FOOL'S EYE VIEW
Estate Agents Called To Account

By Jane Mack (TMFJane)
March 23, 2004

The Office of Fair Trading is calling on consumers to question estate agents about their fees following a two-year study into the industry.

Complaints about estate agents have been on the increase and the trading watchdog says if they don't improve their standards voluntarily they could be forced to join a compulsory code of conduct.

The OFT's report say that a fifth of sellers and a quarter of buyers said they were dissatisfied with the service they received from their estate agent, citing poor value for money, delays in the sale and inadequate communication. They identified serious complaints such as failure by agents to pass on offers or declare a personal interest and buyers were also sometimes told that they would be more successful at getting a property if they used the financial services offered by the agent.

The OFT says that sellers should shop around between estate agents, negotiate on fees and get a written contract that states the fees in percentage terms and money terms. Only half of the sellers they surveyed got quotes from more than one agent while those who did shop around and negotiated the fees paid on average 14% less than others saving on average about £300.

Estate agents should also be required to maintain written records of offers - the current system where much of the buying and selling process is conducted orally makes it more difficult for enforcement agencies to establish breaches of the 1979 Estate Agents Act. As a result they want changes to the Act to give them more powers to deal with those 'unfit to practice'.

However, both the Consumers' Association and the National Association of Estate Agents say they are disappointed with the report.

The Consumer's Association says it falls woefully short of what is needed to protect consumers from poor service and sometimes, criminal activity, within the industry. They say the OFT's decision to allow the industry to self-regulation will leave more people open to rogue traders.

The National Association of Estate Agents is disappointed that the OFT hasn't adopted their own recommendations that estate agents should be subject to certain qualifications and a compulsory licensing scheme. They say that although their own code of practice provides the public with redress from rogue agents, they can only expel or fine members and can't stop them from continuing to practice.

Estate agency is big business. According to the OFT estate agents earned an estimated £2.5 billion from the sale of residential property in England and Wales in 2002 with around 1.45 million property transactions taking place that year at an estimated value of £185 billion. More than nine out of ten people buying and selling a home in England and Wales use an estate agent. 

At the moment complaints about money or compensation have to be referred to the Small Claims Court and complainants who say there's been a breach of the Estate Agents Act 1979 or the Property Misdescriptions Act 1991 are simply are advised to contact their local Trading Standards Department.

Although there is an Ombudsman for Estate Agents, membership of the scheme is voluntary and only 36% of the UK's estate agents have signed up.

The OFT says it now plans to launch a campaign to raise consumer awareness of the benefits of shopping around before choosing an estate agent and of negotiating fee rates. They say consumer knowledge will help to increase competition and result in lower prices, higher quality service and better value for money.

OFT Report (128 page pdf report)