Does gazumping happen in lettings?
Gazumping is a property term that resurfaces when the right conditions prevail. It’s most commonly associated with the sales market, when a mass of purchasers chase a small pool of available properties. Competition can get fierce, people can get desperate and gazumping can become a winning tactic – when a new buyer comes in with a higher offer at the last minute, in hope of seeing off rival purchasers.
What is rarely discussed, however, is gazumping in the rental sector but it does happen. Demand for rental properties is rising, as evidenced by Zoopla. The property portal’s data analysis revealed the number of tenants searching for rental properties at the start of 2022 was 76% higher this year when compared to the same period between 2018 and 2021. At the same time, there were 39% fewer homes available to rent in January 2022 when compared to the same month in other years.
The equation is a simple one – there are more tenants requiring a rental property than there are houses and flats to let. As a result, the gazumping phenomenon has moved from sales into the lettings sector. Rival renters have so few properties to choose from that they are willing to increase their offers, engage in a bidding war and gazump the competition in order to secure a tenancy.
Rental gazumping isn’t going away, especially in light of a report by the consultancy Capital Economics, which highlighted how the UK needs almost 230,000 new rental homes every year if the current rate of demand continues.
Is the highest offer always best?
The nature of renting forces landlords to weigh up far more than just the highest offer. Unlike a property sale, where all ties between the buyer and seller are cut on successful completion, a relationship between a landlord and tenant can last years – and be fraught with difficulties that are completely unrelated to how much rent is being paid.
A far more holistic approach is needed when matching tenants with properties. In a ‘hot’ rental market, landlords can be picky when it comes to who they choose. Even in a case of gazumping – when a dazzling last-minute offer comes in – due diligence will be undertaken to ensure a landlord isn’t blindsided by pound signs.
Those responsible for gazumping will still be subject to pre-tenancy checks and thorough referencing, which can include:-
- Rent payment track record: have they always paid their rent in full and on time in the past?
- Job security: are they employed, freelance, newly hired or on a zero-hours contract?
- Tenancy length: is the tenant willing to sign up for a long let?
- Financial health: has the tenant passed all financial health checks, including proving a good credit score?
- Upfront rent: is the tenant able to pay any upfront rent or do they need a guarantor?
- References: are the tenant’s past landlord and employment references acceptable?
- Speed of signature: how quickly can the tenant sign the agreement and move in?
Landlords will often favour a respectful, reliable tenant who is in secure employment and has impeccable references over a renter with a less favourable background who comes in late with a higher offer.
How to avoid being gazumped
- Offer as soon as you have viewed the property
- If your offer is accepted, ask if the rental can be withdrawn from the market
- Be prepared to sign a tenancy agreement as quickly as you can
- Offer to move in as soon as possible to reduce any void
- Supply as many positive references as possible, especially from previous landlords
- Offer to pay an amount of rent upfront
- Agree to the landlord’s preferred tenancy length
If you have any questions about gazumping, rental offers or competition in your local lettings market, get in touch with the team today.
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