The managing director of a new website that promises to provide low-cost property maintenance for landlords - aspect.co.uk - said that while he was challenging the maintenance work of estate agents, the government itself had “shied away” from fully regulating the sector, which also offers maintenance agreements as part of its letting businesses.
Mr Davies said his company has stopped working with estate agents who ask for commission from property maintenance firms, describing the arrangement as a hidden “scam”.
He said: “We used to manage property maintenance work around London for a leading estate agent but we stopped when they wanted to increase their commission from 15 per cent to 20 per cent.
“We knew their clients weren’t aware of this particular scam and we didn’t want to be associated with that.”
The Office of Fair Trading recently began a year-long investigation into the residential property management industry in response to widespread criticism of letting agents, often accused of overcharging and failing to maintain properties.
Rachel Merelie, senior study officer at the OFT, said: “Service charges for the maintenance of a building can be substantial and we want to make sure that leaseholders are getting a fair deal. We are concerned that management agents and freeholders may not be incentivised to keep maintenance costs down and that leaseholders may not receive value for money.”
Background
Disquiet over the behaviour of estate agents has grown since Financial Adviser began its campaign to toughen up regulation of the sector earlier this year.
Pete Mugleston, mortgage adviser at Derby-based OnlineMortgageAdvisor.co.uk, has been one of many brokers to report potential breaches of the Estate Agents Act, where borrowers are “forced” to sit down with in-house advisers, particularly at branches of larger estate agencies.
He said: “Large chains are particularly concerned with making sure that brokers put pressure on clients to use them, raising as much revenue from the transaction as possible.”
