Government set to encourage private for sale by owner websites

Friday 29th July 2011

The Government looks set to encourage the growth of private ‘for sale by owner’ websites, in order to encourage competition in the market.

It will look at the definition of ‘estate agency work’ in relation to online property businesses.

The announcement is part of the Government response to last year’s OFT market study report on Home Buying and Selling, which wanted to see more new business models enter the estate agency market, including ‘for sale by owner’ websites.

In its response, the Department for Business Innovation & Skills says the Government will consider the OFT’s recommendation “to amend the definition of estate agency work as part of a limited review of estate agents’ legislation, on the basis that we think it is sensible for activities that do not pose a risk to consumers to be outside the scope of the Estate Agents Act.

“However, we will need to balance the benefits to consumers from increased competition with the risks of reduced consumer protection. Customers need to know who they are dealing with and what level of protection they have.

“Consumers that do not use an estate agent are not covered by the protections in the 1979 Act, which now include access to free and independent redress for residential sales.

“If different business models can be properly signposted, consumers will be able to make an informed choice between a bespoke agency driven approach with all the protections of the Estate Agents Act, and a stripped down passive approach with reduced protection.

“They should also benefit from increased competition. Greater choice will also provide increased value for buyers.”

In its response, the Government also says it will consider giving Trading Standards greater powers to inspect estate agency premises, to ensure they are complying with legislation. Currently, Trading Standards must have a ‘reasonable suspicion’ that this is the case before they can enter an estate agency, but this could be dropped.

The Government did, however, reject an OFT proposal that larger ‘headline’ fines be imposed on agents who continue to trade after being prohibited. It also rejected the OFT’s suggestion that a ban on referral fees should at least be considered. But it does say that if the OFT comes up with ‘clear and robust’ evidence as to consumer detriment, it would consider a ban.

Finally, the Government makes it clear that it has no intention of re-introducing HIPs or Scottish-style Home Reports, but does say it is supportive of a “voluntary industry-led approach to improving the consumer experience”. It also wants to see the take-up of e-conveyancing.  

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