The Office of Fair Trading has recommended that the government considers imposing new rules around referral fees paid to estate agents by mortgage brokers, as it says this practice may lead to agents favouring one buyer over another.
In a market study into home buying and selling published by the OFT today the regulator found no problem with existing legislation for estate agents, though called for the enforcement of current rules to be improved to prevent serious breaches by agents.
But the report also says: “The only area where the OFT recommends the government should consider additional rules is around fees received by estate agents for referring buyers to providers of ancillary services such as mortgage advice, surveys, and conveyancing.
“The OFT believes this could cause an estate agent to favour one buyer over another, to the seller’s disadvantage.”
The OFT is also encouraging more sellers to negotiate on estate agents’ commission.
It says that failing to shop around and negotiate could be costing sellers up to £570m a year.
The study also found that the housing market is dominated by traditional estate agents that do not compete strongly on price.
The OFT wants to see more innovation in the estate agency sector, particularly through the development of online services.
John Fingleton, chief executive of the OFT, says: “In the present economic climate it is more important than ever that consumers get a good deal when buying or selling a home.
“Encouraging new business models, online estate agents and private seller platforms could put useful competitive pressure on traditional models and lead to better value for buyers and sellers.
“The government can help this process by updating legislation and making sure regulation only applies where it is essential to protect consumers.
“We also encourage home sellers to negotiate hard on commission fees and consider using alternatives to traditional estate agents.”