Re-emergence of gazundering

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by Lin Freestone

Estate agents are reporting that gazundering is affecting half of all sales in some areas of the UK.

The practice of buyers dropping their offer price just before the point of exchange is now becoming routine in the UK property market.

First experienced in the property slump of the 1990s, gazundering has reappeared, with buyers taking advantage of falling prices and vendors’ vulnerability. Vendors in a chain or fearful of further falls in the market are left with no alternative but to agree to a new, reduced offer before the sale collapses.

The National Association of Estate Agents has reported that vendors of high end properties in London are even accepting offers as much as a third below their asking price. Most initial offers are 10% or 15% below asking price, and in one case a vendor lost £250,000 on his £3m house on the day of exchange.

At the lower end of the market, many vendors selling properties for £195,000 to £200,000 have cut their prices to £175,000 to qualify for the government initiative of a 12-month stamp duty holiday.