Get tough with the go-betweens

The watchdog won't clamp down - so play the field on fees, advises Melanie Bien
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The Independent Online

Estate agents don't tend to win popularity contests, so it came as no surprise last week when a report from the Office of Fair Trading (OFT) concluded that reforms were needed in the £2.5bn-a-year industry in England and Wales.

Estate agents don't tend to win popularity contests, so it came as no surprise last week when a report from the Office of Fair Trading (OFT) concluded that reforms were needed in the £2.5bn-a-year industry in England and Wales.

"There is widespread public dissatisfaction," says John Vickers, chairman of the OFT. "Necessary change includes sharper price competition, more effective regulation and higher industry standards."

Nine out of 10 people use an estate agent when buying or selling a home. Yet a quarter of recent sellers canvassed for the report said they were dissatisfied with the service, citing poor value for money, delays in the sale and inadequate communication. There were also more serious complaints such as agents failing to pass on offers from sellers (which they are legally obliged to do).

Some firms even suggested to buyers that their offer would be more likely to succeed if they also used the financial services offered by the agent. Yet in most cases, homebuyers can get a better deal by using an independent broker to seek out a mortgage.

One discovery made by the OFT was that only half of sellers get quotes from more than one agent. Those who did so, and negotiated the fees, paid 14 per cent less on average than those who didn't. The OFT, therefore, recommends that sellers shop around. It also calls for fees, which tend to be quoted in percentage terms, to be stated as a cash sum. This should enable sellers to understand exactly how much they will have to pay and make it easier to compare different agents.

Unfortunately, the OFT has shied away from recommending that a statutory regulator is introduced. There are a number of codes that agents can sign up to if they wish, such as those set up by the National Association of Estate Agents (NAEA) or the Ombudsman for Estate Agents (OEA). But these don't have much teeth and represent only a small part of the industry. The OEA, for example, covers just 36 per cent of all agents.

Peter Bolton King, the chief executive of the NAEA, says: "We have spent many years campaigning for more stringent controls, to oust rogue agents and ensure the public receive the service they deserve."

But the OFT only goes as far as recommending that the Estate Agents Act 1979 is made more enforceable. Agents will have to maintain written records of offers, rather than relying on oral communication, which should make it easier to prove whether all offers are passed on to the seller.

Only if voluntary codes don't achieve "better and more wide- spread self-regulation" will a statutory scheme be introduced.

The Government has 90 days to respond to the OFT report.

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