Gazumping to be banned in shake-up
THE Government will crack down on gazumping with new measures targeting the estate agency industry and make the process of buying property easier for consumers.
It announced a raft of changes to overhaul the largely unregulated sector, which has long suffered from being seen as anti-consumer.
The plans include encouraging the use of voluntary reservation agreements to stop sales from falling through and ending the practice of gazumping, where sellers accept higher offers following an agreement to sell.
The Government also plans to get rid of “rogue agents” by ensuring that all estate agents have a professional qualification. It will also make it a requirement for these companies to be transparent about whether they receive fees for referring clients to mortgage brokers, surveyors or solicitors.
Sajid Javid, the Secretary of State for Housing, said: “Buying a home is one of the 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.”
Research carried out by the Government found that more than six in 10 people who bought or sold property have experienced stress due to delays in the property transaction process.
The measures come from a consultation held last year. More extreme proposals, such as creating financial penalties for buyers who pull out of purchases and cause chains to collapse, are not included in the new plans.
Some agents choose to be members of bodies such as the National Association of Estate Agents or the Property Ombudsman. However, these organisations lack power, and there are no requirements for estate agents to have a formal training or certification, unlike in the US. It is unclear what kind of qualification the Government will mandate, and it will hold another consultation to work out how estate agents can be brought up to standard like conveyancers, solicitors and surveyors.
Russell Quirk, chief executive of online estate agency Emoov, said: “This is really great news. The industry and Government have talked for a long time to clean up house buying. If you add both speed and certainty to the process, there will be fewer transactions falling through, less wasted money, and less consumer stress.”
He added: “For far too long, it has got away with being almost entirely unregulated. How can it be that financial advisers dealing with the loan for the property are vetted, but the people dealing with the asset itself are not overseen or licensed.”
This is not the first measure to hit the industry. Last year, the Chancellor announced a ban on letting fees which is due to start next year.
Becky Fatemi, managing director of London estate agency Rokstone, said: “Rogue agents are small in number, but sadly the behaviour of ‘wide boys’ gives the industry a bad reputation.”
As part of the Government’s plan to protect leaseholders, it also said it would require managing agents and freeholders to provide lease information and a fee timetable in order to stop freeholders wielding power over their lessees.