Estate agents will have to be professionally qualified in future and reveal referral fees

Estate agents will in future have to hold a professional qualification and also be transparent about the referral fees they receive.

The National Trading Standards Estate Agency Team (NTSEAT) will be tasked with proactively monitoring the disclosure of referral fees, and the Government will also look more closely at the case for banning referral fees.

The measures were announced yesterday morning – just after midnight on Sunday, a timing cynics say is designed to put a housing minister on the Andrew Marr show.

Despite much rhetoric yesterday, the Government has, however, stopped short of trying to use the law to prevent fall-throughs.

There is to be no introduction of mandatory binding offers, and no legal clampdown on gazumping or gazundering, but agents will be encouraged to use voluntary “reservation agreements”.

There will now be “behavioural insight research” carried out into reservation agreements, with the aim of trialling them by the end of this year.

Home Information Packs will not be reintroduced – but the Government says: “Our long-term vision is of a system where all sellers provide search information up front”, and it also says it wants to explore the possibility of a ‘property log book’.

An industry group, to be formed by the housing minister, will look into all the proposals.

There is to be yet another consultation, this time specifically on the new mandatory qualification for estate agents, with housing secretary of state Sajid Javid seemingly convinced that someone’s ability to pass an exam will protect the public from rogues.

Under the raft of changes announced yesterday, managing agents and freeholders will also have to provide up-to-date leasehold information for a set fee and to an agreed timetable.

Industry regulator NTSEAT will be “strengthened” so that it can carry out more enforcement activity, including banning estate agents.

Local authorities will also be affected, with a new timeline of just ten days in which to turn round searches.

The announcement affecting sales and leasehold agents comes exactly one week after the one issued just after midnight on Easter Sunday, affecting letting agents.

While there is very little detail in the latest announcement, the Government said that according to its own research, over six out of ten buyers and sellers have experienced stress when moving house, and about a quarter of sellers would use a different estate agent in future.

It said that unnecessary financial and emotion stress contributed to over a quarter of sales falling through each year.

Javid said: “Buying a home is one of the biggest and most important purchases someone will make in their life.

“But for far too long buyers and sellers have been trapped in a stressful system full of delays and uncertainty.

“So we’re going to put the consumers back in the driving seat. We will require estate agents to hold a qualification so that people are no longer at risk from a minority of ‘rogue agents’ and can trust the process when buying or selling their home.”

The government statement also quoted NAEA boss Mark Hayward who said: “We particularly welcome the commitment to further regulation.

“We have long argued that estate agents should be recognised as professionals, this is an important step towards achieving this, and we look forward to working with the Government.

“Currently, anyone can practise as an estate agent. The changes set out will professionalise the sector, creating a more trustworthy and reliable industry which will be better held to account.”

Yesterday’s statement gave no details as to what the likely timeframe will be.

The announcement followed last autumn’s call for evidence into the home buying and selling process, and was accompanied by a summary of responses to that as well as the Government’s own response.

Over 1,200 responses were received, mostly (932) described as being from the public.

The first link below is to the general announcement and the second to the responses document.

https://www.gov.uk/government/news/government-to-professionalise-the-estate-agent-market

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/697939/Improving_the_home_buying_and_selling_process_response.pdf

 

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31 Comments

  1. Robert May

    Will MP’s have to be professionally qualified too?

    I went to see an MP once, half way through explaining a 4 weekly housing benefit, with monthly top up, 6 weeks in arrears tenant’s statement that he expected all benefits tenants to understand and cope with but which explained how universal credit would open up about 100,000 tenancies for the social sector with I got “sorry you’ve lost me!” Seems you can govern the country, shape legislation without a basic qualification in anything at all and the rest of us are left to cope with the fallout.

    The housing crisis isn’t  going to be fixed by fixing and fiddling about with the wrong things. Things only get fixed when the problem is diagnosed and understood and this story says it isn’t.

     

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  2. ArthurHouse02

    Firstly i think it is a tremendous thumbs up to our industry that according to this research 40% of people who move home dont suffer any stress at all, and 75% of sellers would use the same estate agent again. This says a hell of a lot about the high quality of estate agents.

    Having some sort of “qualification” is not going to weed any of the dross out of our industry, everyone who drives a car had to pass a driving test and look how many awful drivers there are!

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    1. MrLister

      75% of sellers happy to use their agent again is not an impressive figure at all.

      So one in every four sellers are unhappy enough with their agent that they wouldn’t use them again. If these figures are to be believed then we have a big problem with how sellers feel about out levels of customer service. We spend a fair bit of time bashing “online” agents when clearly our own house isn’t in order. I currently have 44 sales in my pipeline. According to this report 11 won’t use me again. These figures are a poor reflection of the wonderful benefits of the full service agent that we’re always banging on about. We knock the likes of PB when actually the service we offer obviously isn’t up to scratch.

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      1. Born Free 58

        Mr Lister

        I have read everyone’s comments on this site for quite a while now. It is hard to believe that a full service agent would post something like this.

        If you don’t believe wholeheartedly in what you do as an independent, then why are you a full service agent.

        If you did believe, why would you pass the comment about 11 people possibly not using you again. You would be making damned sure that everyone has a great service from you and that no-one would not consider using you again. You would also be shouting about it everywhere.

        I would suggest that many of the so called 25% relate to the same poor service agents, not an average of most full service agent’s stock.

        Are you sure you are not an undercover ‘online lister’ recruitment company?

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        1. MrLister

          If you don’t believe wholeheartedly in what you do as an independent, then why are you a full service agent.

          I do…not sure what would make you think I don’t!….and I’m quite sure that with the service I offer 99% of my clients would use me again. I’m just commenting on the fact that 25% wouldn’t use the same agent again as stated in the article above.

          My PB comment was simply because I that I think there’s a lot of bias nonsense written on here about them. I wouldn’t work for them and the model is not for me but I know a lot about them and find it frustrating that so much time is spent knocking them when clearly we should be concentrating on our own model.

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      2. ArthurHouse02

        To confirm Mr Lister, the above report does not single out full service or high street agents, it mentions estate agents in general so the onliners and everyone. I dont have any issue with exams and qualifications as long as they are thorough and meaningful. Pointless just setting this up as a tick box exercise.

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      3. CountryLass

        Mr Lister,

        I took it that 75% of all sellers would use the same Agent to sell again, not 75% of each Agents sellers would use them again. I tried two Agents to sell my home, and I probably wouldn’t use either of them again. The first one was atrocious, I went to them because I used to work with two of the people there, and I was doing the mortgage with them. The second one sold the property, but I don’t work there anymore. Good service, but I will probably use my current company to sell.

        Overall, I think that 75% is a good figure over an industry. For one office it isn’t good, you are right, but in an industry that we are all saying has rogues and con-men out there, its pretty positive!

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  3. EAMD172

    It’s just posturing. We can’t solve the real problem of stressful lengthy transactions so let’s make it LOOK like we are doing something.

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    1. Woodentop

      Congratulations on wining todays first prize for what this is all about. Its nothing more than tinkering. Professionally qualified will not stop dishonesty, fall through rates, bad surveys, lender’s decline, speed up conveyancing. It will not stop gazumping unless you reform the Estate Agency Act. It is nothing more than  political hogwash for the media. No government has found a solution for decades and the current chump in charge hasn’t a single clue.

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  4. EAMD172

    I like to think that my company is a very professional set up with strong morals and a qualification will not make any difference to the morals of any of the staff here.

    The stress is caused by a seller or buyer telling lies, or by a poor title that takes time and money to sort out, or by a dreadful conveyancing clerk who doesn’t know how to sort out a problem or can’t be bothered, or by someone deciding to withdraw at the last minute, or by anyone in the chain not returning calls/emails to provide good quality information etc. etc.

    This is not going to change by making Estate Agents sit an exam.

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  5. Chris Wood

    Can’t happen a moment too soon, as long as enforcement is fair, thorough, proportionate and effective.

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    1. Woodentop

      Amend The Estate Agents Act is all that is needed.

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  6. MichaelDay

    Section 22 of the Estate Agents Act has remained unimplemented since 1979 by successive Governments. It requires a level of competency in order to trade. Many in our industry are probably unaware that this clause even exists given it is some 39 years old!

    No Government has ever introduced as they have preferred competition to competency in the market.

    One other key issue is that any change would almost certainly have to keep those that are already in, in and could only stop new entrants joining.

    The amount of banning orders under the Estate Agents Act has been tiny with policing generally reactive and weak.

    No real detail here – just puff and promises – who in an agency would need to be “qualified” – everyone or just employers, key employees etc.?

    I fully support greater transparency and more professionalism but, it could be argued, that the sanctions are already there – they are just not used effectively.

     

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  7. Pollard36

    Fundamentally, buying a house is stressful period. It isn’t about the skill of the agent (though they can make it easier), or anything other than the fact that a person is putting their life savings in to something and taking a risk (no matter how small in doing so). On top of this they are uprooting their families and sometimes jobs to facilitate this.

    Whilst I’m all for regulation to an extent, it is very naive to think that this will stop by having agents to be further accredited.

    The truth is that ministers don’t understand this as most were given their homes or purchased them with relative financial difficulty – that isn’t a shot or a swipe just fact. How can people so far removed from the ‘genuine’ buying process make these decisions?

    P

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  8. Chris Wood

    No system will ever be perfect however, when minimum standards are introduced, it stops the ‘agents’ who suddenly enter the market every time they believe that it is “easy money” requiring no skill.

    Effective regulation and enforcement of legislation (utterly absent at present) will slowly remove or educate the cowboys and the “I’ve been doing this for years” (in blissful ignorance of the law) brigade.

    What should be left, in the main, will be a much smaller cadre of informed, knowledgeable agents able to charge a fair fee in healthy competition with other, professional, agents. A healthy, properly regulated and fair market that works in the interests of both consumers and agents.

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    1. AgencyInsider

      Not in any way disagreeing with you Chris but can you identify ANY consumer market that is ‘healthy, properly regulated and fair’? I am not at all sure such a thing exists.

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      1. AgentV

        The main problem is that doing underhand things in most markets is often more profitable, such as taking backhanders to secure deals for instance. Whoever polices to stop that happening?

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    2. Woodentop

      Do we not already have minimum standards!!!!!!!!!!!!!!!! The only advantge of having the need for qualifications is to prevent anyone from being in estate agency without it. As to standards of competence, that is something that can be improved with qualifications and nothing more.

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  9. smile please

    This is not good news.

    We will be forced to take never ending expensive exams that could put some smaller agencies out of business.

    Also this now means increased PI on top of CMP no doubt now we are seen as a professional regulated industry Redress will increase. Oh and we have the abolishment of Tenant fees.

    Its a joke, the government will not invest in social housing and are now looking to tax the ar*e out of hard working agents by creating an industry within an industry.

    Anyone says this is a good idea is living in cloud cuckoo land. Look how restrictive solicitors, and Financial Advisers are. We will become order takers with small margins and the public will suffer. All because the Torys think comrade Corbyn is a threat to them.

    I’m off to do a Cyberduck and retreat to a dark room while you all tell me i’m wrong.

     

     

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    1. JWVW

      I tend to agree. This Tory Government promised to free business of the heaps of red tape the Labour Government had imposed, yet all the Tories have done is strangle us in ever more red tape.

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      1. smile please

        Its all to do with pathetic millenials and spongers who have fallen for Corbyn’s “Everything should be free” mentality. No thought to where the money comes from to provide all this free stuff.
        The Torys are so retarded at the moment that instead of coming out with a coherent message themselves that will appeal to true fiscal wise individuals they have decided to copy and try and beat the Corbynites at their own game.
        Which they will not as at least Corbyn is being authentic and Torys are just trying to copy so will not win the votes. Look a Trump in my opinion he should be certified or up on numerous criminal charges BUT because he is authentic and the public want this he is the most powerful man in the world, he can say or do what he likes.
        May and the Torys need a clear voice, in the past they have appealed to savy (if not somtimes seen as heartless) individuals. Where does this leave them now? – More importantly its co*king up my retirment plan 😉 

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        1. Woodentop

          Politicians seem to believe they need to be liberal minded that appeals without any flak being lobbed in their direction, which then ensues with media arrogance nailing them to the floor to be trampled. No guts is the problem with politicians today. As for the Housing Minister … what a joke and the department is run by civil servants who have been in the job far too long and the real minds behind everything, having been wined and dined by lobbyists of socialist minority persuasion. Boris gets my vote, if nothing else he isn’t afraid to speak his mind.

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    2. CountryLass

      I think that an exam is a good idea to make sure that everyone involved in Estate Agency is up to speed on the legal side of it. I suspect you are right about the never-ending expensive exams, which is a shame as something like this would work to regulate the sales and lettings industry, which I think we would all agree is needed to get rid of the cowboys.

      It’s another one of those ‘great in theory, **** in reality’ ideas. IF it were properly managed and monitored then it could be what the industry needs. Sadly, once politicians stick their oar in, it will end up being an expensive waste of time with no benefit to the industry or the consumer.

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      1. smile please

        You are of course right.

        As said above, in other stories and i the past. We already have rules and regulations they just need to be enforced.

        Lets says we do all get qualified, who will police this? how will they police this? how will they fund this?

        I will tell you how, they will bring a levie in that we all need to pay to continue trading as estate agents, the exam is just the first step. Wake up people, speak to your independent mortgage brokers, see how many of them are truly independent and directly authorised (not many). They are not because the cost is too high, so what the answer? – You work under a network who charge you monthly subscription OR a % of you t/o

        Seriously you will all be crying about this in 5 years (if you are still trading).

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  10. revilo

    Over the years I have had the ‘pleasure’ of communicating with several Housing Minsters (not the current one fortunately) and I have yet to find one who actually fully understands the process.

    I’m all for raising standards and professionalism but this really is getting ridiculous..

    “voluntary “reservation” agreements”?

    “Our long-term vision is of a system where all sellers provide search information up front”, and it also says it wants to explore the possibility of a ‘property log book’.

    An industry group, to be formed by the housing minister, will look into all the proposals.”

    Come on! How many times before have we done this?

    I’m off to join smile please..

    Please send Gin…

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  11. Richard Copus

    Robert, MPs have to represent their constituents on just about every matter imaginable so whatever professional qualification they have is going to be of minimum benefit.  I agree not the same with government ministers who should have had personal experience of their portfolios, but rarely have and should have to prove competence for their ministerial posts!

    Estate agents are meant to be property professionals and like other people giving professional advice who are expected to be and are qualified by examination, more than half of us do not have a relevant  –  or sometimes any  –  exam to our name.  What is the big deal about having to take a few exams to prove you have a competent brain?  The qualifications proposed are of a similar standard to the current MNAEA requirements which are A level to first year university grade and you don’t have to have the mind of a rocket scientist to pass them.

    Also, make lock in/lock out agreements mandatory on payment of a small deposit on both sides to sit in a stakeholders’ account until exchange.  That will wipe out gazumping and gazundering overnight.

     

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    1. Woodentop

      In simple terms I take instruction, photograph, measurements, print details, send in post and internet, make viewing, take offer, tell vendor who makes the decision, send notification of sale to four parties and watch to see what happens. Not rocket science that requiries a qualification. Training yes but as it is repetitive, shouldn’t take long to learn … so why do we have some pretty poor standards?  Pressure on poor management and operating systems, which should require qualification because of the heaps of rules and regulations. Staff …….. for some attitude, which no qualification will resolve? Just look at the quality of some in financial services and conveyancing with all the credentials!

       

      It dosen’t take long to digest the Property Ombudsman Code of Practice!!!

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    2. CountryLass

      I think one of the issues is that we are a professional industry, but most of our job is based on experience, local knowledge and people skills. I went to school with a chap who has exams and qualifications coming out of his ears, but the social skills of a concussed trout.
      From my memory of the NAEA exam, it featured heavily on building styles, roof joists and legal jargon. Not a fantastic help to persuading someone that they want to buy a house, or stopping them from panicking when the surveyor says to get extra checks. Or the searches come back as a flood risk as it is within a certain distance or a river (ignoring the fact that most of that distance is up a hill, and if that house is ever flooded then the entire town at the bottom of the hill is under 12 foot of water…)
      As for the ‘lock-in’ agreement, what would constitue someone losing their deposit? Pulling out due to a bad survey? Mortgage application failure? Relationship breakdown? Job loss?

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    3. Robert May

      I have  ISVA qualifications and know how hard it is to fit study into a working week, that was 32 years ago, I can’t imagine even wanting to read the course prospectus now.

      Are 20 and 30 year agency experience principals going to be required to sit examinations to prove their experience and professionalism?  In these more enlightened times where academic qualifications are proven not to be appropriate for all individuals and all industries, practical apprenticeships have found favour once again. Doesn’t the old tried and tested 10 year requirement to become a Fellow sound a far more workable way forward? An agent who lasts 10 years in this very competitive business is doing most things right and most things well.

      Selling property requires  a professional and ethical approach and already carries precedent defined duties to an agent’s clients. Examination passes won’t enforce or reinforce the contractual duties already placed on agents.

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      1. smile please

        Same thing happened in the Financial Services world you use to just need FPC 1,2,3, and you could advise on all manner of products.

        You then started to need bridge papers and individual exams to be able to advise.

        As such hundreds / thousands of advisers left the industry as they did not want to spend the time doing the exams (they knew it would never end) – As such we now have a shortage of true independent financial advisers.

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  12. Estate_Agent_Memes

    Purple Bricks won’t be happy with this – their referral fees from conveyancers are MASSIVE.  Also if their LPE’s are self-employed will they have to disclose what they get paid, and when they get paid,  from PB…?

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