The OFT said on Monday that it would launch a ‘comprehensive’ review of the estate agent market in 2009, four years after its last probe recommended better self-regulation (remember that quaint notion?) by the industry. The government is keen to give more protection to people buying and selling a house (it’s also announced improvements to the controversial Home Information Packs) and it seems to have decided to crack down on some of those agents that have given the industry its dubious reputation among the wider populace.
The OFT said on Monday that its new study will look at competition between service providers, the ‘prospects for new entry’ (in particular by internet sellers), and ‘the extent to which customer interests are protected’ by the current regulations. It will also look at how estate agents deal with brokers, surveyors, solicitors and anyone else involved in the house-buying process. ‘We want to ensure that consumers are supported by an effective, competitive and innovative market,’ said OFT CEO John Fingleton.
It’s been a rotten year for the property industry, with many agents facing redundancy as sales plummet in both the residential and commercial sectors. Even the trade bodies are down in the dumps: the Royal Institute of Chartered Surveyors warned on Monday that commercial property values will keep falling for the next two years (16% next year, and another 10% the year after, to be precise). Meanwhile the Council of Mortgage Lenders admitted that the situation was so dire that it might not even bother trying to forecast what will happen to house prices next year - and they're already at a 30-year low.
Nonetheless, the industry actually seems pleased about this probe. ‘There is nothing to stop anybody from becoming an estate agent and there is a real need for consumers to be aware of this. Buying a house is probably the largest investment that a person will make, so they should make sure that they use property professionals,’ said Peter Bolton King, the CEO of the National Association of Estate Agents. ‘The NAEA has long called for appropriate regulation of the market and I hope that the OFT will recommend the same when it concludes its study’.
In other words, better regulation might stop the cowboys that are giving the industry a bad name. But equally, it would presumably also clear the competitive field for the big boys (like Knight Frank, which has just announced that its top brass will get an average bonus of £780,000 each for last year’s efforts). So we can see why they'd be keen. And with RICS also saying that new buyer enquiries are at their highest level for two years, they'll want to be in the box seat when (if?) the recovery begins...
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Estate agents face up to new OFT competition probe
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