One of the country’s best known entrepreneurs has warned that the Government’s attempts to ‘professionalise’ estate agency will reduce competition and make it more expensive for consumers.
Luke Johnson, whose previous business ventures include Pizza Express and the Ivy, also said that the move would play into the hands of trade bodies who “have been pressing to make the industry more of a cartel for years”.
Writing in his Sunday Times column under the headline ‘Beware the estate agents calling for even more red tape’, Johnson slates plans to introduce new qualifications before agents are allowed to sell or let property.
He said: “Nowhere else in Europe do they feel the need to oblige individuals who sell property to be licensed by the government.”
He said that in America, realtors do have to be licensed.
Johnson said that having had personal experience of buying and selling homes in the US, “I can confirm that the service is no more professional than in Britain but the cost is massively higher”.
Nor does Johnson believe that the lettings industry will be improved by the new rules.
He said: “I’ve found that awful managing agents are often members of the Royal Institution of Chartered Surveyors or the National Association of Estate Agents.
“Having such letters after their names makes no difference when it comes to disreputable behaviour.”
Johnson also disputes whether estate agents are the cause of all ills in the house-buying process, saying that lawyers are as likely to be to blame, along with planning, searches and the Land Registry – all controlled by the Government.
However, he goes on: “Of course, the various trade bodies are delighted at the news.”
He said that they have “vested interests” and that “vested interests love more regulation because it keeps others out”.
He said: “I do not understand how a Conservative government, which is meant to promote business and free markets, has allowed itself to be captured by certain trade groups who want to minimise competition and boost their fees.”
Johnson adds that there will be unintended consequences that will cause more harm than the problem that was designed to be improved.
He says that one consequence of the introduction of licensing could be that online agencies could be prevented from functioning and many would close down: “This reduction in choice must be against the public interest and should be resisted by politicians.”
Licensing, says Johnson, supposedly protects consumers from unscrupulous or incompetent practitioners.
In practice, such rules entrench existing operators, exclude new entrants, and increase bureaucracy and cost, while offering no material benefit.
Never heard of the guy before today but he talks a lot of sense.
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Agreed, Smile. This bit in particular.
“Johnson adds that there will be unintended consequences that will cause more harm than the problem that was designed to be improved.”
Reminds me of this…
https://en.wikipedia.org/wiki/Cobra_effect
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It is already a cartel. Look at the property portals, surveying companies and how landregs sold prices dictates house prices.
Last year I was told the industry is trying to get rid of small landlords. When I asked what a small landlord was, I was told- anyone with under a 100 houses. This move will lead to total manupilation of this industry
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Clearly this gentleman travels widely….
“There is a wide range of such models used in the real estate sector, the profession is considered to be regulated within the meaning of Article 3(1)(a) of Directive 2005/36/EC in 18 countries:, Belgium, Denmark, Ireland, Spain, France, Croatia, Italy, Cyprus, Luxembourg, Hungary, Austria, Slovenia, Slovakia, Finland, Sweden, Iceland, Norway, Switzerland.” Source: https://ec.europa.eu/docsroom/documents/15486/attachments/1/translations/en/renditions/native
Currently you need a license to flip burgers but not value, market, negotiate on and advise on, the sale of someone’s (usually) largest asset and family home. Madness.
What else’s do we need a license for in the UK? There’s an app for that. Enjoy: https://www.gov.uk/licence-finder
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I have been involved in house purchases in many of those countries including the US …. absolute nightmare and rife with corruption.
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Of course there should be regulation. And better regulation.
Conveyancers, surveyors, mortgage advisers, mortgage lenders, but not estate agents?
Keep standards as high as possible throughout the home moving industry, the paying public deserve it.
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Despite being regulated mortgage brokers abused self cert mortgages so much they are no longer available.
Despite being regulated financial advisers abused endowments.
Despite being regulated banks abused PPI
I could go on but I think you get the gist.
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You forgot Dr Shipman but I bet you wouldn’t trust your loved ones health to a quack? 😉
Did you drive to work this morning or take the train?
As you say, licenses are not a guarantee of good behaviour but can help ensure that there is a minimum standard of knowledge and skill at the outset. CPD can be required to maintain standards and spot checks can help ensure compliance is maintained.
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All worthless if not policed. There is already enough regulation to chase agents, that are not enforced. The old chestnut of minimum standards cannot be argued but it turns into costly and time consuming exercise and it is mind set that makes people lazy or dishonest, licencing is as red herring.
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I think we agree on more than we disagree. If there is little to no enforcement, qualifications and minimum standards etc are a waste of time. The public (and law-abiding agents alike) remain unprotected.
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Think we also tend to agree on most Chris but think we need to agree to disagree on this one.
From working in a regulated industry in the past i can assure you it will not lead to increased standards and will only hurt small business owners.
We have rules that if followed will create a legal and fair playing field. How do you think they will police a regulated industry? £££££ money will not appear from nowhere. Also as above does not matter how many rules you put in place people will still break them.
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FYI – CPD – All the individuals do at the end of the month is highlight a couple of articles from industry newspapers or websites they have not even read.
Agin ask yourself how the CPD is policed …. 😉
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Agree on the CPD angle re NAEA. I once claimed I had spent ten days gazing at my navel contemplating the true meaning of the Property Misdescriptions Act to highlight how ridiculous the rules on CPD were at that point within the NAEA.
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Being qualified and licensed in the industry your are in, is a good thing.
As I said in one of my previous posts, it should also be disclosed to the consumer how much experience you have.
Anyone with less than 3 years experience should be classed as a trainee and tiered accordingly.
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Why three years. Estate agency isn’t that much of a no-brainer to warrant that length of time and sure to scare off many good people wanting to come into the industry.
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Sajid Javid, Home Secretary – experience, zero – training, one day
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I know people in the industry 20 years i would not trust them to sell my property!
The ‘Journeyman’ estate agent the industry is littered with.
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Its not about licensing, regulation, red tape its about putting things into practice. I agree that qualifying someone to do a particular job is important and i have no issue with having to pass an exam or whatever. However it will all be meaningless if trading standards or whoever do not punish those who trade illegally. It is the law that you must belong to a redress scheme, hundreds do not and they are still allowed to trade. Estate agents get expelled from ombudsman schemes and are not closed down.
There is no point in paying hundreds or thousands of pounds if we will still be competing with those who are allowed to trade when they have broken the law.
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dom-boy, Twitter, Saturday – Trolling a reTweeted PurpleBricks complaint:
“Ahh here comes the high street mafia, let’s not worry about the conditional selling or the cartel agreements, let’s hassle and pester a CS rep on twitter. #yawn”
dom-boy, today, EYE – on an article with “cartel” in the title:
BOT-ALL. Not a squeak. #Funny_That…
Good to see that the “high street mafia” give enough of a fuppenny to debate the issue – maybe we will all leave the dom’n’ducky duo to quack away ’til their hearts are content on their own thread below this one!
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Have never seen him post on any thread that does not involve the country’s biggest #£1000cointoss operator.
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He said: “I’ve found that awful managing agents are often members of the Royal Institution of Chartered Surveyors or the National Association of Estate Agents. Oh so very true, the list is long and the real bad ones play on their status and qualifications.
He said: “I do not understand how a Conservative government, which is meant to promote business and free markets, has allowed itself to be captured by certain trade groups who want to minimise competition and boost their fees.” That’s another long list and the Conservatives are no longer recognisable?
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“and the real bad ones play on their status and qualifications”
Absolutely Woodentop
I’m all for standards and doing it correctly but what sort of qualifications? Lots of letters after their name? Hmmm?
Last year I dealt with a person, a National Sales ‘manager’ of an allegedly very ‘smart’ firm and all she did was forward the sellers emails to the buyer and the buyers emails to the seller, including third party ‘government department’ correspondence, email addresses etc etc. Absolutely appalling…. I have been quite shocked, as have clients mixed up in the middle of this.
If she worked for me she would now be unemployed..
At the other end of the scale I have had a couple of ‘qualified’ trainees who didn’t have one iota of common sense between them. They may have been ‘qualified’ but were not ‘trainable’ and were no more use to me than a chocolate teapot.
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I think the one thing that we all agree on is that there needs to be something to protect those of us who follow the rules and regulations, and something to punish those who don’t.
It doesn’t really matter if we call it ‘licensing’ or ‘regulation’ or qualification’ to a certain degree, those are just different treatments for the infection that will kill us.
We need a doctor that will look at the symptoms and discuss the treatment with us, not witter on about and ingrowing toe-nail on the reasonably healthy foot they are about to chop off.
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Point well made.
Personally i feel we have ample rules to be abided by, we just need them inforced.
Question is how.
The easiest solution is continue to allow us to self regulate but if we find a competitor is breaking the rules when reported it must be taken seriously. If this is down to finance then we need a not for profits body overseeing this with funding being paid by the agents.
The problem with bringing in regulation VIA NAEA / Property Ombudsman they are a for profit organisation.
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Exactly. I think if every branch contributed £1-£2 a month then, according to an article today saying that there are 16,000 branches in the country, that would be enough to set up a not-for profit ombudsman. Then the money from fines given to those who break the rules will be used to pursue other rule-breakers, and at the end of each financial year, any money left over, once a certain percentage has been put into a ring-fenced account for lean years, can be repaid to agents with no upheld complaints against them. So even though every year each branch would be paying £12-£24 a year still, it would hopefully be building up a decent cash-pot so that it can take on the big boys, or fight for us when needed without having to massively increase contributions each year. And I think that doing it as a branch rather than a company means that each office will be responsible for it’s own complaints and making sure that it follows regulations. Plus, the one-man-band will be on the same footing as the corporates.
Ok, so you may only get £5 back in a year, but the industry would be better policed, better regulated, more strictly enforced and logically buyers, seller, landlords and tenants would all get a better service!
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Its far to a perfect idea which is why it will never happen 😉
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Consumers aren’t lobbying for regulation, they just want to move house with as little hassle as possible. Improvements to the way searches are handled by Local Authorities alone could make consumers happier. If you added to that better holistic service by conveyancers they’d be happier still.
When was the last time you were asked if you were with the NAEA? Does the consumer even know what this means?
It’s those who stand to gain who want regulation as it will line the pockets of quangos. Wait and see subs to the NAEA monkeys going up.
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This guy/woman gets it!
Baffles me why others do not.
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It is good news for the Lettings industry that regulation is on its way. Too many dodgy operators being allowed to continue for too long.
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One agent in my town set up a business after being a restaurant manager. A previous client referred to his firm as a “ship of fools” brilliant.
The point is; no regulation will stop the wide boys and charlatans. Free trade and good business practise will determine the restaurant managers future business success.
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