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CMA issues warning to estate and lettings agents

The CMA has published an open letter to estate and lettings agents warning that they may be at risk of breaking competition law.

June 12, 2015

Estate and lettings agents

Why was the letter published?

The Competition and Markets Authority (CMA) recently fined an association of estate and lettings agents, 3 of its members and a newspaper publisher over £735,000 for agreeing to restrict the advertising of fees or discounts in a local newspaper.

In light of this, the CMA has sent warning letters to a number of estate and lettings agents that it has reasonable grounds for suspecting have been involved in anti-competitive agreements to restrict the advertising of fees.

The CMA has also received complaints that other associations of estate agents and local newspapers may be engaging in similar practices, and is considering whether to take further action.

What do we think?

We have always campaigned for openness and transparency of fees, but our 2014 report – Why the mystery? – revealed that only 2% of estate agents openly mention their fees on their website. A shocking 82% of estate agent websites make no mention of fees at all. The investigation found that a lack of openness by the estate agents leads to home sellers often paying far higher fees than they need to, with contracts that often leave them thousands of pounds out of pocket.

Estate agent disputes are the most common complaint for our members, with many feeling trapped in unfair contracts or battling against hidden charges. As we wrote in our report, the fundamental problem is that the playing field between home sellers and estate agents is far from level, and is largely unregulated despite the large sums of money involved. Estate agents are industry insiders who buy and sell homes all day, every day of their lives, therefore knowing all the tricks of the trade. The homeowner gets involved perhaps once every 20 years, meaning they usually have a lack of experience and knowledge that leaves them open to being taken advantage of.

Paula Higgins, CEO of HomeOwners Alliance says: 

“If estate agents were serious about cleaning up their industry, they would be more open and transparent, ensuring a more level playing field between themselves and their customers.”

Why the mystery? An investigation into the murky world of estate agent fees and contracts

 

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