The subject of estate agency licensing comes up periodically and it just has once again.
The Office of Fair Trading reported in February of this year that they did not consider it appropriate to recommend to Government that property agents be licensed.
In 2008 Sir Bryan Carsberg, formerly head of the OFT, published a paper that took the opposite stance. And Sir Bryan as the recently recruited President of the E-Homebuying Forum, a medium that promotes property selling reform, was today quoted as conceding that the new coalition Government is unlikely to introduce it.
I’m not one for heavy regulation. Markets should certainly look after themselves without much, if any, intervention. Customers should be the judge when it comes to deciding on where to spend their money and service, quality and value should prevail in that choice as an informed one. Playing fields should be level and all that. The quest for reputation and recommendation should be sufficient enough for commerce to act responsibly. Etc.
But we’re not talking about buying a bag of fruit from the stall in the High Street here. Or booking a two week galavant to Tenerife even.
Selling a property is…
1. something that involves an average of almost a quarter of a million pounds a go
4. liable to cost you a small fortune in wasted costs if things go wrong
5. a thing you might only do a very few times in your life
6. the subject of little compulsory oversight
7. excepting barely two legislative Acts, neither of which have been much updated for twenty years
8. already populated by more than its fair share of cowboys and chancers
9. increasingly resulting in huge rises in consumer complaints made to the Property Ombudsman, itself a body that until 2007 was purely voluntary in membership and even now can only order compensation against agents and generally does so of very small value. Complaints are up 43% so far this year versus the last three months of 2009, so the scheme is hardly a deterrent it seems. There is no exam required to join. No professional questions at all actually.
10. Licensable (in so far as the agent involved) in the United States, France, Slovenia, Portugal, Israel, Japan, New Zealand, Panama… You get the picture.
Consumers need to know that the agent they choose is competent. A standard of industry awareness and understanding as part of an agent’s licence approval would make that competence a little more likely to be stumbled upon.
Proper redress whereby an agent’s livelihood were on the line, not just a knuckle rapping by industry ‘elders’ in a smoke filled room might concentrate the property business’s sense of client obligation.
Choosing an agent based on their PR and marketing and hoping for the best once tied into a lengthy sole agency agreement, is not good enough when hundreds of thousands of pounds are in question. As is your sanity.
Estate agency has no entry standard. You need not be qualified, experienced, knowledgeable, tested or in any way established as fit to carry out the role. You may be a car mechanic one day and decide to be an estate agent the next.
Some similar businesses by contrast are regulated in macro detail. The financial services industry as an example.
Energy Assessors have to be qualified. Conveyancers are licensed and qualified. Mortgage brokers can barely tell you their name without recording the fact that you gave them permission to and they are regularly mystery shopped by the FSA to keep them in check.
You cannot be a scaffolder on the Tuesday and a policeman on the Wednesday.
Accountants are regulated. As are solicitors. And publicans. And you even need a licence to fish and to sell dead birds or to be a bouncer.
Property transactions are simply of too high a value to let Tom, Dick and Harry and Co loose without a form of quality control.
It’s not just the shenanigans that go on that make this issue an important one to address. In fact more so it’s the distinct lack of knowledge of the industry and its albeit flimsy legislation that necessitates that a measure must be introduced to raise standards.
Our industry just does not have the will nor the public the clout nor the frequency of contact to make those standards raise by way of market forces and self-regulation alone. Ask most agents if they favour licensing and, quick as a flash, they’ll say no. After all, why would you put yourself under scrutiny if it could be avoided?
Quiz many estate agents though on what they must do when receiving an offer from a prospective purchaser? Or what some of the prescribed matters within the Property Misdescriptions Act are? Or what a ‘connected person’ is? Or what must be explained in a sole agency contract?
Honestly. The majority would not have a clue. And that’s just not good enough.