New government plans to regulate the residential estate agency sector have been welcomed by Portsmouth Property Association (PPA).
Among a raft of measures, estate agents will be required to hold a professional qualification and be transparent about the fees they receive for referring clients to solicitors, surveyors and mortgage brokers.
Tom Holloway, in his second year as chairman, said: “Whilst our members already adhere to our association’s high standards, there is a general feeling here that a level playing field can only be a good thing.
“The selling process already has mandatory qualifications for conveyancers, mortgage advisers, solicitors and surveyors, so the reform of estate agency may be considered long overdue.
“It is a logical step for the government to bring residential estate agents, including online operators, into line with a nationally recognised and obligatory professional qualification before they can do business.”
Currently there is no mandatory regulation of estate agents. With no barriers to entry, anyone can in theory set up without evidencing professional competence.
There is the reassurance of the National Association of Estate Agents Propertymark; the voluntary scheme by the professional body means customers are guaranteed to be consulting with a professional agent providing latest advice and guidance.
Mr Holloway, a commercial property agent and registered Royal Institution of Chartered Surveyors valuer, said: “House buyers and sellers are rightly demanding best practice, transparency and accountability.
“A formal professional qualification should deter rogue operators who let the industry down and can’t compensate customers who experience malpractice.”
“We welcome the measures, which followed an eight-week consultation period.”
He added: “There is a counter-argument that bringing in a professional qualification, which is as yet unspecified, will drive up costs and generate red tape for what is in essence a selling role but what matters is what buyers want – and it appears that licensed regulation is the wish.”
PPA has 150 members, including estate agents, auctioneers, lettings and property management agents, commercial property agents, chartered surveyors, developers, accountants, solicitors and bankers.
The umbrella group, established 98 years ago, promotes and maintains the highest professional ethics and integrity amongst its members.
According to the government, measures to “professionalise” house buying and estate agency will include:
- Insisting sales agents and letting agents hold a professional qualification and be transparent about the fees they receive for referring clients to solicitors, surveyors and mortgage brokers.
- Encouraging the use of voluntary reservation agreements to help prevent sales falling through and crack down on gazumping, a practice where a new buyer steps in to outbid the current buyer.
- Setting a timeline for local authority searches so buyers get the information they need within 10 days.
- Requiring managing agents and freeholders to provide up-to-date lease information for a set fee and to an agreed timetable which will “end the current situation where leaseholders are at the mercy of freeholders and their agents”.
- Strengthening the National Trading Standards Estate Agency Team so it can carry out more enforcement activity, which includes banning agents.
- Publishing guides on ‘How to Buy’ and ‘How to Sell’ to ensure customers are better informed of the process and know what questions they should be asking.
- Working with consumer groups and industry to develop a “consistent set of performance metrics for conveyancers” so consumers can make a more informed choice.
Announcing the measures, the then Housing Secretary Sajid Javid said: “Buying a home is one of the biggest and most important purchases someone will make in their life. But for far too long buyers and sellers have been trapped in a stressful system full of delays and uncertainty.”
“So we’re going to put the consumers back in the driving seat. We will require estate agents to hold a qualification so that people are no longer at risk from a minority of rogue agents and can trust the process when buying or selling their home.”
The government, looking to “increase confidence in the buying chain”, says its proposals will professionalise the sector, creating a more trustworthy and reliable industry better held to account.
According to the government, there are around 20,000 estate agent businesses across the country, and currently, anyone can practice as an estate agent.
“The changes set out will professionalise the sector, creating a more trustworthy and reliable industry who will be better held to account,” the reform announcement stated.
Official figures show that one million homes are bought and sold in England each year but around a quarter of sales fall through, wasting hundreds of millions of pounds.
Consumer protection regulations are already in place to deter estate agents from unfair or misleading trading practices – criminal breaches can lead to fines or imprisonment.
There are also three compulsory redress schemes following government action – the Property Ombudsman, Property Redress Scheme and, until later this year, Ombudsman Services Property.
In a related development, the government says a working group will be set up to bring industry and partners, such as HM Land Registry, together to look at developing innovative digital solutions to speed up the home buying and selling process.