Jonathan Smithers believes gazumping isn’t going away as research reveals it causes 21% of collapsed sales
The President of the Law Society stated he believes gazumping isn’t necessarily a problem, stating 50% of the people involved in a gazumping situation benefit.
It follows research published by Liverpool Victoria which states the practice is the second most frequent cause of sales falling through.
The research states that 27% of property transactions fall through, although it seems the largest number blame conveyancers, with 48% putting the blame on the legal side of the transaction.
During a Q&A after presenting at Legalex, Jonathan Smithers was asked about the potential for introducing a Scottish style system for England and Wales.
He responded: “That’s a question that’s been looked at many times. the think with gazumping, everyone thinks it’s a really bad thing , but 50% of the people in a gazumping situation are better off, 50% of the people think it’s a good thing.
“it’s simply a function of the system that we have. Gazumping is about inequality in the market, so in a rising market you have gazumping, in a falling market you have gazundering. It’s simply a function of people wanting to buy and sell properties in the way that they currently do.
“As I said People have looked at that previously, the Scottish system is said to be more expensive and also doesn’t facilitate chains of transactions we have in the same way. I know that you can ave chains in Scotland but it’s a different kind of system.
“So I think it’s a function of the system we have. The previous government tried home information packs to speed he transaction up, and that didn’t go very well. A lot of people looked it, but if you have the current system, it’s merely a function of that.
“But I think Solicitors do have a role, the Law Society has had a role in making sure that the transaction is smoother for everybody – the introduction of our Conveyancing Quality Scheme for example – to make sure documentation is standardised, it’s actually had that effect, to make the transaction go through more smoothly, and therefore stop that inequality. But gazumping is really a function of the economy, and not of the conveyancing system.”
The LV research also looked at how people find conveyancers. Just 17% of clients said they knew they could shop around for conveyancers, with 35% of those buying or selling simply going with their estate agent’s recommendation. Those who do stick with their estate agent’s recommendation pay on average £400 more, are more likely to chase for updates and less likely to be happy with a service.
The most common complaints from home buyers who were unimpressed with their conveyancer included poor communication (74%) and slow and ineffective service (65%). But those who shopped around were most likely to make their selection based on a competitive price, good reputation or recommendation from a family member or friend.
Martin Milliner, Claims Director at LV= General Insurance said: “It’s clear that in many instances the conveyancing industry isn’t working for consumers and those who simply take their estate agent’s recommendation are most likely to pay the price. That’s why we have entered the market, offering transparent, high quality conveyancing at a price that is right for the consumer, supplied and endorsed by the LV= brand they trust.”.