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Agents’ qualifications will cut competition and increase fees - claim

Estate agent licensing will reduce competition, make buying and selling homes more expensive, and add another layer of red tape to people wanting to get a sales position.

That’s the controversial view of Len Shackleton, who is a research fellow at the Institute of Economic Affairs, professor of economics at the University of Buckingham and editor of the publication Economic Affairs. 

Shackleton, writing on the IEA website, is hugely critical of the government proposals outlined earlier this month to insist that agents should have a so-far unspecified formal professional qualification before being able to operate. 

Shackleton says this adds estate agents to roughly one fifth of the workforce who require some form of government-backed consent before they can operate.

He believes the motivation behind the government initiative is purely political - to be seen to be ‘doing something’ about the wider shortage of homes and the high price of properties for those wishing the buy.

“About the only new evidence that emerged in the ‘consultation’ period following the [Conservative Party] conference seems to be the survey finding that ‘six out of 10 buyers and sellers have experienced stress’” says Shackleton.

“The only surprising thing about this is that it is not 10 out of 10, but this anyway tells us little in itself. The things which most concern buyers and sellers are probably gazumping and its equally evil twin gazundering (which could be minimised by bringing in Scottish-style conveyancing rules) and the high charges made by estate agents who may be acting for both parties as the law stands. Nothing is being done about these issues” he says.

Shackleton reserves much of his criticism for the agency industry itself, pointing out that the National Association of Estate Agents says it has wanted such measures for years, while there is worry amongst many agents about falling sales and the rise of Purplebricks and other online operators. 

“The NAEA is on the face of it a classic example of Milton Friedman’s dictum that the pressure for licensing ‘invariably comes from members of the occupation itself’ rather than the general public. It is itself a provider of professional qualifications which stands to gain from compulsion” says Shackleton. 

He says the role of agents may be something of a side-issue “compared with the problem of insufficient and over-priced housing” but warns that agent licensing “will almost certainly reduce competition amongst estate agents, raise the costs of buying and selling houses, and restrict access to yet another occupation by requiring people to jump through unnecessary hoops before taking on what is essentially a selling role like many others.”

  • Mike Lewis

    It's been talked about for years. The Estate Agents Act 1979 contained a provision that would require agents to have some kind of professional qualifications but the government never activated it. Personally I think it would be a good thing but it'll never happen.

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    I've always been in favour of estate agents gaining a recognised qualification. Those who have taken the Propertymark NAEA/ARLA Technical Award will tell you how much they didn't know before they studied the curriculum.

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    I totally agree - (I may be a little bit biased as I train estate and lettings agents in sales skills and compliance!) However agents really do benefit from legal knowledge and formal skills training - plus I think it helps in staff retention as people feel more invested in. I spent my long career as an estate and lettings agent wanting to do my best but not being entirely sure about the legal world surrounding my job. Once I understood it made property management easier and selling to Vendors and Landlords more convincing!

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    Move 2 Ayrshire Estate Agents are the most Qualified Agent within North Ayrshire.
    We have 3 Qualified members of staff.
    The business in going from strength to strength due to this factor.
    Retention is good
    Fees are good but not excessive.
    Go for it guys as it will make you stand out from the online guys.

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    I also have been involved in training and qualifications in agency for close to 12 years, and repetitively a better understanding of their legal obligations is what most of my learners have told me that they get from completing their qualifications.

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