Townends estate agents, of Ealing, west London, was fined pounds 2,500, after it had ignored warnings not to display "sold subject to contract" boards. The firm's Ealing manager, Jason Godfray, appointed after the offences took place, is reported as saying: "Every agent does something like this. It's naughty, and we'll monitor the situation more closely."
Townends says the practice has now stopped, but Charles Hess, the firm's area director, said: "Mistakes were made. It is commonplace to put boards up where they attract more business. It's not just us."
One house near Hanger Lane was said by trading standards to be "very popular" with agents because a constant stream of traffic gave valuable free advertising. The house was unoccupied at the time, but had boards from six agents outside it.
"A great number of estate agents do this and Townends were simply the worst of the lot," said Douglas Love, senior trading standards officer at Ealing.
The behaviour was condemned by Hugh Dunsmore-Hardy, chief executive of the National Association of Estate Agents, who said such estate agents were "breaking the industry's code of practice".
Trading standards officers have expressed fears that, as the housing market recovers, some of the less pleasing practices of estate agents are making a comeback.
"Some agents will also not send you many houses if you are a first-time buyer. That may be because they are trying to stitch together a chain with multiple commission," said Martin Fisher, the Institute of Trading Standards estate agency officer.
Other practices include "ring fencing", in which a potential buyer offers an estate agent a bribe not to pass other rival offers on to a vendor; agents putting personal property on the market without declaring it; or agents putting a "sold for" price on a house which is higher than the price actually paid.
Another practice occurs when a buyer immediately matches the asking price, suggesting to the agent that he or she has priced the property too low. The agent may then inform the buyer, falsely, that another offer has been received. "I struggle to think what law an agent might actually be breaking," said Mr Fisher. "The practice is nasty and immoral but the agent does have a duty to get the best price.
"I don't want to give the impression that every estate agent is up to such practices," said Mr Fisher. "Agents developed a bad reputation for fanciful description but that has been grasped by the Misdescriptions Act."
Meanwhile, major mortgage lenders have expressed satisfaction with the state of the housing market. "The Budget did no damage to the market. Interest rates won't rise by much, if at all, and inflation is low. Things are reasonably healthy," said Gary Marsh, housing specialist for the Halifax, which expects house prices to rise by 5 per cent this year and 4 per cent in 1999.
The view was endorsed by a spokeswoman for the Building Society Association, who said: "We don't have a huge increase or a re-run of the 1980s and that's just the ticket." The BSA says the average house price in the third quarter of 1997 was pounds 77,600, compared with pounds 76,000 this time last year. Mortgage lending decreased slightly from pounds 1,549m in January to pounds 1,478m last month.