Government promises gentle crackdown on housing market

THERE WILL BE A crackdown on estate and managing agents and reform of the housing sales process says the Government – announcing cosmetic reforms that fall far short of tackling the housing crisis.

The package of measures has been announced by Sajid Javid MP, Secretary of State for Communities and Local Government. Labour’s Shadow Housing Secretary, John Healey, responded quickly, saying the proposals fell far short of the reforms that homeowners and first time buyers had been hoping to see.

Estate agents
At the moment, anyone can call themselves an estate agent and start a business. The Government believes this allows some rotten apples to buy and sell houses – and rip off the public. It wants estate agents to hold a professional qualification. It is not yet clear whether this move will require anyone calling themselves an estate agent to have a qualification or whether it will be that estate agent businesses will have to include at least some qualified staff.

Managing agents
Legislation will be introduced to require managing gents to reveal the fees they receive for referrals from other professional such as solicitors, surveyors and mortgage brokers.

House sales
At the moment, anyone selling a house can accept an offer from a purchaser – but then, before the paperwork is completed and contracts are exchanged – can pull out of the sale and accept a higher offer. This process, known as “gazumping”, used to be common in the 70s – but it is much less common now.
Problems buyers and sellers face now include mortgage companies reneging on previously agreed mortgage deals, and buyers having to reduce prices in order to sell at all. The Government appears not to have noticed the change, and is intending to introduce a new form of pre-contract agreement to prevent gazumping. It claims that over 250,000 house sales fall through annually, but has not said how many are due to gazumping.

Other measures
The Government has also promised to provide information on house-buying so that sellers and buyers can know their rights and to  tighten up the process used by freeholders to release information on leases.

It will also “strengthen” Trading Standards – which seems to be a pledge to give Local Authority Trading Standards services the power to ban agents who break the rules. However, there is no commitment to restore cuts to Local Authority funding, which have severely reduced the work that Trading Standards can do.

Homeowner and Estate Agent organisations have welcomed the news of these reforms. Resident groups pointed out that they will do nothing to increase the supply of housing – which is needed to house the homeless and overcrowded, as well as acting as a pressure on the market to keep sales prices and private rents at reasonable levels.

•Read more about it:
Finance watchdog has bad news on housing
Rabina slams Bungle-Biggs on housing plans

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