Office of Fair Trading to be given stronger powers to investigate and stamp out malpractice

The government is to introduce tough laws to clamp down on rogue residential estate agents in a vindication of Property Week’s campaign to regulate the industry.

In an exclusive interview, trade minister Ian McCartney told Property Week that civil servants and legal advisers to the Department of Trade and Industry are well advanced in drafting a new consumer bill which aims to clean up the housing market.

McCartney is promising stronger powers for the Office of Fair Trading and Trading Standards officials to investigate malpractice and remove cowboy agents. Victims of malpractice could be compensated under the proposals.

If passed, the bill will also ensure that all 12,000 residential agents join the existing Ombudsman for Estate Agents scheme, or be banned from trading. At the moment the scheme lacks teeth as membership is largely voluntary.

McCartney hailed the proposed legislation as a ‘massive extension of the regulatory regime to secure an open, transparent and effective market’. He also praised the campaign by Property Week and its readers. ‘You’ve got through very effectively in the evidence and in the way you’ve deployed the case, and that has meant the government has to put an effective response in place,’ he said.

The proposed bill will stop short of industry-run regulation or licensing of agents, which would require membership of the RICS or the National Association of Estate Agents. ‘They are not regulatory bodies, nor could they be regulatory bodies,’ said McCartney.

The DTI position is that compulsory membership of the Ombudsman for Estate Agents scheme – which now covers only 60% of agents – will be just as effective against malpractice.

The way you’ve deployed the case has meant the government has to put an effective response in place

Ian McCartney

The ombudsman, Stephen Carr-Smith, welcomed the latest development.

‘If this legislation comes in and makes all estate agents join the ombudsman scheme – which is an independent redress scheme – that is extremely good news for the consumer,’ he said.

Stephen Gould, RICS director of professional regulation and consumer protection, welcomed government action to protect consumers. But he added that the proposed measures equated to ‘regulation by complaint’.

Gould said: ‘The RICS considers it unfair and anti-competitive to force any business to belong to a specific independent redress mechanism. We ask that the minister ensures that he takes account of a complex redress landscape and legislates accordingly.’

McCartney said the proposals require ‘proper consultation’, but declared his determination to introduce the draft bill during the next parliamentary session because of the poor track record against rogue agents – just 37 convictions and prohibition orders in the last two years.

‘I think we need to do better than this and that’s why I’m going to give the OFT more powers to prohibit the estate agents it considers are unfit,’ he said.