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Attempts to ‘professionalise’ industry by licensing will create a cartel, warns top entrepreneur

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One of the country’s best known entrepreneurs has warned that the Government’s attempts to ‘professionalise’ estate agency will reduce competition and make it more expensive for consumers.

Luke Johnson, whose previous business ventures include Pizza Express and the Ivy, also said that the move would play into the hands of trade bodies who “have been pressing to make the industry more of a cartel for years”.

Writing in his Sunday Times column under the headline ‘Beware the estate agents calling for even more red tape’, Johnson slates plans to introduce new qualifications before agents are allowed to sell or let property.

He said: “Nowhere else in Europe do they feel the need to oblige individuals who sell property to be licensed by the government.”

He said that in America, realtors do have to be licensed.

Johnson said that having had personal experience of buying and selling homes in the US, “I can confirm that the service is no more professional than in Britain but the cost is massively higher”.

Nor does Johnson believe that the lettings industry will be improved by the new rules.

He said: “I’ve found that awful managing agents are often members of the Royal Institution of Chartered Surveyors or the National Association of Estate Agents.

“Having such letters after their names makes no difference when it comes to disreputable behaviour.”

Johnson also disputes whether estate agents are the cause of all ills in the house-buying process, saying that lawyers are as likely to be to blame, along with planning, searches and the Land Registry – all controlled by the Government.

However, he goes on: “Of course, the various trade bodies are delighted at the news.”

He said that they have “vested interests” and that “vested interests love more regulation because it keeps others out”.

He said: “I do not understand how a Conservative government, which is meant to promote business and free markets, has allowed itself to be captured by certain trade groups who want to minimise competition and boost their fees.”

Johnson adds that there will be unintended consequences that will cause more harm than the problem that was designed to be improved.

He says that one consequence of the introduction of licensing could be that online agencies could be prevented from functioning and many would close down: “This reduction in choice must be against the public interest and should be resisted by politicians.”

Licensing, says Johnson, supposedly protects consumers from unscrupulous or incompetent practitioners.

In practice, such rules entrench existing operators, exclude new entrants, and increase bureaucracy and cost, while offering no material benefit.

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Source:: Attempts to ‘professionalise’ industry by licensing will create a cartel, warns top entrepreneur