A new product is aiming to aid both buyers and sellers solve the problem of transactions falling-through in the rental market.
‘Gazeal’ has been produced by a group of solicitors and focuses on tying buyers and sellers into honouring their agreement once a deal has been reached. The new product is backed by title insurance.
Protection
Aimed at preventing agreements falling-through, the product is to focus primarily on transactions completed without chains. This will cover people such as first-time buyers and buy-to-let investors.
The product works by providing an escrow service, wherein both parties involved in the deal pay £250 each to secure the agreement. Gazael then holds the title of the property until all legal formalities have been concluded, after which exchanges occur automatically.
Legally binding
Duncan Samuel, founder of Gazeal, feels that it is important that a product such as his was developed. Samuel said, ‘in Australia, the USA and in Scotland here in the UK, as well as many other countries around the world, once a house sale and price are agreed verbally it is binding in law, subject to survey and title search. This is not the case in the rest of the UK, where deals can break down near completion for a number of reasons, such as the vendor demanding a higher price than originally agreed, an alternative purchaser offering more, or a purchaser wanting to pay less than agreed or they will refuse to complete the purchase.’[1]
Mr Samuel believes that Gazeal will improve the sector, whilst giving people peace of mind at the same time. He believes that, ‘Gazeal gives buyers and sellers certainty, by securing the sale at the outset of the transaction. This gives comfort to buyers and sellers, and also helps free up estate agents who spend much of their time going back and forward between vendors and buyers.’[2]
Continuing, Samuel stated that Gazeal is, ‘simple, straightforward and cost effective,’ and the product allows both vendor and purchaser to, ‘plan with confidence,’ with the estate agent knowing that there is a, ‘a guaranteed sale on the books.’[3]
Interest
Managing director of the National Association of Estate Agents (NAEA) Mark Hayward said that despite his company not officially supporting Gazeal, he would be one of a number of interested industry figures watching to see how the product fares. Hayward acknowledged the issue of failed transactions, stating that, ‘with an average fee on each house sale of £2,950, the fee amount lost or deferred adds up to over £715m. Factor in over £1.2m wasted house viewings as a result of sales falling through and this makes it a real issue for the industry.’[4]
Bill McClintock of The Property Ombudsman scheme, was another to pledge his interest in the scheme. He said, ‘one of the things that adds to the cost of sales for residential estate agents is that they only sell a proportion of the properties on which they are instructed. McClintock believes that if estate agents were able to, ‘count on selling a greater percentage,’ then, ‘their cost per property would reduce significantly.’[5]
He went on to say that, ‘after the sale has been agreed between the seller and buyer, there is normally quite a long period of uncertainty whilst the buyer and their solicitors are checking the title documents.’ He thinks that, ‘if this period could be shortened by a third party title insurance, it would reduce the number of sales that fall through and fail to complete.’[6]
Concluding, Mr McClintock stated categorically that, ‘if buyers and sellers enter into the Gazeal agreement this will reduce the risk and make the sale more certain to complete. This must be in the consumers’ interest and as such I would welcome such a move.’[7]
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