House sellers may have to pay thousands of pounds to estate agents even if they sell through a property website, according to a ruling from Britain’s competition watchdog.
The Office of Fair Trading (OFT) has said that companies that allow homeowners to sell their properties online and offer a supporting service, such as a for sale board, should be classified as estate agents.
Until now many homeowners have managed to avoid estate agents’ fees — of between 1 and 2.5 per cent of the sale price — by marketing their homes online for a flat fee of about £100, even if they had signed with an agent.
The websites usually provide for sale boards with a phone line to answer queries, but vendors are left to arrange and conduct viewings and negotiate with buyers.
But now the OFT has concluded that if website users have a sole agency arrangement with a high street estate agent they should pay the commission even if the agent was not involved in the sale. That is because, under the new ruling, an estate agent could claim that use of the website had breached the sole agency agreement, just as if the property had been sold by a second high street agent.
The ruling, made at the end of the year, could lead to dozens of private sale websites going out of business.
Estate agents and property websites contacted by The Times yesterday agreed that the area was murky and needed to be clarified.
The OFT said that it had clarified existing rules to tell consumers that they might have to pay two fees — to the high street agent and to the online firm. The guidance is not legally binding but estate agents, furious that online firms are taking away their business, are eagerly awaiting a test case.
Keith Davis, managing director of propertybroker.com, a private sale website based in London and the Home Counties, described the ruling as absurd, saying that it clearly worked against consumers’ interests.
“If the OFT’s opinion is upheld by the courts, consumers will be forced to choose between using an estate agent and trying to sell their home privately,” he said.
The OFT says that a website would be classified as an estate agent if it introduced a client by sending out particulars, receiving and fielding queries from people wanting to buy or sell a property or put up a for sale board outside. It warns the site owners: “You will be misleading consumers if you state that you are not doing estate agency work when you are. If you are acting as an estate agent, you must comply with your legal duties.”
Christine Burke, a property developer from West London, who has simultaneously advertised renovated flats with estate agents and private sale websites, called the OFT’s definition ridiculous. She said: “I don’t see why an agent has the right to take a commission when they have done nothing.”
If the OFT’s interpretation becomes law, it would also mean that most private sale websites would become subject to the Estate Agents Act 1979 which, Mr Davis argues, could force many out of business.
“The Act requires companies selling properties to fulfil formal procedures such as informing vendors in writing of buyer offers,” he said. “Private sale websites never pass on these details because they are not involved in the negotiating.”
David Philpott, the OFT deputy director of enforcement, defended the move, saying that it helped consumers. “We have sought to clarify the law. Many private sale websites were claiming that they were not acting as estate agents when they were. People can still choose to go to property retailers but they need to know the risks.”
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