Opinion piece: Buckle up, we’re going to be experiencing some turbulence

It’s that time of year when our thoughts turn towards summer holidays with travel to warmer climates, freedom and a break from damp mornings, train malfunctions and buyers changing their minds because, well, just because.

Of course, all the excited anticipation of the holiday is somewhat tempered by the pilot’s announcement on first boarding the plane that “in the event of an emergency, you’ll need to adopt the brace position”.

Which is timely advice for agents right now with the latest announcement from the Housing Secretary Sajid Javid, who seems intent of ruining any agent’s carefree holiday plans.

Following the now-established government line of announcing housing changes on a Sunday so a minister can appear on the Andrew Marr show and upset people’s weekends, their intentions are clear.

Given that the first two items in the press release insist that agents “must be transparent about fees they receive from solicitors” and “hold a professional qualification” it is obvious who is the focus of their attention with this news.

We’ve always been very open about transparency and whilst we agree that reasonable fees are part of any recommended sales referral system based on merit, we think the Government might have a point here.

The motivation for using referral fees and their proportion of the overall cost seems to have got out of hand. When we talk to agents who apologetically tell us that “we must recommend the SweetAndLovelyLegalMovingServices panel, although our clients complain about poor service, we can’t get hold of anyone and we waste hours chasing them, my management team insists we use them for the referral fee”, something is definitely amiss.

That “something” is bribery, as defined under the Bribery Act 2010.

We’re waiting for the wording to be defined, as it’s not clear what “transparency about fees” actually means in a practical sense. However, the Government has signalled its intent that it happens, by confirming they will be “strengthening” the National Trading Standards Estate Agency team (who knew such a specifically-targeted elite task force even existed?) to carry out more enforcement activity including the banning of estate agents who do not comply.

It does sound like bad news for those agents who have taken the advice to “drink the KoolAid” and maximise revenues by using panel managers to increase their revenue. We’ve experienced opinions on both sides on this issue.

An owner of a five-office agency simply did not believe that the choice of lawyer can impact the speed of a chain transaction and was happy to take the panel manager’s bribe. However, another turned down the offer of “easy money of £400” (to quote the salesman) because his experience of the panelled lawyer was so poor he knew it would stop his deals going through.

To add insult to injury, not only has the Government insisted that agents declare referral fees, but in future, they will have to suffer the indignity of having to go through the rigmarole of getting a “professional qualification”. Whatever that is.

We’d love to say that this is a great idea, especially as most agents we talk to understand the importance of professionalism, but we are a little sceptical about what this means in reality.

Let’s think for a moment about those people that we deal with on a daily basis that have “professional qualifications”. Mr Javid gave us a clue in his latest press release.

Yes – solicitors.

If the Government believes that insisting agents becoming qualified will solve the problems of the property industry, then maybe they should get some feedback from them on their experiences of working with “professionally qualified” individuals.

Far be it from us to judge, but in our personal experience, and we are sure most agents would agree, the most common feedback we receive about solicitors is they can be “arrogant, rude and inefficient”. It’s not often we hear the word “professional” bandied about.

Which does beg the question about whether introducing qualifications for agents will have any impact on the professionalism and service levels they provide.

Most people in the industry we speak with, want to improve the house buying and selling process. We do believe that shining a light on the more corrupt aspects of the business which does impact service levels will really help, and the Government should be commended for listening to the industry feedback they received in their consultation.

However, with the Government putting estate agents fairly and squarely within their sights, let’s hope it won’t be necessary to use those yellow air supply masks that drop down from the roof in times of emergency.

* Peter Ambrose is founder of independent conveyancing firm The Partnership

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11 Comments

  1. Hillofwad71

    Peter seems to have a big chip on his shoulders about solicitors and “professional qualifications” yet is happy to promote his business with the title

    The Partnership -Property Solicitors

    https://thepartnershiplimited.com/the-team/ which includes staff happy to refer to themselves as solicitors.I guess they don’t see themselves as arrogant ,rude or inefficent

     

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    1. Peter Ambrose (The Partnership)

      Hi Hillofwad71
      You are rather missing the point I was trying to make.
      People act professionally due to their training, management and let’s face it, basic manners.
      A qualification does not ensure that.
      Yes we employ solicitors but they are professional and polite because that’s the sort of people we hire!
      Not sure I have a “chip on my shoulder” about solicitors, but we do deal with them on a daily basis, and yes, it is not always a pleasant experience.
      That doesn’t mean that they are all bad, evil people – just that a qualification doesn’t guarantee professionalism.
      Just read the Law Society Gazette and see how many are struck off each week!

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  2. Ric

    Great news and in other news…

    Can everyone pop to my crowdfunding page please.

    The business is to assist 20,000 estate agency companies have their staff become qualified.

    http://www.passwithease.com is the company.

    20,000 EA Companies with on average 4 staff so 80,000 exams at £500 is £40,000,000

    Bing bang bosh, I would like to raise £150,000,000 please. No catches and we will float it in December.

    Get in.

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    1. P-Daddy

      This is brilliant qualification…so easy to do and I have passed it already with distinction! Thanks Ric, its a nice touch that with each graduation certificate, you get a free testimonial from Sajid Javid. Don’t know what all the fuss is about

      I think this business has to be worth much more than £150,000,000 🙂

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  3. Philosopher2467

    As a lot of us know; it’s not just the ‘kick back’ it’s how the kickback is produced that I think requires highlighting.

    I don’t think many punters know that some conveyancer’s add an amount to each aspect of what they do. I suspect that a punter thinks a Local Search costs the same irrespective of which solicitor/conveyancer is used. Think again punter!! Similarly with Telegrapic transfers etc. Therefore a quote for conveyance feom the agents pet firm may not be all that different from anyone else and let’s face it, it’s more convenient to keep it under one roof (not)! Then there are the disbursements. Well; everyone has to pay them right? What is less clear is the ‘margin’ added to those disbursements to enhance the kick back. That’s where there needs to be a very close inspection by Trading Standards.

    How the blazes can it be fair and appropriate to have a simple conveyance transaction loaded by £400???? Someone explain that to me……please?

    This has the look of a PPI scandal about it.

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  4. chrisdaniel

    Its a similar position the Govt are adopting as Licensing for Landlords ( where they have to be accredited ) – but mashed-up for Estate Agents,  and …

    The flawed principle of if we make the majority legally compliant, that will stop Rogues –  Exactly How does that work !!!

    The Property Redress legislation was Full of Holes ( just like a lot of legislation,)  as it allows a Rogue Agent to  set up in the name of a different company and register with one of the schemes – how daft is that ?

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  5. scruffy

    I and many others have long been advocates of professional training/minimum qualifications and indeed I have ranted about referral fees (consequent conflicts of interest and poor service) for years, so these “original” ideas from Sajid Javid should be welcomed provided that effective measures can be phased in without undue harm to the sector. These do not have to be draconian.

    If such measures drive some players out, they probably should never have been allowed to play. Such has long been the unintended consequence of allowing anyone to set up overnight, presenting themselves as instant local experts.

    I feel that other sectors with vested interests could also help: insurers can play their part in the premiums paid for professional indemnity cover, where a lack of formal training to a minimum standard, such as provided by Propertymark, would hit their premiums accordingly with a specific levy.

    Access to the web portals could readily and formally be denied to those agents without evidence of such minimum standards of qualification and sufficient PI cover. Access to the market is vital through these portals so as gate-keepers (more like toll-booth operators) why not charge them with policing this element ?  It seems to me that a licence to trade in estate agency would create no harm other than to ensure that the public is better protected, whilst levelling the playing field for the established “professional” market, so they can focus their competitive efforts on service levels. Surely this is what the regulators and public are seeking  ?

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  6. Typhoon

    Not all agents are as stupid as you inferred  Mr Ambrose.

    There are some excellent conveyancing machines out there that provide outstanding service and give clients really good value for money whilst  paying  an introductory commission. And it’s declared at the outset to customers.

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    1. Woodentop

      That’s is how it should be? Any agent like to say they don’t know any agent who has been creaming the referral system for many years? Some big names come to mind.

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    2. Peter Ambrose (The Partnership)

      Hi Typhoon

      I never said ALL agents were stupid – indeed, quite the opposite – I showed that one owner believes the choice of lawyer doesn’t make a difference, and the other that it did.

      You are right that there are some excellent large companies doing good, efficient work out there, but I have evidence from people who come from smaller companies who are trying to mirror the efficiencies of the larger firms, of weak performance and inefficiencies.

      The issue is that negotiators are often obligated to refer companies who they KNOW give poor performance, by their management.

      It is the elephant in the room and no-one other than me seems brave enough to admit it publicly.

       

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  7. malcolmroy63

    So a rogue agent will not have the intelligence or ability to pass an exam?

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