View more on these topics

Ban brokers from paying referral fees to estate agents, urges OFT

The Office of Fair Trading is urging the government to ban mortgage brokers from paying referral fees to estate agents.

A study on home buying and selling published by the OFT last week recommends that the government should consider additional rules on fees received by estate agents for referring buyers to providers of ancillary services such as mortgage advice, surveys and conveyancing.

The report says: “The prospect of additional income may give estate agents a financial incentive to prefer some buyers over others.

“We recommend that, as part of its work on the future of estate agency regulation, the government considers further whether the potential for conflicts of interest should be removed, including a ban on such payments.”

Andrew Montlake, communications director of Coreco Group, says the OFT is probably concerned about some estate agents that force buyers to go to a particular broker and then use the information the broker gathers to assess the borrower’s affordability and push up a property’s asking price.

But he says most mortgage bro-kers, including Coreco, would never disclose clients’ borrowing capacity.

He says: “When we deal with an estate agent we are completely independent. Estate agents want their clients dealt with by a firm that will give them good independent advice.”

But Montlake adds that it is common for brokers to pay an introductory fee to estate agents as they would do to any introducer.
The OFT is also encouraging sellers to negotiate on estate agents’ commission. It says failing to shop around can cost sellers £570m a year.

The OFT’s report recommends that rules dating back to 1979 are updated to pave the way for firms such as Google and Tesco to offer rival estate agency services, which could be cheaper alternatives to traditional estate agents.

Recommended

Net lending is up at Woolwich but gross figures fall

Woolwich increased its net mort-gage lending by £5.7bn in 2009, but its gross lending fell by £8bn, its annual results revealed last week. It saw new mortgage lending rise by £5.7bn to £88bn in 2009, compared to £82.3bn in 2008. Gross new mortgage lending was down to £14.2bn in 2009, from £22.9bn in 2008. Barclays […]

In my opinion: Don’t get too excited by rally in prices

The year started with a rise in house prices and property listings, but Nationwide reckons prices could stay flat or even fall in the next two years, so there is still some way to go before recovery kicks in

Newsletter

News and expert analysis straight to your inbox

Sign up
Comments
  • Post a comment
  • Richard Scott 25th February 2010 at 4:12 pm

    I endorse what Stuart says to a degree. However, my own recent experience shows the “corporate bandits” are alive and kicking. A recent first time buyer client of mine had a very unsubtle attempt to persuade him to use the Agent’s adviser. The unnamed adviser cast doubts on my ability to obtain a mortgage in the time frame stated by the repo company. The adviser also said “what happens if your adviser cannot be contacted at a crucial stage”. And finally, despite my client nominating a solicitor recommended by me the agent’s staff said “the solicitor may not be approved by the vendor”. Fortunately I had briefed my client of this potential and he ignored the bull being spoken by the estate agency. But how many new buyers would be taken in?

  • Stuart Duncan 24th February 2010 at 3:59 pm

    All the OFT has to do is enforce the current law and stop corporate agents breaching the Estate Agency Act and Data Protection rules.

    I offer independent mortgage advice as a broker based within an estate agent’s premises. I am very careful not to give any information to the Estate Agency and always make the client aware that they are under no obligation at all to use us.

    It seems like the old story. We all get tarred with the same brush and get made to suffer for the actions of corporate bandits.

    The OFT would do well to analyse exactly who gets complained about before trying to rob brokers of their livelihoods and consumers of what can be a fantastic service.