U-turn on cowboy estate agents

The Government is set to reject demands for a tough system of licensing for estate agents.

The decision will dismay consumer groups and reputable estate agents, who believe a compulsory licence to trade is the only way to drive cowboys out of Britain's least regulated industry.

They want the Government to clamp down on behaviour such as undervaluing property, inventing fake buyers to push up prices, and "fly-boarding".

There are also concerns that a slowdown in the property market following yesterday's interest rate rise could drive more agents to stoop to unethical tactics to protect their profits.

However, the case for mandatory licensing has failed to win the support of officials at the Department of Trade and Industry.

"Licensing is easy for people to call for, but that does not mean that it is right," a senior government figure told the Evening Standard.

"All the evidence from abroad suggests that if you move to licensing estate agents you deter new entrants to the profession and reduce competition. That is not in the interests of consumers.

"It is important to recognise that licensing has cons as well as pros. Simply because the industry and consumer groups want licensing doesn't make it the best option."

The Government's position is due to be published this month in its response to a widely condemned Office Of Fair Trading report on estate agents. The OFT was described as "pathetic" by critics because it gave estate agents another two years to clean up their act. In its response, the Government is likely to recommend a package of measures falling far short of compulsory licensing to tighten up "policing" of the industry and make consumers more aware of their rights.

The decision will be a blow to consumer groups. They fear the Government has gone soft on a reviled ?4billion industry that generates up to 24,000 complaints a year - one for every two estate agents in Britain. Emma Harrison, a spokeswoman for the Consumers' Association magazine Which? said: "We are disappointed to hear that the DTI is not going to tackle the issue of rogue agents.

"In our survey, 68 per cent of people we polled said they wanted the Government to license agents.

"We will continue to campaign for regulation and we will call on peers to amend the Housing Bill to introduce a regulatory framework for estate agents."

Louis Armstrong, chief executive of the Royal Institute of Chartered Surveyors, added: "In light of recent stories of cowboy estate agents, we believe it is high noon for the Government on this issue.

"The OFT report was a damp squib. A minimum standard of competence and system of compulsory licensing of estate agents must be introduced as soon as possible."

Anyone can set up as an agent without any experience of the property market or knowledge of property law. It is a highly lucrative business with each sale generating an average fee of about ?2,100 for the agent.