Binding Contracts, Gazumping and Gazundering: What the 2026 Reforms Change
In England and Wales nobody is committed until exchange, which is why gazumping and gazundering exist. The government intends to change that. Here is how, and when.
What you need to know
Between offer and exchange — typically eight to twelve weeks — neither party in England and Wales is legally committed, which is what makes gazumping and gazundering possible. The June 2026 reform roadmap commits to binding conditional contracts that would commit both sides shortly after an offer, with financial penalties for withdrawing without a legitimate reason. No date has been set and the penalty structure is undefined.
- Nobody is committed until exchange of contracts, typically 8–12 weeks after an offer is accepted.
- Binding conditional contracts would commit both parties shortly after an offer, with penalties for unjustified withdrawal.
- Legitimate withdrawal grounds cited in the roadmap include death, illness, new material information and major financial change.
- Binding contracts are deliberately sequenced after mandatory sales packs, so they are the later of the two reforms.
- Reservation agreements offer partial protection today and are lawful, though rarely used.
Here is the structural oddity at the heart of buying and selling property in England and Wales: for the eight to twelve weeks between an offer being accepted and contracts being exchanged, nobody is committed to anything. Either party can walk away, at any moment, for any reason or none, at no legal cost whatsoever.
Everything unpleasant about the English system flows from that gap. Gazumping exists because of it. Gazundering exists because of it. So does a fall-through rate of roughly one in four. The government now intends to close it.
What gazumping and gazundering actually are
Gazumping
A seller accepts an offer, then accepts a higher one from someone else before exchange. The first buyer loses the property and everything they have spent — survey, searches, solicitor's time, mortgage arrangement fee. Typically £1,500 to £2,500, unrecoverable.
Gazundering
A buyer reduces their offer shortly before exchange, usually with no new information to justify it. The seller has often already committed to an onward purchase, given notice, or booked removals. The pressure is deliberate and the timing is chosen for maximum leverage.
Both are lawful. Both are, in the strict sense, rational. Neither is possible in Scotland.
What the government is proposing
The home buying and selling reform roadmap, published on 19 June 2026, commits to introducing binding conditional contracts. The mechanism:
- Buyer and seller enter a contract shortly after an offer is accepted, rather than at exchange
- The contract is conditional — withdrawal remains possible on legitimate grounds
- Withdrawing outside those grounds triggers a financial penalty
The roadmap gives these examples of legitimate grounds for withdrawal:
- Death
- Illness
- Materially new information coming to light about the property
- Major changes in financial circumstances
That third ground is doing a lot of work, and it is why the reforms are sequenced the way they are.
Why sales packs have to come first
The government has been explicit that it will not mandate binding contracts until upfront sales packs are tested and embedded. The logic is sound and worth understanding.
If you bind a buyer at the point of offer, but they still do not receive searches, title information or a condition report until week six, then “materially new information” will be discovered in almost every transaction. Every buyer would have a legitimate exit, and the binding contract would bind nobody.
Binding contracts only work if the information arrives before the commitment. That is the entire architecture of the reform programme: information first, commitment second.
What is still undefined
Being clear about the gaps, because coverage has run ahead of the document:
| Question | Status |
|---|---|
| How large is the penalty? | Undefined — due to be settled in the 2027–2028 phase |
| Who adjudicates whether a reason is legitimate? | Not specified in the roadmap |
| When does the contract bite — offer, or a few days after? | Not specified |
| How does it work in a chain? | Not addressed; a binding contract in a chain of five raises obvious sequencing questions |
| When does it become law? | “Before the end of this Parliament”, after sales packs |
The chain question is the one practitioners keep raising. If your purchase is conditional on your sale, and both are binding contracts with penalties, the interaction is not obvious. The roadmap does not resolve it.
The Scottish comparison
Scotland has effectively run this experiment since 2008. Offers and acceptances are exchanged as formal letters — missives — and once missives are concluded, both parties are legally bound. That point arrives far earlier than exchange does in England.
Paired with the Home Report, which gives every buyer condition and valuation information before they offer, the result is a market with materially lower fall-through rates. The English reform programme is, in substance, an attempt to arrive at the Scottish position by a different route.
The honest caveat: Scotland's system also involves sealed bids and a different professional structure, so the comparison is instructive rather than exact.
What you can do now
Binding contracts are years away. In the meantime:
Reservation agreements
A reservation agreement — sometimes called a lock-out agreement — is a contract under which both parties deposit a modest sum, forfeited if they withdraw without good reason. They are lawful and available today, and they are a reasonable private approximation of what the reform proposes. They remain uncommon, partly because agents rarely suggest them. See reservation agreements.
Speed
The most effective protection available today is shortening the exposure. Gazumping and gazundering both require a long gap between offer and exchange. A seller whose legal work was underway before listing can reach exchange in weeks rather than months, and a window that narrow gives neither party much room to manoeuvre against the other.
Behaviour
If you are a seller, taking the property off the market properly and telling the buyer you have done so materially reduces the chance they protect themselves by continuing to look. Trust in this process is reciprocal and fragile.
Sources and further reading
- MHCLG— Home buying and selling reform roadmap, 19 June 2026 (gov.uk)
- Law Society of Scotland— Missives and the Scottish conveyancing process (lawscot.org.uk)
- The Law Society— Standard Conditions of Sale and exchange of contracts (lawsociety.org.uk)
- Quick Move Now— Fall-through rate tracker, 2026
Related guides
- The 2026 Home Buying Reforms
- Reservation Agreements in the UK
- When Can a Buyer Pull Out?
- Exchange of Contracts Explained
- Scotland's Home Report
- House Sale Fall-Through Rate 2026
Frequently asked questions
Are house sale agreements binding in England and Wales?
Not until exchange of contracts. Between offer acceptance and exchange — typically eight to twelve weeks — neither party is committed and either can withdraw for any reason, or none, at no legal cost. This is the structural reason gazumping and gazundering exist in England and Wales but not in Scotland, where missives become binding much earlier.
What is a binding conditional contract?
A contract that commits both buyer and seller shortly after an offer is accepted, rather than months later at exchange, while preserving the right to withdraw on legitimate grounds. The government's June 2026 reform roadmap gives death, illness, materially new information about the property, and major changes in financial circumstances as examples of legitimate grounds. Withdrawing outside those grounds would carry a financial penalty.
When will binding contracts become law?
No date has been set. The government committed in June 2026 to legislate before the end of this Parliament, but explicitly sequenced binding contracts after mandatory sales packs — it will not bind a buyer to a purchase before ensuring they have the information to judge it. The penalty structure is due to be defined in the 2027 to 2028 phase. A realistic expectation is that binding contracts arrive some years after sales packs.
Will binding contracts stop gazumping?
They should substantially reduce it. Gazumping works because a seller can accept a higher offer at any point before exchange without consequence. If accepting an offer creates a binding commitment with a penalty for withdrawal, the economics change: a seller would need the new offer to exceed the old one by more than the penalty. It would not become impossible, but it would stop being free.
What is gazundering and would the reforms stop it?
Gazundering is a buyer reducing their offer late in the process, often days before exchange, exploiting the seller's sunk costs and time pressure. Binding contracts would attack it directly, because the price would be fixed at the point of commitment rather than at exchange. A buyer wanting to reduce would be varying an agreed contract rather than simply revising an informal offer.
Can I protect myself from gazumping or gazundering now?
Partly. A reservation agreement — sometimes called a lock-out agreement — is a contract in which both parties commit a modest sum, forfeited if they withdraw without good reason. These are lawful and available today, though not widely used. Beyond that, the practical protection is speed: the shorter the period between offer and exchange, the less opportunity there is for either party to move against you.
How does Scotland avoid this problem?
In Scotland the offer and acceptance are made through formal letters called missives, and once missives are concluded the agreement is legally binding on both parties. That point comes much earlier than exchange does in England and Wales. Combined with the Home Report giving buyers condition information before they offer, it produces materially lower fall-through rates. The English reforms are, in substance, an attempt to reach a similar position.
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