Estate agents 'need regulating'

Published 16th Jun 2008

Estate agents, letting agents and managing agents, who handle residential property, should be subjected to formal regulation, a report says.

The author, Sir Bryan Carsberg, who used to head the Office of Fair Trading, said this would offer customers better protection.

Anyone can set up in business as an estate agent, but Sir Bryan says a basic qualification is needed.

He also suggests that Home Information Packs (Hips) should become voluntary.

"I recommend that landlords, letting and managing agents should be subject to appropriate regulatory requirements in order to achieve consumer protection, efficient markets and cost effectiveness," Sir Bryan said.

"I think that the markets for estate agencies, letting agencies and managing agencies are not working well because clients are not well informed about the qualifications of different agents and about what to expect from them in the way of service," he added.

Regulation

At the moment anyone can open up an estate agency without any qualifications or permission from any official body.

They can, though, be banned by the Office of Fair Trading (OFT) if they subsequently break the laws about misdescribing a property, handling a client's money, not declaring an interest in a property, or engage in some other form of dishonesty.

There are even fewer controls on letting agents and managing agents.

In his report Sir Bryan cited evidence that many people do not understand the house selling process and are suspicious of its "complexities and uncertainties".

Calling for the establishment of formal regulatory bodies similar to those for various professions, Sir Bryan said: "It is also clear that consumers have significant dissatisfaction with the present situation and want something done to improve it."

He also called for all estate agents to become members of a redress organisation such as an Ombudsman scheme, which will probably become a legal requirement later this year.

The proposals were welcomed by Peter Bolton King, chief executive of the National Association of Estate Agents (NAEA).

"The estate agency sector in the UK is far from perfect and we know there is still more to be done," he said.

"One or two bad apples can still affect the whole barrel and therefore Sir Brian's recommendation... is one we wholeheartedly endorse."

Surveys

The biggest recent change in England and Wales to the sale of residential property has been the introduction of Home Information Packs

These were originally designed to provide much for more information upfront to potential house buyers and to cut short the often frustrating process of buying a home.

But Sir Bryan recommends that Hips should become purely voluntary because the new system is not working.

"Some would summarise the position by saying that the Hip provides the worst of all worlds - it omits much of the most useful information but still imposes significant costs on the property transaction," he said.

And he added that they should not, as was once intended, include a survey of the property that is being sold.

"It is simply not appropriate for legislation to lay down how consumers should conduct transactions unless there is a substantial public interest in the transaction and I do not think there is in the case of buying and selling residential property," he said.

Major reform

Sir Bryan's report, which contains 30 recommendations to improve the way the residential property market works, was commissioned last year by a number of bodies.

They were the Royal Institution of Chartered Surveyors (Rics), the National Association of Estate Agents and the Association of Residential Letting Agents (Arla).

The report's aim was to look at ways to improve regulation, standards and methods of redress for people buying or renting property.

Rics welcomed the report as the basis for "major reform" of the industry.

"The processes for regulation and redress do not go far enough to protect the consumer and we agree that participation in regulatory and redress schemes needs to be both consistent and universal," said Gillian Charlesworth of Rics.

"They should include all estate agents, letting agents, managing agents and landlords," she added.

Source: ' BBC '

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