Is gazumping legal?

When you're just starting out on your homebuying journey, it's common to be a little naïve about the process. You might think that so long as you play by the rules and get an offer accepted, you should be able to secure your dream home.

The reality is that in the world of home buying can be a little more cut-throat. Your home purchase isn't safe until completion day, and the keys are in your hand. 

One common pitfall that plenty of prospective buyers come up against is gazumping. 

Let's take a quick look at gazumping, including the all-important question – is it even legal?

What is gazumping?

Picture this scenario. You've found your dream property. The sellers have accepted your offer, and you're keen to set the sale wheels in motion. You may have booked a surveyor, solicitor and even put a deposit down on a removals company.

But then the news comes in. The sellers have gone on to accept another offer, rendering your offer null and void. 

Take a deep breath. This scenario is all-too-familiar to homebuyers across the UK. It's known as gazumping, and it's happening every single day to people just like you.

As this scenario shows, gazumping in homebuying is when a previously accepted offer is later rejected in favour of a better offer that has come in after the initial one.

Few homebuyers start out thinking they're going to be gazumped, but it's incredibly common and accounts for many of the 1 in 4 UK house sales that fall through before completion.

Is gazumping legal?

If you've found yourself furiously Googling "is gazumping legal?", we have some bad news for you. Gazumping is perfectly legal right until the contracts are exchanged and the ownership of the property is legally transferred to you.

This means that any money you've invested in the sale so far, assuming that things were progressing towards completion, is lost. These costs can include things like booking a home survey, paying your mortgage lender fees and instructing solicitors to see your purchase through. All of which mount up to an average cost of around £2,400.

There's nothing you can do about these sunken costs unless you've taken out gazumping insurance. Our insurance policies, Home Buyers and Home Sellers Protection, cover you if you're gazumped from £59. If it's too late for that – you have our sympathies. 

We understand that it's easy to feel resentful towards the sellers after being gazumped – but try to put yourself in their shoes. It only makes sense that they'd go for the very best offer – who doesn't want to make the most money possible on a house sale?! It's not always about the highest sum – aspects such as a chain-free buyer can be attractive to sellers and might be enough to tip the scales against you.

What can be done about gazumping?

We have some great news. You can protect yourself against the financial losses of gazumping with a simple and affordable insurance policy. 

Gazumping insurance – also known as Home Buyers' Protection insurance – is a type of cover which allows you, the buyer, to claim back money you've spent on the property purchase after being gazumped.

Costs you'd be eligible to claim back with this type of insurance include; solicitor's fees, mortgage lender's fees, surveyor's fees and much more. It doesn't just apply to gazumping, either. With Home Buyer's Protection insurance, you can claim money back on the sale should it fall through for many different reasons beyond your control.

The reality is that unless it's made illegal (a move which we're confident plenty of people would support), gazumping is a risk you simply must take when buying a home. If you've already been gazumped – you might have to put it down to bad luck and move on.

But if you haven't been gazumped yet – get yourself covered with Home Buyers' Protection insurance ASAP.