New research by bridging lender Market Financial Solutions (MFS) has revealed the widespread issue within the property market of buyers being pipped to the post at the last minute. In particular, the nationally representative survey of 2,000 UK adults revealed that property buyers in London were far more likely to be ‘gazumped’ by rivals when trying to complete a purchase.
MFS’s study unveiled that 15% of adults in London – the equivalent of more than 1 million people in the capital – have lost out on a property purchase to a rival buyer despite having an offer accepted. This is three times higher than the figure of 5% from the UK as a whole. Across the country, over 1.5 million people revealed that they had lost out on their ‘dream home’ because a property purchase fell through after an offer on the house had been accepted.
The results illustrate the competitiveness of London’s globally renowned property market, with the capital ranked last year by Savills as the most competitive city in the world. Residents of the capital earn almost double the UK average, while London also ranks second in the world for foreign property investment, with £18.8 billion worth of property bought by overseas buyers in the year to June 2016, according to Knight Frank’s Global Cities report. The result is a huge amount of buying power that, as MFS’s research shows, increases the likelihood of Londoners losing out on property purchases at the last minute.
The issue of being ‘gazumped’ on a property purchase brings added costs – 3% of UK adults (1.54 million people), and 9% of Londoners, have lost out on fees to intermediaries such as solicitors and surveyors because they were pipped to the post during a property purchase. Which? has revealed that property buyers lose on average £2,899 in fees on a failed purchase, meaning that across the nation the cost of being ‘gazumped’ totals more than £4.4 billion. The survey found that an inability to access funds in time is one of the main reasons that property deals unravel at an advanced stage; 9% of Londoners said they had experienced this issue, while 1.54 million UK adults also stated they had been undone by this problem.
‘Millennials’ were found to be more at risk than older generations when it comes to being pipped to the post in the property market. Of those aged between 18 and 34, 1.18 million said they had lost out to rival buyers after having an offer accepted; 1.03 million had seen a deal fall through because they could not access funds in time; and 738,000 had lost money on intermediaries’ fees after being ‘gazumped’. To effectively compete on a property market renowned for its ruthless competitiveness, a growing number of millennials are willing to ‘gazump’ as part of their property strategy– 442,800 18 to 34 year olds admitted to ‘gazumping’ in 2016, while 590,400 millennials are considering the practice in 2017.
