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Call to ban agents from selling services to buyers while acting for sellers

MY DEPOSITS

Estate agents should be banned from selling services, such as conveyancing, to buyers while acting for sellers in the same transaction.

The call has come from the HomeOwners Alliance, which is warning there is a conflict of interest of the type that is banned in other professional sectors such as accountancy and law.

It is also accusing agents of a lack of transparency, and says that while agents are obliged by the Property Ombudsman to declare referral fees, it sees little evidence of this happening.

Altogether, the group calculates that 300,000 buyers and sellers a year could be using an agent’s mortgage or legal services, without shopping around for the best deal. It says this increases costs to consumers, hampering healthy competition.

The group warns that 55% of buyers feel pressured by agents into using particular mortgage services, 49% into using conveyancing and 41% into using surveying.

Overall, the research, which questioned over 2,000 people at the end of last year, suggests that 25% of those who have used an estate agent to buy or sell a property have felt under pressure to use the agent’s in-house services.

Paula Higgins, chief executive at the HomeOwners Alliance, said that as a minimum there needs to better enforcement of the existing regulation that requires all estate agents to declare their referral fees, with estate agents taking advantage of their unique position being penalised.

She said: “The great majority of estate agents are upstanding and a vital part of the home buying and selling process, but sadly a small number may be encouraging their clients to use their services for all the wrong reasons, not to help smooth the process but for financial gain.

“Any estate agent that favours buyers who use in-house services is doing a disservice to their client – the seller – as well.

“Sellers can also lose out because estate agents have an incentive to sell a property to a buyer who is taking out a mortgage or life insurance with them rather than one that isn’t.

“While there is nothing wrong with agents offering services to their clients and receiving a fee for this where it is done in a transparent way, it’s important to note that their client is the seller, not the buyer.

“Offering services to both can lead to a damaging conflict of interest and harm competition.”

However, the HomeOwners Alliance itself is part owned by conveyancing comparison provider ULS, and gets some of its income through mortgage and conveyancing services.

It admitted to EYE – as detailed on its website – that it receives referral fees for those taking mortgage or conveyancer services through its website.

A spokesman added that they were not against referral fees but believed there needed to be more transparency.

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Source:: Call to ban agents from selling services to buyers while acting for sellers