But agents’ association criticises Office for Fair Trading report, says stricter rules are needed to protect customers
BRITAIN’S housing market needs a shake-up to give the public a better deal but there is no requirement for better regulation of estate agents, the Office for Fair Trading (OFT) said on Thursday.
A year-long OFT study into the housing market concluded that a lack of competition for traditional estate agents was an issue, but said existing measures to govern their activities were sufficient.
However, it advised customers to shop around and haggle over agents’ fees, estimating that a failure to do so could be costing house sellers up to Ã‚Â£pounds;570 million (S$1.24 billion) a year.
A body which represents estate agents said the OFT report was disappointing and that tighter rules were needed to protect customers.
The OFT study said the law should be changed to make it easier for other providers to enter the housing market, in particular through online services. This would have a ‘dramatic’ impact on the cost of buying or selling a home, it said. But there should only be regulation where it was necessary to protect consumers.
‘In the present economic climate, it is more important than ever that people get a good deal when buying or selling a home,’ said John Fingleton, the OFT’s chief executive. ‘Encouraging new business models, online estate agents and private seller platforms could put useful competitive pressure on traditional models and lead to better value for buyers and sellers.’
It rejected tighter controls of estate agents, saying overall satisfaction with them had risen in recent years. A recent OFT survey found 88 per cent of buyers and sellers were happy with agents, up from just over 70 per cent in 2004.
While a third of those who used traditional estate agents thought the fees they paid represented poor value for money, 64 per cent did not negotiate a lower commission rate.
However, the OFT did say that there was need for more regulation governing fees received by agents for referring customers to companies providing extra services such as mortgage advice and surveys.
‘The OFT believes this could cause an estate agent to favour one buyer over another, to the seller’s disadvantage,’ it said.
Peter Bolton King, chief executive of the National Association of Estate Agents (NAEA) which has around 10,000 members, said the OFT had ‘categorically failed to see that better regulation’ of the market was required.
‘Buying a home is often the largest single transaction of a person’s life and it is disappointing that the OFT has not thought it appropriate to acknowledge that a robust and appropriate level of consumer protection is needed,’ he said.
‘The NAEA would like to see a greater level of regulation to ensure that professional, qualified estate agents are not confused with agents that, all too often, fail to meet the basic professional standards we would expect from our members.’
Source: Business Times, 20 Feb 2010