Ombudsman calls for legislation of ‘quick house sales’

The Property Ombudsman has called for legislation of the ‘quick house sale’ market, following an Office of Fair Trading report which found unfair practices and “potentially illegal behaviour” may have led to customers losing tens of thousands of pounds.

Following its review, which commenced in April, the OFT has opened formal investigations into three quick house sale firms.

In its report on the sector, the OFT admits that quick house sale firms can be “beneficial to consumers who need a fast, hassle-free sale”.

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Consumers a faster sale than might be achieved on the open market, with the seller usually agreeing to receive a below market value price - discounts range between 10 and 25 per cent - for their home in return.

However, it also raises concerns over practices including reducing the price offered at the last minute, making misleading claims about property values or discounts, and the use of long-term ‘exclusivity’ agreements that prevent sales to other buyers through severe penalties.

OFT said some firms are also pushing for the “fastest possible times to completion”, for example seven days rather than the more typical three to four weeks quoted on websites and marketing materials.

Christopher Hamer, property ombudsman, called for legislation to ensure that all firms provide consistent service.

He said: “This report reveals that there is yet another area of the property sector where there is no formal regulatory framework.

“As with the residential lettings sector there is a minority, albeit sizeable, number of ‘quick house sale’ firms that do not appear to follow established standards or acceptable trading practices. The result is an unsafe environment for consumers at a time when they are making important decisions concerning the sale of their home perhaps when under severe financial or health pressures.

“Consumers using ‘quick house sale’ firms have no access to independent redress and the risks associated with this are significant.

“Whilst I note that the OFT is pursuing a self-regulatory approach, the only way of realistically ensuring all such firms provide consistent service is through legislation.”

In April, OFT launched an investigation into the ‘quick house sale’ market amid concerns firms are unfairly targeting vulnerable people who are in financial difficulty.

Gaucho Rasmussen, OFT director, said: “Responsible quick house sale firms offer a valuable service to consumers who want a fast sale. However we have also seen potentially illegal behaviour and as a result the OFT has opened investigations into three companies.

“When sellers get a bad deal, they could lose a lot of money. We want to ensure that consumers can have confidence in this sector and put an end to these shoddy practices.”