The general issue of gazumping was examined by the Law Reform Commission, LRC, in October 1999. Its report examined the practice of taking booking deposits on the sale of new residential properties. The commission found that gazumping occurred in only a handful of cases, less than 5% and almost always on the sale of new houses. It concluded that the current legal position, which does not confer any interest in property upon the payment of a booking deposit, generally benefits the purchaser more than the vendor, allowing the purchaser flexibility to conduct the necessary preliminary investigations before committing to an irrevocable agreement.
Among the recommendations of the LRC report was the initiation of, and adherence to voluntary codes of practice among the industry such as the home purchase protection pledge established by the Irish Home Builders Association, IHBA.
Under the IHBA code of practice, members must not increase the price of the property or accept any offer from any other party for the property for a seven week period following payment of a booking deposit, during which time contracts should be exchanged and signed. The code stipulates that IHBA members are only entitled to increase the price of properties in circumstances where VAT rates have changed or as a result of newly enacted legislation that would directly affect the price of a property. In the event of non-compliance by a member of the IHBA in regard to this aspect of the code, the IHBA may take appropriate sanctions against that member.
My Department plans to engage with the Office of the Director of Consumer Affairs during 2004 to consider a range of consumer issues related to housing including gazumping.