Estate agents to be probed
Estate agents are to be investigated by the Office of Fair Trading (OFT) amid concerns that there is little price competition between firms and consumers’ interests are not being fully protected.
The study is expected to include estate agents, as well as mortgage brokers, surveyors and solicitors.
John Fingleton, chief executive of the OFT, says: “Buying or selling a home is something most people do only a few times in their life, but it is usually the biggest transaction they will make. We want to ensure that consumers are served well when buying or selling a home and are supported by an effective, competitive and innovative market.”
The decision to launch a full enquiry into the home buying and selling sector comes as the government unveils new rules that some critics warn will make it harder for people to sell their homes.
Margaret Beckett, the housing minister, has announced that Labour’s controversial Home Information Packs (HIPs), which provide upfront information to buyers about property, will now have to include a new element called a property information questionnaire. This will contain flood risk information, gas and electricity safety as well as parking arrangements.
However, in a concession to homeowners struggling to sell their property, Beckett has also extended the deadline for phasing in HIPs. Although legislation states homeowners must have a physical copy of the HIP before they can put their home on the market, a concession known as the first day marketing rule was introduced in light of the weakened property market. This allows people to put their homes on the market for 28 days without a HIP as long as one has been commissioned.
The first day marketing rule was due to be scrapped at the end of December, but Beckett has now extended this deadline until April 2009.
Keshav Thukaram, managing director of Smartlandlord.co.uk, believes the first day marketing rule should be extended for even longer as demanding sellers have a HIP before a home can be put on the market only creates "more obstacle".
Beckett said: "HIPs are potentially a vital aid to consumers who are seeking to purchase a home […] the changes made will make sure consumers are better protected, better informed and better assisted when buying a home.”
The decision to extend the first day marketing rule until April has been introduced in light of estate agent concerns that scrapping this concession could damage the property market further.
Louise Hanson, head of campaigns at Which?, welcomes the OFT’s investigation and changes to HIPs.
But she adds: "We have long said that HIPs are of limited value to consumers in their current form. The changes are welcome but there is still so much work to do to improve the home buying and selling process and to raise standards."
And Gillian Charlesworth, director of external affairs at the Royal Institution of Chartered Surveyors, which has long been against the introduction of HIPs, says: "The challenge now is to ensure that by April we have a HIP that does what the government claims, and brings genuine benefit to home buyers and sellers.
"We believe it is essential to have the right structures and products ready and in place for when the market improves so call on the OFT and government to accelerate their work."
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.