Gazumping comes back with a vengeance in London

Gazumping is back with a vengeance in the London market as the capital increasingly does its own thing – divorced from the rest of the UK.

Agents are reporting that cash-rich buyers are piling into bricks and mortar, partly fuelled by a desire to beat the April 6 stamp duty deadline when £1m-plus houses will attract a 5% duty, and partly because their bonuses have landed.

Buying agent Jack Greenwood, of Homes One, said the London market had reached a ‘tipping point’ where buyers could no longer afford not to have their own representation.

He said: “Central London property has increasingly become a global commodity. Not only have prices and demand gone up, but supply has actually gone down.

“To make matters worse, in some parts of London almost one in four properties is now sold ‘off market’. The net result is huge competition for the best properties.”

Peter Rollings, chief executive of Marsh & Parsons, said: “With over 14 buyers registering for every property placed on the market in central London, competition among buyers has undeniably heated up.

“The arrival of the bonus season, and those hurrying to buy high-end property before the stamp duty hike in April, have bolstered demand.

“Bidding wars are emerging on desirable prime homes, and there has been a noticeable increase in gazumping. Vendors are now in such a strong position that many are accepting bids higher than initial offers from interested rival parties, particularly in areas like Kensington and Notting Hill.
 
“Buyers can no longer afford to drag their heels, and must move quickly to ensure they secure their desired property.”

He added: “There are a lot of people who do have cash to invest, who are piling it into bricks and mortar. 

“Activity in the London property market is being buoyed by the substantial demand from UK and international cash buyers, who are immune to the current mortgage finance famine and are triggering stiff competition for the limited stock of prime properties on the market. 

“In the capital, the days of gazumping have returned with a vengeance, and more and more properties are going to sealed bids. Anyone who thinks they can bid way below a sensible asking price is dreaming.”

Rollings was speaking after the latest figures from the Council of Mortgage Lenders showed that house purchase lending in January slumped 26% to £4.6bn, and 29% by number of mortgages.

Just 28,500 mortgages for house purchase were advanced in January. This was down 13% by value on January 2010, and down 12% by number.

The CML said the fall in lending was far greater than the seasonal norm.

First-time buyers took 10,500 loans worth £1.2bn in January, down 28% by number and 29% by value on December.

Home mover loans fell 29% by number, from 25,400 to 18,000, and 28% by value from £4bn to £2.9bn month on month.

Rollings said: “These numbers keep getting worse despite two years of record low interest rates. Nobody is calling for a return to the irresponsible lending of a few years ago, but the choke on mortgage finance is stifling buyers who want to take advantage of the value there is in much of the UK property market at the moment.”

Last week, the RICS said that house prices were falling in all parts of the UK apart from London.