Watchdog calls for estate agent regulations shake-up

Rules on how homes are sold in the UK are holding back online alternatives to estate agents and leading to weak competition on commission fees, the consumer watchdog said today.

The Office of Fair Trading (OFT) said regulations, dating back to 1979, needed to be overhauled to allow competitors to grow and challenge the traditional estate agency model.

Its study into home buying and selling also found that a failure from sellers to negotiate on estate agency fees could be costing consumers up to £570 million a year.

Regulations could be relaxed for online alternatives not involved in risky activities, such as getting involved in price negotiations, to allow greater competition, according to the OFT.

While overall the OFT said the estate agent market and regulation was working well, it said there was a case for further rules - or even a potential ban - on estate agents referring ancillary services such as mortgage advice due to conflict of interest fears.

It found that the fees-for-referral system could lead to agents pushing forward one buyer over another, to the detriment of the seller.

Today's report also looked at the overall buying process in England and Wales and found that there were possible benefits of introducing a binding commitment between buyers and sellers earlier.

But it stopped short of recommending changing the model to a similar system to that used in Scotland as it said there could be "significant" difficulties involved in changing it.