Britons love to hate estate agents, second only to the bankers these days as one of the most despised professions. But could new Government proposals break up their monopoly on selling homes and save homeowners thousands of pounds in fees?
This week the Department for Business, Innovations and Skills proposed amendments to the Estate Agents Act to remove restrictions on websites that allow sellers to advertise their homes directly to the public. Until now, online intermediaries hosting private property sales have legally been treated as estate agents and forced to check the accuracy of advertised property details under the Property Misdescriptions Act (PMA), despite the fact that they are not involved with any other part of the sales process and do not offer advice. This has pushed up their costs and kept them from being able to compete seriously with high-street estate agents.
"Reducing the regulations for these businesses will open up the market and increase choices for consumers looking to save costs when buying or selling a property," says Consumer Affairs Minister Jo Swinson.
Whilst the vast majority of people currently use estate agents to sell their house, they are free to do the work themselves and sell via web-based intermediaries that enable homeowners to advertise their properties privately. Some are free such as Tepilo, run by TV property personality Sarah Beeny, while others have a fixed fee, at a fraction of the typical estate agent bill, with sites such as Propertybroker.co.uk and Noestateagentsplease.co.uk charging from around £50. In comparison, estate agent fees are around 2 per cent of the sale price — equating to £5,000 on a £350,000 property.
"These proposals are a good idea if they do what they are supposed to do and free up the market," says Russell Quirk, founder of online estate agent eMoov.co.uk. "It just doesn't follow that using a high street estate agent is the best and only way to sell your property, and that using an estate agent is the only way to ensure the description of your property is accurate."
Unsurprisingly, many estate agents are not pleased.
"The PMA is there to protect buyers from underhanded agents misrepresenting property. To allow non-industry experts to come into the market unregulated is potentially catastrophic," suggests Jonathan Hudson of Hudsons Property. "There is potential here for people to mis-sell properties or provide the wrong information, so buyers incur unnecessary expense in mortgage arrangement and survey fees, before errors of information are spotted by their conveyancers.
"Allowing rules to be relaxed for new start-ups or private selling opens up the opportunity for people to abuse the system or claim they are immune from paying out damages for costs involved with one of the most important purchases one can make as a mature adult."
There is no doubt that going down the estate agent route is more expensive and a potential increase in competition would be good news for consumers. But many in the industry say that this could actually lead to new problems. The Royal Institution of Chartered Surveyors (RICS) warns the amendments could leave prospective home-buyers and sellers unwittingly carrying out complex negotiations without professional help, leading to delays, increased costs and more sales falling through. Estate agents also have complaint processes and a route to redress if anything goes wrong, something passive intermediaries do not have in place, which some say could leave the consumer vulnerable to rogue operators.
But in reality anyone involved in property sales (both estate agents and intermediate websites) must still adhere to consumer and business protection regulations (CPRs and BPRs). Incidentally, the Office of Fair Trading last week published new guidelines to these rules, beefing up the protection against false or misleading statements.
Practically speaking, this means both estate agents and listings sites would still in breach of these regulations if they fail to ensure the information provided is accurate, or if important information has been omitted. The only question is how well these rules can be policed.
Regardless of these protections, it is still true that a good agent provides a far more comprehensive service than passive intermediaries, offering local experience and negotiating skills, vetting buyers and following up with solicitors, surveyors and mortgage brokers.
Still, many sellers resent having to pay such huge sums, particularly to not-so-good estate agents who take a huge chunk of the asking price and do seemingly very little else. Many sellers may be happy to forgo the expertise of an estate agent and plump for the cheaper route with no advice, showing their home and negotiating alone.
Of course things could be much worse — in the US estate agents charge far more than here, with fees of around 6 per cent. There are also lots of things sellers can do to cut costs now. Online estate agents such as eMoov.co.uk, HouseSimple.co.uk, HouseNetwork.co.uk and Sellmyhome.co.uk offer a halfway house costing from around £350 with access to major property portals along with several of the services expected from an estate agent such as arranging appointments and negotiating with the buyer.
If you do try the high street, get several quotes from agents as fees can vary widely, particularly when comparing an independent company to the big names. Last year Which? found fees across 48 estate agents ranged from 0.75 per cent to 2.5 per cent. You can try to negotiate down the fee, but pick a member of a body like the National Association of Estate Agents (NAEA) and read the small print. Some insist on sole agency, so you pay a commission fee even if you go on to sell privately or through another agent.