How Sweden stopped gazundering – and Britain can too
Buying a property in Sweden will sound like the stuff of dreams to those trying to navigate the UK’s knotty housing market.
Surveys done before the property is even listed, qualified estate agents who have to keep ‘doctors’ notes’ on the sales process, and no legal fees.
For sellers, too, the abundance of information supplied upfront, the lack of third parties involved and the speedier road to completion mean ‘gazundering’ – when a buyer makes a lower offer at the eleventh hour – simply doesn’t happen in Sweden.
In the UK, however, one in three home sellers have endured the controversial practice according to property consultant House Buyer Bureau.
“I’d be a nervous wreck selling in the UK,” says Johan Linde, head of analysis at Croisette – a Swedish estate agent and overseas partner of Knight Frank.
“The overthinking window buyers are given in the UK gives them time to renegotiate. Who wants that?”
In Sweden, Mr Linde said buyers and sellers are “in much safer hands” which is a big part of why he simply doesn’t experience many drop-outs from buyers – if any – as a result of gazundering.
Estate agents need a two-year university qualification to sell properties in Sweden. From 2028, this figure is rising to three years.
Swedish agents also have to be insured. This acts as a form of personal indemnity insurance – a cover regulated financial advisers have to take out in the UK.
Agents must then log each step of the sales process to prove they have complied with selling regulations. Mr Linde said: “You have to write a journal afterwards to log the sales process – like a doctor.”
In England, estate agents do not need any professional qualifications. There’s no need to get a licence and agents don’t need to do any prior training or pass any checks.
The country is an outlier when compared with its neighbours. In Scotland, agents have to be on a government register and undergo a ‘fit and proper person test’. In Wales, agents have to obtain a licence, complete a training course and then be assessed on its contents.
As a result, the English house-buying system relies on a host of third parties in order for anyone to complete on their new home.
The more time buyers are given to think about their purchase, the more likely they are to try and throw in a low ball offer at the last minute – especially if house prices and mortgage rates have taken a fall in the meantime.
One thing buyers in Britain are lumbered with is having to pay for a surveyor to check a property after they put in an offer on it. But in Sweden, it is on the estate agent to check the technical standards of the property, such as the electrics, the roof condition and any potential upcoming renovation needed over the next ten years.
It is an agent’s duty to inform potential buyers of this in writing, and if a buyer neglects it then they forfeit their rights to claim defects against the seller afterwards.
Carola Russmark, chief executive of the Real Estate Agents Association, which oversees the registration of all agents in Sweden, said: “The buyer is compelled to actively participate in their own home purchase. The more engaged, convinced, and secure the prospective buyer is in the bidding process, the more dedicated they become to their purchase in the end and reducing the risk of changing their mind.”
On costly conveyancing costs, in Sweden lawyers are not involved in the sales process. Instead, the agent can handle everything – including the transaction at the very end.
But perhaps the clincher is this: if you want to buy a property in Sweden, you have just one week after agreeing terms to put down a 10pc non-refundable deposit.
‘Two years of drop outs’
Philip Sheppard, 57, is from the UK but lives in Sweden. He has been trying to sell his parents’ home in Warwickshire for over two years but buyers have continued to drop out at the last minute.
Mr Sheppard, who works at a Swedish bank, said: “During the bidding process in Sweden, if you win it you have four or five days to pay a 10pc deposit and that’s standard. You have to be committed to the process.
“Banks trust the Land Registry here too. This means you don’t need a lawyer to confirm the title, that’s a given – the current owner owns the property, period.”
Recent market movements in Sweden have also made it harder for buyers to pull off an eleventh hour offer.
Joakim Lusensky, of brokerage firm Maklarsamfundet, said: “Throughout the pandemic, the Swedish real estate market was very hot and in many areas bidding wars have been more the norm than the exception.
“That means a strategy of gazundering rarely works, as there is almost always another keen buyer in line ready to buy for the same price or more.”
In England and Wales, organisations which oversee the house buying process have tried to change it for the better – but it will take time for cultures to shift.
Late last year, National Trading Standards (NTS) told estate agents that more details need to be included in property listings and disclosed upfront at viewings in order to avoid buyers discovering “nasty surprises” midway through transactions, which can collapse deal chains.
It is hoped the changes will also save would-be buyers losing money on wasted home-buyer surveys and legal fees.
Failure to comply, according to NTS, could be in breach of the law, despite the measures being issued as guidance only.
NTS says it is an offence to omit information which could impact the decision of the average consumer. Failing to comply could also trigger a complaint against the agent, and lead to them having to pay out redress.
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