Written By Em

Movements are being made by the Government to remove the possibility of gazumping by encouraging the agreement of a reservation.

This call for voluntary reservation agreements has prompted more definite action from companies such as Gazeal, the property technology business. They have introduced a legally binding contract for buyers and sellers to sign at the beginning stage of the sales process. They claim that this has been extremely effective, with none of the sales using the system falling through, in comparison to the estimated industry average of over 33%.

The idea of a property market without the possibility of being gazumped is a positive one. To install confidence in the individual looking to invest might help to stabilise the entire purchase process. Smoothing out the bumps in the chain of property buying could potentially result in much speedier transactions, and a massive reduction in the fees being thrown into the big black hole of attempted purchases.

As it currently stands, these failed transactions result in £270m per annum of lost fees and disbursements. It is a stressful situation for all buyers and sellers, but in particular it makes it that much harder for first-time buyers to step onto the initial rung of the property ladder.

Duncan Samuel, Managing Director of Gazeal, said: “Our research shows that the cost per failed transaction per household is over £1,000 on average and this can be totally avoided by using our legally binding agreement – Gazeal Seal – which has saved our clients so much heartache and money. Research points to 57% of homeowners who have experienced being gazumped. Our process cuts it out.

“The Government seems determined to improve the housing transaction process and we fully support that. However, Gazeal’s system goes further – even removing the Caveat Emptor (buyer beware) rule in that we guarantee the title on house purchases. Under the existing system buyers or their solicitors have to check the title to ensure its ‘good’. We insure that risk.”

Options like Gazeal may be worth taking a closer look at. It could help to bring peace of mind by providing an assurance that a sale or purchase is contracted. There is a 14 day cooling off period, so both parties have a last chance to revaluate the situation if needs be. This allows buyers to change their mind and ask for the return of the deposit.

Will Reservation Agreements Prevent Buyers from being Gazumped?

Buyers will also be required to provide proof of mortgage funding, ensuring that they have an agreement with a lender. After the cooling off period has passed, there is a full commitment to an exchange of contracts. It is still vital that buyers get a survey done on the house, in order to confirm the property is of an acceptable and expected condition.

It is up to the seller to be pre-emptive and contact a company such as Gazeal to make the property ‘Exchange Ready’, as soon as it is listed for sale. The business claim that their process “typically reduces transaction times from 77+ days to around 35 days.”

Duncan Samuel adds: “Over 65% of all buyers and sellers are rightly worried they will not make it to completion following an offer being accepted. We have a system in place, which is working to both speed up the process and to ensure that transactions do not fall-through.

“This week we have been invited by The Ministry of Housing, Communities and Local Government to work with them to improve what is a broken system. We are proving that this can be done and deserves to be rolled out across the UK’s housing market.”

With the amount of savings being lost by house buyers due to the lack of prevention options, we are interested to see how such contracts take off in the future. The only matter to consider as the buyer and the seller is whether it is worth the extra fee. Gazeal require £250 from the seller, which is paid after completion of the sale, and £250 from the buyer, which is paid after an offer has been accepted. There is also a 1% reservation fee, which is held against the 10% contractual deposit.

With this information in mind, would you consider arranging a reservation agreement when selling a property? Do you believe that perhaps they should be included as standard as part of the property buying process?

The London Marathon takes place once again this Sunday, and members from JLL, the commercial real estate agency, will be taking part. Their aim is to raise money for their charity partner, Crisis.

Five members of the JLL team will be running this year to raise money and awareness of the vital work that Crisis does. Tamara Kennedy, Alexandra Marsh, Michael Gillon, Jonathan Tavey and Jamie Prys-Owen will be taking part. The company hopes to raise £10,000 from the marathon effort along, with an overall goal to raise £600,000 by the end of the year.

Chris Ireland, UK CEO at JLL has said: “Since December 2016, we have been raising money and awareness for Crisis, who do some incredible work across the country with homeless individuals. The marathon is a physically gruelling feat and the team have raised an incredible sum for the charity. We wish the team good luck and will be cheering all runners on the day.”

Crisis is a national charity, which focuses on raising funds to support homeless people, with the ultimate aim of ending homelessness. They work side-by-side with vulnerable people across England, Scotland and Wales, offering support to rebuild their lives. They offer education training and support with housing employment and health. Donations will also help to fund research into the causes and consequences of homelessness, and campaigns for the changes needed to end it.

Jon Sparkes, Crisis CEO, has commented: “Homelessness is one of the most urgent issues of our time, but at Crisis we know what it takes to end it. We’d like to thank JLL and its employees for their kind support, which will help us to provide life-changing housing, health, education and employment services to homeless people across the country.”

Since its establishment in 1981, the London Marathon has become an annual event, used widely by fundraises to support various charities. It consists of a 26-mile route around the city, passing hotspots such as Canary Wharf, Greenwich, Southwark, Westminster and Aldwych. Those of the JLL team who are not running will be providing support from their London office, which is on route.

Despite the slowdown in the lettings market throughout the UK in February, we can see the data from the Agency Express Property Activity Index has revealed an increase in pace during March. The index shows national month on month increases in both new listings ‘To Let’ at 13.1%, and properties ‘Let’ at 4.8%.

It is encouraging to see the figures from March looking so robust, but we need to bear in mind that yearly figures do indicate greater activity in the market in the same month last year. At that point the supply of new listings sat at 16.4% and properties ‘Let’ at 12.2%.

A review of activity across the rest of the UK has shown that that all twelve regions recorded by the Property Activity Index (PAI) have reported a rise in new ‘To Let’ listings, sitting at 13.1%, and 8 regions have reported increases in properties ‘Let’ at 4.8%.

The North East has had the best month overall, having reported record lows in February, to then bounce back with new listings. In March it sat at a robust 56.6% and properties ‘Let’ at 34.3%.

However, a review of the index’s data history highlights the point that this year’s figures are still lower than those recorded twelve months previous.

On top of that, it points out the buoyant activity across the North West. Month on month, figures for properties coming on to the market have risen at 15.6%, as did figures for properties ‘Let’ at 21.60%.

Other regional hotspots in this month’ index included:

Properties ‘To Let’:

• Scotland 37.70%
• South West 17.90%
• Central England 12.00%
• South East 11.00%
• Wales 10.40%

Properties ‘Let By’

• South West 9.60%
• London 9.20%
• Wales 9.10%
• Yorkshire & Humberside 6.70%

The East Midlands has shown the largest decline in March, following an unusually robust February. Figures for properties ‘Let’ fell at -15.6%, but new listings have remained on trend at 9.5%.

Stephen Watson, Managing Director of Agency Express has commented: “Historically we see a bounce in activity throughout March and this month’s lettings activity has been fairly steady. However, as our report has hightlighted year on year figures have started to wane.”