Advisers across England and Wales have called for tighter controls over estate agents to protect clients against rogue operators using “bully-boy” tactics on potential buyers.
Complaints from advisers and mortgage brokers about estate agents include: forcing potential buyers to sign agency agreements to use their own in-house brokers; pressurising advisers to provide proof of earnings and bank statements; and undervaluing homes to sell to contacts, such as developers.
Brian Brotherton, principal of Essex-based The Partnership, said: “There should be a separation between the estate agent and the mortgage arrangement; at the very least, it should be made clear to the client that in-house mortgage advice may be restricted.”
Mr Brotherton said it is “bizzare” that anyone can sell a house for hundreds of thousands of pounds, but only the mortgage and the mortgage adviser are regulated.
Ian Rogers of CA Mortgage Services in Gwent said he has been “pushed” to provide sensitive financial information from clients, such as bank statements, which he has declined to do.
He added: “Bad practice should be reported and there should be more protection for consumers. The FCA should provide first-time buyers with a checklist of what they need to look out for before they start going down the mortgage route. This could save them time and expense.”
Both Mr Rogers and Mr Brotherton said they have a “decent” working arrangement with their local agents, but they suggested there are more “dirty tactics” employed by rogue agents in cities.
An IFA, who wished to remain anonymous, based in a large connurbation in Kent said things reached “boiling point” with one local agent, which is not a member of the NAEA. This firm makes buyers sign an agency agreement stating that they cannot make a purchase unless they use its in-house mortgage broker.
The adviser said: “In two cases, people have pulled out because of this. It is diabolical.”
One London-based buy-to-let investor warned that some agents are deliberately undervaluing properties in order to sell them to a professional contact for a kick-back.
Rob Sinclair, chief executive of the Association of Mortgage Intermediaries, said: “This is unusual, but I have come across it. It is most likely where you have a ‘vulnerable’ seller and the property is being sold to a developer.
“However, I am not sure that adding the FCA to the watch would improve much, as rogues still operate under their watch and good people comply. There are some good estate agents out there.”
Donna Hopton, director for broker forum Cherry, said: “Advisers exist in a highly regulated space and follow strict guidance and rules, whereas, currently, agents do not.
“Advisers just want this to stop, and evidence received suggests they would like to see some sort of forced or even voluntary regulation.”
Ms Hopton added: “There must be better protection for consumers, so they know that any agent they deal with will put their interests at the centre of the transaction.”
Right to reply
Mark Hayward, managing director of the National Association of Estate Agents, said the NAEA deplored bad practice. He added that members found to be in breach of the code of conduct could face disciplinary action, including expulsion and fines.
On the question of valuations, he said: “Estate agents have a duty of care to give accurate advice. If they are challenged on their valuing, they must be able to substantiate the value by the use of comparisons in the current market stipulated under the ombudsman code.”
He added that forcing people to use in-house mortgage brokers is “illegal” and could not be part of an agency agreement.
Mr Hayward said: “Also, under consumer protection regulations, estate agents should ensure that the current stage the property is under offer is displayed correctly on the board and on the website”.
He added that agents should protect consumers by adhering to the Data Protection Act.
