Labour MP Stella Creasy has explained why she's calling on the House of Lords to vote in favour of amending the Consumer Rights Bill to ban sale by tender.
Writing a guest post on MoneySavingExpert.com, Creasy, who is the MP for Walthamstow and Shadow Minister for Competition and Consumer Affairs, explains why she wants estate agents to be prevented from charging fees to both buyers and sellers in the same transaction. She wrote:
An Englishman's home may be his castle, but the price tag for owning or renting in our current housing market is enough to make anyone weep. While a lack of supply of homes in Britain means property is always going to be a costly business, other factors are also helping to further push up rents and house prices.
In particular, the behaviour of middlemen - letting agents and estate agents - is fanning the flames of property hotspots. Consequently consumers are paying overheated prices for services which act against their own interests.
The average home now costs eight times the average wage. Rightmove recently predicted house prices would rise by 30% in the next five years, to an average of £318,000 in England and Wales and nearly £715,000 in London. Property prices and rents are not separate but interconnected.
As house prices rise, landlords feel pressure to maximise their income, whether through selling or increasing the rent they charge. So tenants face little prospect of being able to buy their own homes, with estimates it can take over 20 years for the average family to save for a deposit. So these people find themselves stuck in the private rented sector.
In these testing circumstances, those who negotiate the deals are often the real winners. In estate agencies a new form of contract is becoming more and more popular. The 'sale by informal tender' contract, which involves using sealed bids to make offers on properties.
Increasingly, agents are then charging the successful bidder an 'introductory' fee - in some cases of 2%-2.5% of the property price, plus VAT.
For many buyers these fees run into several thousand pounds - money which the owner of the property never sees. The sellers are also charged a fee to market their property, meaning they are paying for the privilege of being ripped off.
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Comments
A little bit of info is dangerous. Creasey needs to greater understand that sealed bids have been about for years. Agents pay heavy to portals which takes most consumer funding. She should lobby to ease mortgages. If an agent didnt gain best prices they would be in breach of CPRs (which she should know).
Agents who insist offerers pay a fee should be told to stick it as all offers have to be out forward to the client else an agent is in breach of the estate agents act.
Whats her problem I dont think she knows.
The electorate are the ones being ripped off - constantly - by MPs!
True. Creasy is treating it as too black and white, when it's a lot more complex than that. Not everyone is charging these fees, and smaller companies shouldn't face the same sanctions despite not ripping off their clients in the way certain bigger agents have been known to do.
It's never a good idea for an MP to wade in on debates like this - most of the time they get shouted down in double quick time. I actually think she makes some very valid points, but tarring all agents with the same brush doesn't help her cause. As an MP, she is surely well aware of how a whole profession can be subject to sweeping generalisations, so she'd be better off targeting the agents who do pull this kind of stunt rather than seeking to punish those agents who haven't done anything wrong.
yawn yawn it's a free market. How many times have I heard "it's not fair" when the bill comes You've agreed to pay at the outset, now I've delivered and I want paying. Like when the bill comes at the restaurant, it will normally match the menu. I've never heard "it's not fair" when diners are paying for their meal, despite ludicrous service charges added. If I'd like to tip _I_ will decide how much, thank you.
As an agent I rarely get tips. But thank yous are free and those I get plenty also.
The MPs and the Lords are so fired up about it they've asked for specific wording to be included in the Consumer Rights Act due out next year.
This MP needs to look at the independant agents that deal with Lettings very fairly there are a lot of us out there! We look after our clients on both sides and do not over charge but the bigger agents are the ones causing alll this fuss in the industry by ripping off clients, mp's need to start inviting smaller companies up to parliament to hear the other side of the story and start treating the smaller agent who deals with clients fairly & in a better way or all you will be left with is the bigger rip off agents!
Ordinary citizens are being ripped off by MPs. Is that a generalisation or what Come on, the minority of agents try this sort of stunt. The rest of us make fair charges for work done or costs incurred. It's a business not a public service, try a housing association funded by the taxpayer if you want to join the queue. The latest rant by Ms Creasy sounds like self publicity about something that hardly ever happens using a nice soft easy target. There, my rants over now