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Homeeurope news‘Ghost gazumping’ haunts London housing market

‘Ghost gazumping’ haunts London housing market

Property buyers in London are increasingly being asked to pay tens of thousands of pounds extra at the last minute, in a new, more aggressive form of "gazumping" that does not feature a rival bidder.

In a sign of the frenzied state of the capital's housing market, estate agents say many sellers are raising the price of their homes days before the exchange of contracts.

Unlike the gazumping of the 1980s, when rival buyers stepped in at the last minute with a higher offer, this trend involves sellers increasing the price because they can – because there is so much demand for a small number of properties.

(Read more: Bovis ups dividend as UK housing market booms)

"It's now very common and a depressing factor of a market with low supply and monster demand," said Peter Rollings, chief executive of Marsh & Parsons estate agents.

This "ghost gazumping" typically happens several weeks after an initial offer is accepted, as rival estate agents door-knock sellers and tell them they have agreed to too low a price.

Dominic Agace, chief executive of Winkworth, said this was a "new phenomenon" that had not been seen before, even during the property bubbles of the 1980s and the mid-2000s. "It's something that has not been around before. We obviously have had gazumping in the past but this is not something I have ever seen until now."

Mr Agace said the trend was increasingly common in London suburbs including Dulwich, Twickenham, Shepherd's Bush and Kensal Rise.

(Read more: No UK housing bubble, just a London one: EY)

"We've just seen it happen with one house, where the deal was struck at £1m but the sellers have gone back and asked for £1.1m. The buyers are paying the higher amount," he said.

Andrew Ince, a 45-year-old driver, was asked to pay an extra £20,000 just before exchange of contracts on a house in Chigwell, east London. "I thought it was completely unethical," he said. "I flipped and said 'no way'."

But many other buyers are paying the extra sums, in some cases in six figures, to avoid having to find a new house as prices keep rising.

The phenomenon illustrates how much the housing market has improved since the credit crunch, when prices fell sharply in some boroughs of London.

More from the FT:
Mortgage rules 'penalise pension savers'
Homeowners could end up paying £2bn more if the bank rate rises
Private rental surge hits benefits bill

Prices in the capital were 14.9 per cent higher year-on-year in the fourth quarter of 2013.

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