MORTGAGE and property experts are predicting gazundering could return as prospective buyers start to worry about the impact of inflation on their finances due to the war in the Middle East — and the prospect that they may have paid over the odds for a property if prices soften.
Gazundering is the process whereby a buyer lowers the offer they have made on a property, often just before the official exchange of contracts, with a view to getting a reduced sale price.
It is a frowned upon and disruptive practice that many in the property sector would like to see made illegal.
On Thursday, the Bank of England’s Monetary Policy Committee unanimously left rates on hold, and, in its minutes, said inflation is now expected to be around 3% in the second quarter of the year rather than 2.1% as previously forecast.
Chains rattled
Bob Singh, Founder at Chess Mortgages, a broker, said: “Gazundering looks 100% set to return to rattle a few chains, causing palpitations and headaches for estate agents. Committed sellers will have to grapple with the fear of losing their onward purchase and starting all over again.
“Most will accept a slight price adjustment to keep the deal alive and estate agents may reduce their fees, too, just to make the deal work for all parties.
“In English law, the legal commitment only happens at the exchange of contracts stage and often, in troubled times, buying choices are either deferred or, if already in process, reviewed.
“Questions arise as to whether it’s the right thing to do and whether the price being paid reflects the perceived value. With spiking interest rates, buyers will be questioning their move and those deals agreed well before the conflict are the most at risk of a price renegotiation.”
Financial self-defence
Patricia Ogunfeibo, Founder and non-practicing Solicitor at tenant2owner, agreed: “Gazundering could be back. With mortgage rate volatility driven by geopolitical uncertainty and the Bank of England holding firm, the numbers that worked a few weeks ago might no longer work.
“If your borrowing costs have materially changed since your offer was accepted, or you are worried about the impact of the current crisis on your finances more generally, you are entitled to revisit that offer. That is not gazundering for sport, that is financial self-defence.
“People in the middle of a chain might be able to absorb moderately higher costs, but it is not prudent for a first-time buyer to. My advice: know your numbers, protect your position and never proceed with a transaction that no longer adds up for you just to be polite.”
Massive thorn
Ben Perks, Managing Director at Orchard Financial Advisers, said that while not welcome, gazundering does look set to return: “Gazundering is a massive thorn in the side of the mortgage and property industries and should be outlawed. But it is likely that we will see instances of it reappear in the near future.
“If the UK economy does have a wobble in reaction to events in Iran, people’s budgets will start to creak. This could mean they reevaluate and renegotiate on pricing.”
Like Perks, Dariusz Karpowicz, Director at Albion Financial Advice, also believes gazundering should be outlawed: “Gazundering should be illegal. The UK property process is already long, stressful and fragile. Letting buyers rip up their offer at the last minute just makes it worse for everyone involved.
“If your mortgage costs have genuinely changed, be upfront early. Do not wait until completion week to spring it on the seller. Nothing is legally binding until exchange, and that is the real flaw here. Transparency beats brinkmanship every time.”
Simon Bridgland, Broker at Charwin Private Clients, a broker based in Canterbury, said he hasn’t seen any gazundering yet but that “it could easily happen”. But he did note that a significant percentage of newly listed properties in his area have had price reductions this week.
He added: “Those in chains already will no doubt start to wonder if the property they are buying still holds the good value they once believed.”
Holding together
Nick Harris, Founding Director at Quarters, an estate agent based in Wokingham, also said he hasn’t seen any “meaningful return” of gazundering to date.
He continued: “Despite geopolitical uncertainty and mortgage rate volatility, behaviour on the ground in Wokingham remains disciplined. Agreed sales are largely holding together, with buyers not routinely renegotiating late in the process.
“Gazundering isn’t making a comeback, the market is simply less forgiving. Price correctly and deals hold together; push too far and buyers just won’t engage. What we are seeing is a highly price-sensitive market.
“Buyers are well-informed and quick to disengage if a property feels overpriced. Sellers who launch at the right level generate strong interest and progress smoothly, while those who aim too high face longer timeframes and price adjustments.
“Gazundering remains rare and widely viewed as poor form, with most moves still driven by life events rather than opportunism.”
Hyper-informed
Richard Davidson, Mortgage Advisor at onlinemortgageadvisor.co.uk, believes gazundering could become more common due to buyers having access to a “forensic” level of data.
He said: “The rise in gazundering is often attributed to rising costs or a shift in market leverage, but a deeper trend is emerging, the hyper-informed buyer. Today’s purchasers are utilising an unprecedented level of data to renegotiate terms as new information surfaces.
“No longer a simple tactical move, this ‘savvy repricing’ is frequently driven by comprehensive structural surveys and forensic research, allowing buyers to adjust their offers to reflect the true value of the asset.”
