Clampdown on estate agents

ESTATE agents will be forced to sign up to an independent ombudsman scheme or face a ban on practising, it was announced today.

The Department of Trade and Industry (DTI) plans are aimed at making it easier to crackdown on rogue firms. The ombudsman will be able to compensate the victims of dodgy practices, while firms who refuse to sign up to the scheme will be struck off.

The ombudsman will be required to report agents who commit serious offences to the Office of Fair Trading (OFT).

The move comes in response to a report by the OFT earlier this year into the industry, which concluded that a compulsory compensation scheme was 'essential' to the future of estate agents.

Under the current system customers have little legal redress against rogue agents, unless the estate agent has signed up to the voluntary Ombudsman for Estate Agents scheme. However, less than 40% of the UK's 30,000 agents actually belong at present and there is no requirement on the ombudsman to report agents who commit serious offences.

The DTI's proposals, which will come under consultation in the autumn, also call for estate agents to keep clear, detailed written records of all transactions and to make contracts easier to understand so customers know exactly what they are signing up to.

DTI Minister Gerry Sutcliffe, said: 'There are many good estate agents who provide value for money but there are some who do not come up to scratch – although finding evidence to prove this is not easy because written records are often not kept.

'By beefing up enforcement and making it legal for estate agents to belong to an independent ombudsman-type scheme, we provide protection for consumers and honest estate agents and put the brakes on the rogues,' he added.

The announcement, in particular the compulsory membership for all agents of an independent ombudsman scheme, was welcomed by the NAEA.

Richard Hair, President of the NAEA said:'The plans for compulsory membership of an independent redress system are vital to protect the public throughout the home buying and selling process.

'We fully agree with both the OFT and DTI that consumers deserve a better deal from estate agents..The proposals put forward in this report mark a significant step forward for the industry and a brighter future for homebuyers and sellers.'

Just last week the National Association of Estate Agents (NAEA) announced it would set up an independent redress scheme for sellers and buyers. However, the scheme, due to come be introduced 2006, will cover only NAEA members - who make up only a third of the UK's 30,000 agents.

But estate agents Spicerhaart believe the Government has not gone far enough in the plans to tackle rogue estate agents.

CEO Paul Smith, said:'I'm pleased to see that the DTI is now finally moving in the right direction but it's still not enough. By falling short of introducing licensing the Government has failed to take the opportunity to fully protect the public from rogue agents.'