday's Moneybox that this practice is on the rise.

1:56Where there's a buyer's market, then there are more properties than buyers. So the buyers are more comfortable doing this sort of thing. Well, loads of you got in touch after that with your buying and selling nightmares. And we'll hear from some of those listeners in the next half an hour. We're also going to hear how it works very differently in Scotland. Now let's start with gazundering, which is rising at the moment, but was really rampant in the 80s in particular. Now, part of the pressure of gazundering comes because it happens at the last minute and that can often force sellers to consider renegotiating.

2:29It clearly, going by your emails, leaves a very bad taste. Here's a Moneybox listener we're calling George. We were about to exchange contracts for our house sale. We were part of quite a large change. When on the morning of when we had expected exchange of contracts, our buyer suddenly asked for a 10 ,000 reduction. To say the steam were coming out my ears, we were furious. We agreed to a reduction in price provided that they maintained the original completion date. We've now accepted it and we're in a beautiful home and we are where we want to be. But it is still one of those things where you wake up in the small of the morning and you remember what happened.

3:10Poor George. It really shows how these feelings can really stay with you. Well, listening to that are David Bridge, Head of Conveyancing at the Dorset-based Solicitor's Kitely's, which deals with properties across England and Wales, and Nathan Emerson, the CEO of PropertyMark, which is a professional body for estate agents. Hello. Hello. Good afternoon. Good to have you both with us. Nathan, steam coming out of George's ears. Is Gazundering normal now? I think Gazundering's been with us for as long as I can remember, and that's a very, very long time. And part of that does come because of a number of issues that can arise during transactions.

3:50So there are some people that go into the transaction with every mind of renegotiating. But by and large, the majority of the renegotiations and gazundering issues actually come about because of issues that happen during the course of a transaction. So potentially for perfectly good, legitimate reasons. Absolutely. David, how would you define gazundering? because it kind of has to come at the end of the process, doesn't it? It's not like trying to negotiate a better price because you've had a survey done and the roof needs replacing. I think that's the exact distinction. It comes as a last-minute price chip.

4:26That tends to be when I would call it gazundering. If it's a negotiation during part of the due diligence process, then everyone has time to cope and deal with it. But when it's at the last minute, it leaves a really awful taste in people's mouths because it's a form of bullying. And I think it's when it slips from negotiation to bullying that it becomes a problem. Clearly, George felt a lot of anger and frustration. So I suppose you're saying that sometimes it can be quite far removed from the normal renegotiation of a contract. Oh, absolutely. I think because it's done at the last minute, they're using time to pressure against you.

5:01Everything's lined up. The chain is lined up. OK, Nathan, you were an estate agent and now you represent them. So what's the agent's role in all this? isn't kind of their job to stop these sorts of issues on behalf of their client and before it has the chance to scupper the whole purchase? Absolutely. I think a lot of agents are highly proactive and they are attuned to these events happening. We are legally obliged, so if anybody makes an offer on a property, even after a sale has been agreed or during a transaction, if a buyer changes their offer amount, we are legally obliged, obviously, to put that forward to the client.

5:34but what will normally happen is agents will advise the client on what they believe the best course of action can be and that can often be well let's go back and just say no we're not accepting that you know we can put the property back on the market we can sell that to somebody else it could be the perverse where you know you've got the only one and only buyer for that property within that price range and even the renegotiated price, actually you may struggle to exceed that if you took the property back to the market. So I think each one is its own individual circumstance. I agree entirely. It leaves a very bad taste in the mouth because very often of the timing.

6:16But I think you have to look at each circumstance in its isolation and agents will advise their clients as they see fit. And more often than not, it is pushing back on that because it is very often last minute and it can be very unpleasant with the amounts of money we're talking. But Nathan, you think that there can be perfectly legitimate reasons for it happening? There can. I mean, one example of that can often be when you have long chains, for example, there becomes pressure for somebody to break the chain, for example. And nowadays you do find that transactions are tight financially for everybody.

6:52And so if one party, for example, at the bottom of the chain is pushing very hard and the other end of the chain isn't ready, somebody in the middle will often move out into temporary accommodation in order to keep that happening. But that obviously then becomes quite an expensive, unforeseen cost. This is just one example. And very often the chain will be asked to renegotiate to mitigate that one person's exposure, enabling everybody else to continue the journey. OK, thank you. Well, let's hear from another listener now. We're calling her Susan. Out of all the emails that you sent us after Saturday, hers was the biggest attempt at gazundering.

7:26Just before we were to exchange, the potential buyer asked to drop the price by£150 ,000, which was impossible. And so the sale obviously failed. It's like a punch in the stomach. after five months of conveyancing negotiations. I had moved out of the house I was selling and my new life was about to begin. I'm in my early 70s and retirement was ahead and the money from the house sale would have fuelled adventures and a new lifestyle. And really the two years since then, my life has been on hold. Poor Susan tells us she's still looking to close a deal on her house. So, David, we've sort of touched a little bit on some of the things that can come up that can cause gazundering.

8:17And would you say then that part of the trouble is how long it can take to actually complete a house sale? So it takes around 120 days, about four months on average to complete in England and Wales. That is 60 % longer than it did in 2007. Is that what's behind one in three transactions now falling through like Susan's? I think the accepted wisdom is that the longer a transaction goes on, the more chance there is for somebody to change their mind, because absolutely nobody is bound into the transaction until exchange. So, sorry, go. Oh, no, sorry. Please, please finish. Yeah. So once we've taken that into account, yes, a quicker transaction has less time to fall over.

8:58I don't think it actually engenders guzzundering as such, because that is still an ongoing due diligence and negotiation. So I think guzzundering, I still think we need to keep clear that that is a last minute attempt to change the price, whereas negotiation is a perfectly acceptable part of the process. OK. And can you give us any tips? Is there anything people can do to reduce the risk of gazundering, even if they can't rule it out entirely? I think stay very open with everybody within the chain, good communication and start the process early and give as much information as you can at the outset so that people go into it without the need to renegotiate because it's done right at the outset with no nasty surprises.

9:42Nathan, briefly, if you can, do you see this happening a lot? we do see it happening a lot um i mean the the studies vary but if you were to benchmark 20 25 percent of transactions at some point will face negotiation a proportion of those obviously will be last minute goes under and i think if you look at poor susan's case that's that's a very extreme i mean it may be her house price is is considerably higher so the average house price in the uk hovers around 300 ,000. And so for a renegotiation of 150 ,000, that's massively extreme. So I'm presuming her house may have been million pound plus property at that sort of level.

10:22So percentage does come into it. And also that the fact is obviously you're two years further down the line and she's not been able to continue her journey. And of course, the property markets continue to drop away since then. So of course, it's making her job harder all the way through. Yes. Yes. You know, so unfortunately it is one of those situations. She's been a victim of something and she had to make a decision. She made a decision on what her buyer did. And only obviously time will tell if that helped her through that journey, really. It was a very shame to hear it. OK, well, let's talk about the other side of this, which is gazumping, which can be just as distressing.

10:57But for the buyer this time, again, it's perfectly legal in England, Wales and Northern Ireland before contracts are exchanged. Here's a listener we're calling Louise, who is still upset about what happened when she tried to buy her first home a number of years ago. Found a property, put an offer in, had it accepted, secured a mortgage, done the survey. So just in the run up to exchanging contracts and completing. And it was sufficiently close that I had already given up the lease on the room I was renting. And I got a call from my estate agent saying that the buyer had accepted another offer.

11:33it was a cash offer and they were in a position to exchange and complete straight away. We're going to go ahead and do that. Describe the moment that you got that call and you realised that you weren't getting this property, that you were geared up to buy. It was a total shock. I think I felt a bit sick. There was a moment of disbelief and not being able to process what it meant. And then all of the practicality started to come in. How much is this going to cost? Could this happen again? And from a practical perspective, I didn't have anywhere to live. So I ended up couch surfing for a few months while I tried to put something alternative in place.

12:08And that was really stressful, particularly because I'd just moved to London for work. So I didn't know that many people. Do you think there should be more reflection in law to show that trying to buy and sell a house or a flat is more than just a cold-hearted, blunt-nosed transaction? I do, yes. I believe in the situation I had in London. The other party that came in and gazumped me was a buy-to-let landlord. So he had cash available because of that. Well, thank you to Louise for sharing her story. David, this is, as I say, just as distressing for the buyer as gazundering is to the seller. We are going to talk about future reforms in a moment, but right now, is there anything you can do to reduce this kind of risk?

12:54Yeah, I think very little, unfortunately, other than securing your deal and doing, as I said, making sure that you keep your communications open. But unfortunately, as Nathan said earlier, they are required as an estate agent to put any offer forward to a seller. And a seller has to weigh up whether to accept that or not on a moral basis, but also on a financial basis and weighing up time and opportunity, because those are also considerations. You know, sometimes a bird in the hand is worth two in the bush. So it's not a given that just being offered more money will allow somebody to just take the property away from you.

13:34But it's got to be weighed up. OK, well, let's talk then about these promised reforms, which the government says will bring the outdated process of buying and selling homes into the modern age, saving people time and money and giving them, they say, the certainty they deserve. Our reporter, Hannah Mullane, has been looking into this for us. Hannah, what has been promised? A massive shake-up for this is what's been promised. So the whole process is actually going to look quite different to how it is today. Right now, you have to wait until you exchange contracts for the sale to become legally binding.

14:06And that often happens right at the end after all the money's been spent on conveyancing fees and maybe even movers have been booked. The new plan is that legally binding sale agreements will be introduced earlier to stop buyers or sellers walking away at a late stage in the process without a legitimate reason. There will also be more information up front. Sellers and estate agents will be required to share property details, including the condition and status in the chain, through so-called sales packs. There's also plans for a new code of practice to raise standards for estate agents, including requiring them to have certain qualifications, and there'll be more digital tools used in the process.

14:42The government thinks this will halve the number of sales that fall through and cut buying time by around four weeks. I mean, that is a lot, isn't it? Will it be across all of the UK? Because housing is a devolved issue. Yeah, housing is a devolved issue. So the UK government is promising these reforms for England and Wales. However, the current roadmap says it anticipates the majority of measures will apply to Northern Ireland as well. Scotland has its own system in place. And so Westminster doesn't think these measures will apply there. OK, and we'll talk actually about Scotland in just a moment.

15:11Hannah, for England, Wales and Northern Ireland, will these reforms fix the issue of gazumping and gazundering specifically? Well, that's certainly the plan. The Ministry of Housing, Communities and Local Government told us we're stopping Cassandering by introducing legally binding agreements that prevent buyers from walking away at the last minute without a valid reason, with fines for those who do. And by bringing in legally binding contracts once an offer's been accepted, that should set out commitments for both the buyer and the seller. And if either breaks those terms by withdrawing without valid reason or failing to meet those obligations, they'll have to face a financial penalty.

15:46So the plan is that both sides will be in a binding contract much earlier in the process. OK, when do we expect these reforms will come into force? Well, the plan is that this will be implemented gradually with a formal roadmap being laid out across this parliament. Of course, we need to see if anything changes under the new prime minister and the new housing secretary. But if they stick to the original plan, then we'll get a code of practice for property agents and listings later this year. The government has said it would consult on estate agent qualifications and using more digital tools next year.

16:14And then by the end of Parliament, so by 2029, the current plan is to bring in that legislation requiring sales packs and binding contracts. Hannah Mullane, thank you very much indeed.

16:44at cmegroup.com forward slash podcast. Derivatives are not suitable for all investors and involve the risk of losing more than the amount originally deposited and any profit you might've made. This is not a recommendation or offer to buy, sell, or attain any specific investment or service. Fall tastes better with better ingredients from Whole Foods Market. No added growth hormones or antibiotics in their meat department means slow braised short ribs are even more satisfying. All seafood is wild caught like their vibrant sockeye salmon or verified responsibly farmed. And all sweets, including fall-themed cookies, are made without high-fructose corn syrup.

17:22Spice up fall at Whole Foods Market. Nathan, what's the view then from the estate agent world? Will these reforms remove some of the tensions? Will they fix issues like gazundering and gazumping? I think they will go a long way towards doing that. There will be prescribed reasons yet to be thrashed out as to why somebody could withdraw from the sale still, and that's absolutely correct, and I'm sure the right protections will be there. But what it's doing from day one, it's giving you everything you need to make an informed decision over the property, including the actual condition of the property, so that takes out that last-minute renegotiation because you've got a quote back on the roof or dampened timber works to do.

18:06So it's giving you a condition of the property from day one. It's also giving you all the requisite information that you need to know surrounding that property so you can make an informed transactional decision when you agree the offer. So subject to that, you're taking out insecurity. You're also committing now that you will do your best endeavours to proceed through that transaction to completion. So that should make a fundamental difference. Is there a risk, Nathan, that the need to prepare the sales packs will mean it actually takes a lot longer to get a property listed on the market? For sure.

18:38But I think when you look at, and there will be additional costs, But of course, when you look at the overall transaction timescale, it's not the rush of getting a property to the market. A lot of householders think it's the urgency of getting a house to the market, and it isn't. It's getting that property to the market, and then the property will then sell quicker, is the government's thinking. And because it's prepared, whilst it takes longer, the overall transaction timescale will be reduced, and so will uncertainty. You do get changes along the way. People separate, you know, different circumstances.

19:08People change their mind. but by and large we're taking out the majority of the risk in that process that can be done. And going by the emails, the many, many emails that are coming in again, it can't come too soon. Anna's email, she says she lost two sales on her late mother's two-bed apartment. In both cases, she says she had to pay solicitor's charges of several hundred pounds. To add to it all, she says she's now having to pay council tax on the property as it's been classed as a second home because it's part of a probated estate. Thank you very much for that. David, the government hopes then these reforms will cut the time it takes to buy a home by around four weeks.

19:43And as I say, halve the number of sales that fall through. What do you reckon? I'm a little less rose tinted about it, if I'm honest. I think there's a danger that we're just simply moving the point at which we start measuring so that a lot of the work still has to be done. And it's just done beforehand, which we won't class as being how long it takes to sell a house. I think also we've tried in the past to do home information packs and it didn't massively cut down, as far as I'm aware, any of the fall throughs. The problem with information is if you have it and it's not interpreted correctly, it's not really very helpful.

20:20So just providing information to a buyer doesn't actually help them make an informed choice without some sort of interpretation. And that's where getting a lawyer involved is going to be. You're just going to get the lawyer involved sooner, I think. But maybe that could run things through smoothly. We're going to have to move on because we want to get through some of these emails. Susan says, it happened to us as a young family years ago. The effects were many. I'm disgusted this practice still goes on, ruining many lives, I'm sure, and hardly ever discussed. So thank you for attempting at least.

20:50Lots of people got in touch after Saturday to say the reforms should make the system more like Scotland's. Here's a listener that we're calling Rosalind and another listener, Pat, who both got in touch to praise the Scottish system. It was a while ago now, but it still rankles. The day before we were due to sell our house, the prospective purchasers reduced the price or reduced their offer by 50 ,000, which is quite a lot. And they said that if we didn't agree to it, the deal was off. Now, we didn't want to let our person down whose house we were hoping to buy and stop the chain in that direction.

21:28And there was absolutely nothing we could do about it. We had to go through, but it left a very nasty taste. I would like, along the Scottish lines, apparently the situation is binding as soon as you have made an offer and it's been accepted in writing. And I think that would certainly help here, because both gazundering and gazumping are very nasty practices. And I think anything that can be done to get rid of them would be a good idea. Several years ago, I bought a property in Scotland. I read the home information pack, viewed the property. I'm a solicitor, made the vendors solicitors an offer which was accepted.

22:06I think from memory, completion had to be within three months. This is the first time I bought a property by myself, and I swithered between delight and being absolutely terrified. What? I asked if I changed my mind. That's easy, said my solicitor. It goes back on the market at once and you will be liable for all advertising from when it first went on the market until the final completion of the sale. I bought the place. Perhaps I should adapt and adopt legislation which works. Thank you. Goodbye. Thank you, Pat. OK, so how does it work in Scotland? Well, here's David Harrohan, Associate Professor at the University of the Built Environment in Reading.

22:46The Scottish system has arguably greater transparency and commitment at the beginning of a sale. There's a home report that the seller has to produce to give over to a prospective buyer. The buyer can then quickly establish if it's the property that they think they're buying. And then the solicitors exchange what are referred to as missives. I would read that as terms and conditions of a deal. And then very quickly they're asked to commit to a security deposit. The buyer passes that over to the seller. At that point, very quickly, there is an established contractual relationship between the buyer and seller.

23:21So therefore, there shouldn't be any gazumping or gazundering sort of behaviours after that. And how much is that deposit typically? There's no official guide, but typically it tends to be around 10 % of the proposed purchase price. Is that seller's pack then that's given to the buyer so early on in the process, is that essentially, has a lot of the conveyancing already been done? It gives you information about the property, its condition, any repairs that need to be done. It'll also give you information about energy efficiency ratings and such and any sort of local information. I would say that it does for the seller, it does create a kind of a pressure and a cost up front.

24:01They'll have to commission for people to put that report together, severe and so on. But it is worth doing because of the transparency and certainty it creates. So you agree a sale, you pay a deposit. What happens then if you need to change your plans for a good faith reason? So if suddenly, I don't know, you divorce and you no longer want to buy the house that you were looking at? If you've given over the deposit, it becomes contractual. So conceivably, then you've lost the deposit to the seller. The only reason you would be able to come out of that agreement is if there was something that transpired afterwards that wasn't declared, that was fairly fundamental in terms of the condition, let's say, of the building.

24:41So I think if the deposit came in, it would do away with gazumping and gazundering. The only kind of challenge with it is we have to get used to that idea. I don't know whether the government would go as far as doing this because it's quite a bold move to do, change the system that fundamentally. Is everything roses and loveliness in Scotland then? Does the property market just sail through? No stress, no pressure. I wish it was. The Scottish system is not 100 % perfect. I've spoken to colleagues who live in Scotland and they've said that while there is this process that you exchange quite quickly, there are cases apparently of delays in those missiles being completed and chains happening in the Scottish system.

25:24But it's more unusual to see that happen, I believe. David Harahan there. OK, let's hear from another listener, a satisfying listener, who did the thing we probably all want to do when faced with gazundering. We're calling him James. He stood his ground and he called his buyers bluff. About two weeks before completion, the buyer got in touch via the solicitor to say he wanted£5 ,000 off the purchase price. But we were in the fortunate position of I was moving to my partner's house. And so we weren't tied to a deadline or forced into sort of a green like some people would be. so basically I said we would not 500 off the price or we would walk away.

26:07Unsurprisingly, he accepted our offer of 500 on the price. I appreciate a lot of people aren't in a position to do that. Well, that was James. Stephen has emailed to say he did the same. He says, at the last minute before exchanging contracts, I received a call from my solicitor passing on a message from the buyer saying that unless I dropped the price by£10 ,000, they would pull out. Incensed by this dirty trick and strongly suspecting a bluff, I replied that unless they exchanged immediately as agreed, I would raise the price by£10 ,000. And if they didn't agree, I would pull out and put the property back on the market.

26:40The sale went ahead right away at the originally agreed price. Good stories, David. But is that the best thing to do? Because it is a massively stressful time, isn't it? And it's hard to actually call the bluff unless you can afford to have the sale fall through and start it all again. I think that's exactly it. You've got to weigh up whether you've got enough room in the transaction. how committed you are to the sale, what the rest of the chain is doing. My preference would always be to stand up for it. And to put it back, I like the idea of reversing and saying, well, in fact, I'm going to double and raise.

27:13I think that's an excellent idea. But I think at the end of the day, you've got to weigh up what's best for you. And if you can negotiate something that you can live with, then that's probably worth doing if that's the only alternative you can see. Yes, but it's hard, isn't it, when emotions get really involved with this kind of situation. Nathan, the pressure of keeping a chain together was a consideration for a lot of our gazundered listeners. That is a real issue, isn't it? There's a lot of other people that you don't want to let down. Absolutely. Immense amount of pressure. And let's forget, a lot of people in the chain, they're not speaking to everybody up and down the chain.

27:52They're only involved in their particular link. So buyers and sellers will communicate very often through an agent. Solicitors will deal solicitors to solicitors, and they'll be a bit of a financial advisor. The agents have the ability to go up and down the chain, and they do communicate with each other two or three links down either side. So there's a lot of coordination that does go on all of the time, which is often unseen, and that's often done to try and mitigate the pressure. It's the work that's done behind the background that eases things off. You know, the solicitors have an awful lot of work to do and our job is to try and help ease that process through and create the space where it's needed to get that work done.

28:31Thank you very much. Claire has emailed, we were recently exundered last year, literally the day before the exchange, the buyer wanted£15 ,000 off the price. We were distraught. The people whose house we were buying were buying a new build and could lose their property. Our estate agents were amazing. It was so stressful. We jumped through so many hoops for our buyers. It was ridiculous, but they did get the house in the end, which is good. Well, that is all we've got time for in this Moneybox Live podcast. Thank you to everybody who shared their stories and thank you to my guests. We've been hearing from Nathan Emerson from Property Mark and David Bridge from the Solicitor's Kitely's.

29:01Paul Lewis will be back with Moneybox at midday on Saturday or on BBC Sounds a few hours later, talking about the rising cost of water bills and what help you can get with them. If you want to share your thoughts or if there's a story you think we should be taking a look at, then get in touch. You can email moneybox at bbc.co.uk or send us a comment or a voice note on WhatsApp. The number is 033 06783 183. We really do read and listen to every message. In this podcast, the producer was Craig Henderson, the studio manager Craig Boardman, the production coordinator Jackie Johnson, our editor is Jess Quayle, I'm Felicity Hanna and this was a BBC News Money and Work production for BBC Sounds.

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