OFT rules out estate agency regulation

The Office of Fair Trading (OFT) has dismissed industry calls to regulate estate agents.

At present, it is possible to open an estate agency without qualifications or permission from any official body.

Trade bodies such as the National Assocaition of Estate Agents (NAEA) have been campaigning for regulation in this area for the last few years but the OFT has dismissed the calls as it believes the current situation is working well for consumers.

However, it does believe more can be done to help consumers without further regulation including negotiating on commissions paid to estate agents. The watchdog estimates sellers are losing as much as £570m a year collectively by paying too much commission.

It also wants the Government to consider a ban on fees received by estate agents for sending buyers to mortgage brokers or conveyancers.

In its report Home Buying and Selling: A Market Study, the OFT says it welcomes new entrants setting up rival property businesses as this will shake up the traditional estate agency model, resulting in better choice and lower prices. Google is just one entrant rumoured to be launching a property search website this year.

The OFT believes consumers are becoming increasingly open to ways of buying and selling that avoid using estate agents. More than a quarter (27%) of sellers who used a traditional estate agent have considered an alternative method.

Its says innovation, in particular through online services, could have a dramatic impact on the cost of buying and selling a home.

John Fingleton, chief executive of the OFT, says: "Encouraging new business models, online estate agents and private seller platforms could put useful competitive pressure on traditional models and lead to better value for buyers and sellers."

However, Peter Bolton King, chief executive of the NAEA, has hit out at the OFT's decision: "Once again, the OFT has categorically failed to see that better regulation of the home buying and selling market is required. Buying a home is often the largest single transaction of a person's life and it is disappointing that the OFT has not thought it appropriate to acknowledge that a robust and appropriate level of consumer protection is needed."