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I had planned to write a piece on the Renters’ Reform Bill, which I had expected – and was genuinely hoping – would pass into law before Parliament’s extended summer recess.
However, as former prime minister Harold McMillian ruefully quipped: “Events, dear boy, events.” I could not stand by and ignore the storm that blew up following a hard-hittingPanorama that revealed that conditional selling, used to boost income from referral fees, is still rife in the property market. It picked on two well-known national brands as part of their exposé.
No doubt, a good few other businesses exhaled a collective sigh of relief that they were not named and shamed, but undoubtedly have their crisis PR teams on standby in case further revelations come out in the big media as a result.
Many other agents will be at pains to demonstrate that they should not be tarred by the same brush. However, respected EYE contributor, Chris Watkins, has come out and pilloried those who have jumped on the bandwagon and who, in a few days or weeks’ time, will likely slip back into their old habits of portal juggling, property puffery and price overvaluation, as the overheated competition shows no signs of cooling.
This is without even mentioning the ongoing struggles the industry faces with material information. It will be back to business as usual, and we will soon see who falls off the waggon.
EYE also expressed its surprise that no one from the sector was available to make a comment. While many are likely still considering their positions (and again briefing their PR crisis teams), I felt compelled to speak up from the get-go.
Don’t get me wrong, the case against the two named agents is not yet proven. Clever though the undercover infiltration by the journalist and the witness interviews were, a lot gets left on the cutting room floor. National Trading Standards rightly pointed out that these allegations require thorough investigation. Still, mud sticks, and we would be fooling ourselves to pretend that this is not a problem.
That is why I spoke up. This is not a bandwagon I just jumped on. It is one I have been trying to steer for some time, albeit not as successfully as I would have hoped.
Cast your mind back to 2017, when the government undertook a call for evidence on the buying and selling market. One of the concerns that came out of this was referral fees.
Alongside RICS, Propertymark, TPO and Guild of Property Professionals, I joined a working group convened by NTSEAT to look at whether these kickbacks should be banned.
The result of our deliberations was a set of guidance requiring agents to disclose referral fees up front. There was even a pro forma template for agents to use.
TPO and de facto Propertymark, also updated their code of practice accordingly, and National Trading Standards warnedthat agents were in the last chance saloon. Failure to comply could lead to hefty fines and a possible future prohibition on the fees could be on the cards.
Roll on a year, and a follow-up report was published that showed there had been a positive effect. It was understood that this secondary market was seen as important to the sector and often benefited the consumer. However, its recommendation was transparency and disclosure should be incorporated into legislation. It also wanted to see a concerted publicity and awareness drive amongst the public, enhanced guidance and greater enforcement.
A lot of water passed under the bridge and fast forward to 2022. The housing minister at the time revealed there were no plans for putting mandatory declaration of charges and commissions in to law, asserting that existing provisions were sufficient. This is the link to the minister’s answer in 2022: https://questions-statements.parliament.uk/written-questions/detail/2022-05-16/2328/
We all got back to other important things and to be fair, at Property Redress, we were not receiving many complaints on the matter, nor were there many enforcement cases or prosecutions. It is now clear that the practice was still going on and as the market changed, agents got cute in how they hid what they were doing. Consumers remained in the dark so of course, they did not complain or refer the perpetrators to the authorities.
We must now admit, that having codes and guidance is evidently not working. Voluntary memberships, even with reputable bodies like Propertymark, are not a barrier against bad practices. While the redress scheme, ombudsman and enforcement agencies are picking up the pieces, it is not enough. What is need is regulation and stronger legislation.
The government needs to listen to groups such as HomeOwners Alliance led by Paula Higgins, heed campaigns like that of FT Adviser calling for tighter laws, and act now by speeding up the introduction of ROPA, the Regulation of Property Agents.
They should also look at the reforms proposed by Home Buying & Selling Council led by Bethany De MontjoieRudolf and Kate Faulkner, to improve the overall experience of the buying and selling process.
It has been a long journey to get to this stage, and this latest reputational blow to the sector will not necessarily disappear. Indeed, I call on my colleagues in the industry, if you have not done so already, to break your silence. Let us push for the reforms and changes many of us have been championing for years, the ones we need, and the ones the best of us crave and will embrace willingly.
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#long #winding #road #estate #agency #regulation
