Monday, 3 November 2014

Stop the Rip-off

The housing crisis continues to grow.

As I write, Shelter publishes its latest report confirming that more than 90,000 children in the UK without a permanent home, living in some form of temporary accommodation. Meanwhile, 9 million people now rent privately including over 1.3 million families with children.  Nearly half of private rented households are over the age of 35. 

It is undoubtedly the case that, whenever any market is unstable, some people will seek to exploit the situation for their own benefit. I have written before about those letting agents who are double-charging, purporting to act for both the landlord and the tenant and providing a complete lack of transparency of their fees.[i]

It is now clear that some estate agents are pulling off a similar trick, charging both buyers and sellers for a sale of the same property. This practice creates a conflict of interest, as it is not clear who the agent is represent. With some agents charging buyers 2.5% of the sale price of a property that fee can run into thousands of pounds.

The average home is now eight times the average wage, and it takes over 20 years for the average family to save for a deposit. In the last year, 1 million homes were bought in the UK.  House prices rose by nearly 12% over the last year.

It’s in this context that many estate agents have introduced a new form of contract, called ‘sale by informal tender’ involving sealed bids to make offers on properties.  Estate agents are then charging the successful bidder an ‘introductory’ fee, but also charging a fee sellers to market their property in this way.

The practice is rapidly spreading from London to the rest of the UK. It’s a rip-off and it needs to be stopped quickly. We have a chance to do this in the Consumer Rights’ Bill, currently in the House of Lords.

Despite people clearly being fed-up with those who want rip-off Britain, Conservative and Liberal Democrat Ministers have so far rejected attempts to change the law. It’s time to try again