Rule change will affect Estate Agents

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Home sellers will more easily be able to avoid handing over thousands in fees to estate agents under Government proposals to remove restrictions on websites that allow vendors to advertise direct to the public.

The changes could loosen the stranglehold that estate agents enjoy over property sales, and drive down fees that typically account for about 2 per cent of a property’s sale price.

The Department for Business, Innovations and Skills (BIS) today proposed amendments to the Estate Agents Act so that web-based ‘intermediaries’ – which allow sellers to advertise their home online direct to buyers – will no longer be treated in the same way as estate agents.

 

These intermediaries do not perform any other role during the sales process, such as giving advice, yet the Act as it stands treats them as agents and requires them to perform the same checks on properties that agents must.

Intermediaries have found it hard to grow because of the extra costs placed upon them from checking the accuracy of property listings. Crucially, they have found it hard to gain a footing with the powerful property web portals, Zoopla, Findaproperty and Rightmove which are paid by estate agents to aggregate listings and provide house hunters with a one-stop shop to search for properties.

Jo Swinson, the new consumer affairs minister, said: ‘These intermediaries help buyers and sellers contact each other at a low cost, but don’t engage in other estate agent activities, so it’s unfair to expect them to go out and check all the property details of all the sellers on their websites.

‘Reducing the regulations for these businesses will open up the market and increase choices for consumers looking to save costs when buying or selling a property.’

The intermediaries allow property sellers to advertise their homes online for a fixed fee far below the sums scooped up by estate agents via commission.

This compares to commission to estate agents that can run to many thousands of pounds. A recent Which? report found estate agent fees range from 0.75 per cent to 2.5 per cent, with 1.8 per cent the average fee. Selling a £300,000 property on this basis would cost £5,400.

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