Mortgages  

Labour slams ‘downgrade’ to estate agent regulation

The shadow consumer affairs minister has backed Financial Adviser’s campaign to toughen up regulation for the booming sector, arguing that “now is not the time to turn a blind eye” to an array of bad practices reported by homebuyers.

Ms Creasy said many estate agents were now charging buyers to see properties, lowering the price they can afford to pay.

She said: “The only people who do well out of these kinds of ‘sealed bid’ deals are the agents who get a nice fat fee from both the buyer and the seller.

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“The ombudsman calls this an ‘emerging commercial practice’ meaning it may be starting in London but without quick action it could spread across the country.”

Labour voted against government plans to transfer regulatory powers to estate agents from the Office of Fair Trading to Powys and Anglesey Council Trading Standards on 1 April when they were debated by a parliamentary committee on 10 February.

Ms Creasy, a member of the secondary legislation scrutiny committee, argued that the coalition government should be “reforming” the ombudsman so it can offer a “uniform complaints process”.

She added: “Many buyers are frightened to challenge the agents and these unfair contract terms as they think they will be locked out of our housing market as a result. That is why we need a fresh approach that gives consumers protection.”

However, Vince Cable, the Secretary of State for Business, Innovation and Skills, has defended the changes.

In a letter to Lord Goodlad, chairman of the committee, on 15 January, Mr Cable said that Powys Council was best placed to “meet the considerations of efficiency and effectiveness” imposed by the Public Bodies Act 2011.

He wrote: “Powys County Council was selected as the most appropriate local authority to discharge the functions following an open competition where all United Kingdom local authorities were invited to submit bids.”

Since Financial Adviser began its campaign last month, a wave of advisers have come forward to claim that some estate agents hold offers at bay unless buyers provide excessive financial information or use an in-house mortgage broker.

Adviser view

Andrew Montlake, director of London-based mortgage broker Coreco, said: “Many estate agents do abide by the industry’s voluntary code but I cannot help wonder whether some of the bad practices reported by Financial Adviser would go away if regulation of the sector had real teeth.”