Estate agents 'need regulating'

from BBC

All estate, lettings and managing agents should face new regulation to protect consumers, according to a new industry-backed review of residential property released today.

A new professional body similar to the Financial Services Authority or the Law Society should be able to ban individuals, according to the Carsberg Review of residential property.

The new rules should extend to some developers and builders and those landlords who deal directly with tenants, the review suggests.

About 70 per cent of the 35,000 estate agents in the UK are currently signed up to schemes to enforce professional standards, but the voluntary arrangements leave little protection for customers of the many thousands of other letting and other agents.

Sir Brian Carsberg, the former director-general of the Office of Fair Trading and of Oftel, the telecommunications regulator, said that most consumers wrongly believe that agents were regulated and trained.

He said: “Very few people know if the agent they deal with is qualified and that those qualifications are.”

The review suggests agents fail to understand the law, harbour undeclared conflicts of interest and may value properties incorrectly. Sir Bryan believes that the suggested regulatory body could replace the Property Misdescriptions Act and other legislation.

He says that agents should be encouraged under the new customer-focused regime to do more to help consumers speed up transactions, by using auctions, deposits, lock-out agreements and other techniques.

The independent review by Sir Brian, sponsored by the Royal Institution of Chartered Surveyors (RICS), the National Association of Estate Agents (NAEA) and the Association of Residential Lettings Agents (ARLA), makes 30 recommendations.

Sir Bryan suggests the Scottish system of buying homes — in which firm commitments to buy are made much earlier, reducing the number of failed sales — works more efficiently than elsewhere in the UK.

To win the right to operate in England and Wales, all but the most experienced agents should be forced undertake a compulsory qualification, like the technical award covering law and valuation techniques offered by the NAEA. Sir Bryan said: “It’s not a very complicated exam but it covers the ground well and seems to be a good minimum requirement.”

Gillian Charlesworth, director of external affairs at RICS, said: “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.”

The Government has set much store by home information packs (Hips), introduced last year, as a way of speeding up and securing property transations.

But Sir Bryan suggests that they should be abandoned: “The Hips legislation imposes a cost on customers that exceeds the benefit considerably. Making them voluntary would be equivalent to scrapping them.”

Government plans to speed up transactions with home information packs have foundered in part because of the difficulty of quickly accessing local searches.

Sir Bryan warned that stories had emerged of some local authorities trying to hinder private search companies with slow responses. He said: “It may be an abuse of dominant position under current competition legislation."