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Estate agents in England and Wales

Launched: June 2002

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Purpose of the study

To investigate whether the market in England and Wales works well for buyers and sellers and, if not, propose ways in which any shortcomings could be remedied. Issues included:

  • fee structures
  • the nature and effectiveness of competition in the market
  • how well the Estate Agents Act was working to protect consumers, and
  • comparisons with other countries.

(Study followed in-house work.)

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Findings

The findings showed:

1. Legislative change was needed: OFT and trading standards services were restricted in taking enforcement action by limitations in the Estate Agents Act 1979.

2. No obvious structural competition concerns in the market, but limited price competition. Less than half of sellers got more than one quote.

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Recommendations

The recommendations of the study were changes to the law so that:

  • it is more enforceable allowing effective action to be taken to address breaches of the legislation
  • it is clear, so it covers new ways of buying and selling property, and
  • statutory terms used in estate agency contracts are made easier for consumers to understand.

Improved self-regulation by:

  • establishment of independent, low cost procedures for handling complaints
  • redress for consumers who have received a poor service, and
  • code sponsors to apply for approval under the OFT's Consumer Codes Approval Scheme.

Called on consumers to take action by:

  • shopping around between estate agents and negotiating fees, and
  • requesting fees quoted both in percentage terms and as a money amount.

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Action following market study

  • July 2004: Government accepted that the law needed to be strengthened to deal effectively with rogue agents.
  • September 2004: OFT consumer information campaign on comparing prices and negotiating fees.
  • September 2005: Ombudsman for Estate Agents Company Limited had approval for its code of practice from OFT.
  • July 2007: Consumer Estate Agents Redress Act 2007 became law.

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Market study details and report

Download the OFT Report  Estate agency market in England and Wales March 2004 (pdf file 544 kb)

The OFT Report's annexes can be downloaded below:

Download Annexe A - Consumer survey (pdf 245 kb)
Download Annexe B - Business survey (362 kb)
Download Annexe C - International survey (781 kb)
Download Annexe D - Case studies (93 kb)
Download Annexe D - full version - Case studies (1.68 mb)
Download the academic paper - Microeconomic Assessment of the Home Buying Offer and Contract Process (441 kb)

See press release 'Estate agency market needs change' March 2004.

The Government response to our estate agency report can be found on the Department for Business, Enterprise and Regulatory Reform website  22 July 2004.

See press release on 'OFT publishes guidance on buying and selling a home'. Since this press release the leaflet has been taken out of circulation 23 September 2004

See the OFT new guidance on what constitutes estate agency work for the purposes of the Estate Agents Act.

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Background information 

Announcement of study - see press release 'OFT launches study into estate agency market needs change' 11 June 2002

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Further information

If you are buying or selling your home, useful information and advice can be found in the Consumer information section of this website.




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