Should estate agents charge buyers for compliance checks?
Property television presenter Kirstie Allsopp has sparked a row in the housing industry by criticising an estate agency for charging a buyer for compliance checks.
In response, Bradleys Estate Agents said it charged a small admin fee for AML and proof- and source-of-funds checks, and said most agencies charged similar fees. Estate agents are required to carry out these checks on buyers, and doing so is a cost to the agency.
While some agencies choose to cover that cost themselves, others do not. A poll by Estate Agent Today last year found that 17% of agencies pass on the costs of checks to the buyer.
Are agencies that charge variable fees exposing themselves to further risk?
The reported fee of around £40 isn’t much in the context of a house purchase. (According to the Office for National Statistics, the average house price in Cornwall, where Bradleys is located, is £299,000.) It also pales in comparison to the price of surveys, conveyancing, mortgage product fees and other expected costs.
But the row also points to what could be a bigger issue in the estate agency sector. In Bradleys’ exchange with Allsopp, they said that the charge would not apply if the buyer used their preferred conveyancing firm.
Mortgage brokers and other industry suppliers have recently complained of a rise in conditional selling by estate agents. Buyers have reported agents refusing to pass along offers unless they use their preferred mortgage broker or solicitor, or implying that sellers are more likely to accept an offer that uses the agency’s preferred suppliers.
Charging a variable fee to carry out checks hasn’t been called out in the same way, and there is no suggestion that it is unlawful. However, according to journalist and consumer rights advocate Martin Lewis, agencies that hard sell their mortgage brokers and solicitors are “skirting the edge of the law” – and if calls to change the law are successful, fees like this could be caught up in new legislation.
Other estate agent headlines
Propertymark seeks ‘real world’ feedback on Material Information – Property Industry Eye
Councils warn agents over legality of For Sale board sites – Estate Agent Today
TPFG reveals how Belvoir deal DOUBLED group turnover – The Negotiator
