To the dismay of many, the Office of Fair Trading last March recommended that no action be taken to control estate agents. But today, in what could be seen as a rebuff to the OFT the government has announced plans to tackle rogue estate agents.
All estate agents will have to sign up to independent ombudsman schemes or face being banned under new plans unveiled by consumer minister Gerry Sutcliffe today.
The ombudsmen will provide a government approved redress system for consumers to seek compensation for poor service.
In addition, the ombudsmen will be required to refer rogue agents who commit serious offences to the OFT for further investigation, making it easier for enforcers to take action.
Under the current system, the OFT can ban rogue estate agents and there is a voluntary ombudsman scheme. But only about 40% of estate agents belong to the voluntary scheme and the ombudsman is not required to refer rogue agents to the OFT.
Also estate agents are not required to keep written records of transactions, which makes it more difficult for enforcers to substantiate complaints.
The new measures are part of a package of proposals to be put forward for consultation in the autumn, in response to the Office of Fair Trading's market report earlier this year.
The proposals will build on the OFT's recommendations and aim to crack down on rogue estate agents without unduly burdening business or introducing measures that could push up the cost of buying and selling houses.
The proposals, outlined in a written statement to the House of Commons, will include:
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Tightening up existing legislation to give the OFT and trading standards stronger enforcement powers.
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Requiring estate agents to keep clear and full written records of all transactions so that consumers and enforcers can see what work has been done.
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Providing a consumer-focused redress system where people can pursue complaints and seek compensation where appropriate.
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Making estate agency contracts easier to understand so that consumers know what they are signing up to and are not caught out by clauses in small print or unclear language.
Gerry Sutcliffe said: "This is a broadly competitive market, and there are many good estate agents who provide value for money. But that doesn't alter the fact that there are some who do not come up to scratch - although finding evidence to prove this is not easy because written records are often not kept.”
"Under our proposals, the market will remain competitive, but those rogue agents who flout the law will find themselves out of a job.”
"There have been calls to introduce a system where estate agents have to obtain a licence before they can set up business. This would cut competition, deterring potentially good estate agents from entering the marketplace. But more importantly, it would not weed out the rogues and would push up prices without offering protection.”
"By beefing up enforcement and making it legal for estate agents to belong to an independent ombudsman-type scheme, we provide protection for consumers and honest estate agents - and put the brakes on the rogues."
The government intends to use the Housing Bill presently before Parliament to provide the statutory redress system.
This would involve giving the Secretary of State powers to grant statutory recognition to appropriate independent ombudsman-style redress systems.
Housing minister Keith Hill said: "The introduction of home information packs from 2007 will mean a significant change of role for estate agents. For the first time, they will have a pack containing important information about the condition of the property and any problems that might affect its sale. This is crucially important information and needs to be properly handled.”
"Other key professionals involved in the home buying and selling process provide independent redress for consumers when things go wrong. It is important estate agents working with home information packs also offer free, independent redress for home buyers and sellers. This will help agents meet the standards of service and professionalism that consumers need."
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