The government has announced plans to reform the house buying process in England and Wales, with ministers promising measures designed to reduce failed property transactions and tackle practices such as gazumping and gazundering.
The proposals could result in one of the most significant changes to residential conveyancing in decades. While the details have yet to be finalised, the reforms are intended to create greater certainty for buyers and sellers by bringing forward key information and encouraging earlier commitment during the transaction process.
For many homebuyers, the announcement raises an important question: could the long-standing risk of losing a property to a higher bidder finally become a thing of the past?
What Has the Government Proposed?
The government has outlined a package of reforms aimed at reducing the number of property transactions that collapse before completion.
The proposals include measures to make information available earlier in the process, reduce delays between offer acceptance and exchange of contracts and discourage parties from withdrawing after significant time and expense have been incurred.
Ministers have also indicated that changes could be introduced to create stronger commitments between buyers and sellers before contracts are formally exchanged.
The objective is to reduce uncertainty within the housing market and cut the substantial costs associated with failed transactions.
According to industry estimates, hundreds of thousands of agreed property sales fall through each year, often after buyers have already paid for surveys, searches, mortgage arrangements and legal work.
Why Does Current Law Allow Gazumping?
The current position is rooted in a long-established principle of English property law.
When a seller accepts an offer on a property, no binding contract is usually created. Instead, both parties enter the conveyancing process while investigations, searches and mortgage arrangements are completed.
A legally binding agreement generally arises only when contracts are formally exchanged.
Until that point, either party remains free to walk away from the transaction.
This means a seller can accept a higher offer from another buyer before exchange, a practice commonly known as gazumping.
Similarly, a buyer may seek to reduce their offer shortly before exchange, often referred to as gazundering.
Although both practices can cause frustration and financial loss, they are not currently unlawful because neither party is normally under a contractual obligation to proceed.
Could Buyers and Sellers Become Legally Bound Earlier?
The most significant aspect of the government’s proposals concerns the possibility of creating stronger commitments before the exchange of contracts.
One option that has attracted attention is the wider use of reservation agreements. These agreements can require buyers and sellers to commit financially to a transaction at an earlier stage, with penalties applying if either party withdraws without a valid reason.
Supporters argue that such arrangements could discourage speculative offers and reduce the likelihood of transactions collapsing after months of negotiation.
Earlier commitments could also encourage parties to disclose relevant information sooner, helping to identify potential problems before substantial costs are incurred.
However, questions remain about how any new system would operate in practice. Property transactions often involve chains, mortgage approvals, survey findings and changing personal circumstances, all of which can legitimately affect a party’s ability to proceed.
Any future legislation would need to balance greater certainty with the need for flexibility when genuine issues arise.
What Could the Reforms Mean for Buyers and Sellers?
For buyers, the reforms could reduce the risk of spending significant sums on a transaction only to lose the property to another purchaser.
For sellers, greater certainty could mean fewer aborted sales and a more predictable path to completion.
The government also hopes the changes will shorten transaction times by encouraging information to be gathered and shared earlier in the process.
Property professionals have broadly welcomed efforts to improve efficiency, although some have warned that additional upfront requirements could increase costs at the beginning of a transaction.
There are also concerns about how disputes would be resolved where one party believes they had a legitimate reason to withdraw.
Will Gazumping Actually End?
At this stage, the answer remains unclear.
The government has announced its intention to reform the system, but detailed legislation has not yet been published. Previous governments have also explored ways to reduce gazumping and failed transactions, with mixed results.
The effectiveness of any reforms will ultimately depend on the final legal framework, the level of financial commitment required from buyers and sellers and the practical realities of the housing market.
Property chains, financing issues and unexpected survey findings are unlikely to disappear, regardless of how the law changes.
Nevertheless, the proposals represent a notable shift in approach. For decades, the house buying process in England and Wales has been built on the principle that parties generally remain free to change their minds until contracts are exchanged.
If the government proceeds with its plans, that principle may be about to face one of its most significant challenges in modern times.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing Agency for the Professional Services Sector.
