Estate agent disputes still high despite housing market slump
The number of disputes involving estate agents and home-buyers has defied the massive drop in housing market activity and remained relatively high last year.
Complaints about home sales referred to the Ombudsman for Estate Agents Christopher Hamer, who deals with unresolved disputes between sales and lettings agents, only dropped by three per cent in 2008 despite overall sales activity across the housing market falling off by as much as 60 per cent.
But complaints about lettings agents were more in line with market trends. The rise in the residential lettings market saw a 200 per cent increase in the number of lettings disputes handled by the Ombudsman and Mr Hamer predicted that during 2009 lettings will become the major area of his activities.
Mr Hamer said: “I am surprised that my workload in sales disputes has not reduced more significantly.
“Perhaps it shows that buyers and sellers still have higher expectations of agents’ services whilst there are so few properties being sold.
“It’s possibly because estate agents have cut down on their back-office staff. There are less people to deal with complaints and they are finding their way through to me because of that.
“I think that when people are buying a house, they are taking out an extreme financial commitment and they are less ready to be satisfied with anything other than a perfect service.
“Given the amount of money that changes hands in the housing market that’s probably the right approach to have.”
According to the Ombudsman for Estate Agents’ annual report for 2008, nine per cent of the organisation’s complaints about sales came from the West Midlands, while just 2.5 per cent of overall complaints about lettings came from the region. That figure compares with 36 per cent for Greater London and 20 per cent for South East England.
Mr Hamer said he did not know why the figure was so low for the West Midlands, but speculated it could be because agencies in the region were better at resolving the complaints in-house so they did not need to be referred to the Ombudsman.
The Ombudsman also revealed that in 2008 he made the highest ever award to a complainant in the 20-year history of the scheme.
The estate agent in question was ordered to pay out £23,880 after conflicting advice had been given by staff and the agent had failed to act in the best interests of the client or negotiate effectively.
Of the total, Mr. Hamer awarded £1,000 to cover the distress, aggravation and inconvenience suffered by the complainant and the rest was an award to recompense for financial loss. The maximum award he can make is £25,000.
Mr Hamer said the complaints he had seen in 2008 covered a range of issues, varying from misunderstanding of the kinds of agency agreements to agents not relaying offers correctly to sellers.
On the lettings side many revolve around credit or character references not being checked thoroughly before tenants are allowed to move in.
He said: “There’s nothing that tells me that this is malicious about any of these issues – it’s just brain-out-of-gear-type complaints.
Mr Hamer’s comments come as a separate body, the Association of Residential Letting Agents, said an influx of unqualified estate agents were setting up businesses as letting agents because of the economic downturn.
Arla said many estate agents were expanding their businesses to cover lettings in a bid to survive the housing market downturn.
Three-quarters of the group’s members reported that estate agents in their local area had set up rental businesses during the past six months, with the average member saying four estate agents had expanded into lettings. But some said as many as ten had.
Arla warned that it believes a high proportion of these agents do not meet the standards required by professional associations such as itself to run a rental business.
Operations manager Ian Potter said: “To make the transition from an estate agent to a lettings agent, they need to have studied more than a hundred different pieces of legislation, and pass minimum competency tests.
“Those consulting an agent need to be absolutely sure they are getting the best advice possible.”
Peter Bolton King, chief executive of the National Association of Estate Agents, said: “I can understand why estate agents, or unregulated start-up agents, have appeared in the lettings market.
“But they could get themselves and their clients into trouble if they aren’t completely aware of the relevant legislation.”
Both groups are calling for the introduction of a licensing scheme across the property industry.
