Regulation of Estate Agents: A Series of Half-hearted Measures?

Abstract

The British public have long been highly dubious of the activities of that body of persons collectively known as Estate Agents. The business of acting as an agent for people wishing to sell real property has been a feature of the British market for many years. The activity, at least in the good times, can be very lucrative, featuring commissions between 1 and 2 per cent of the selling price, plus additional charges covering most of the actual costs of undertaking the activity. In English law anyone can act as an estate agent. There is no direct requirement for such a person to have acquired any qualification, nor is there any licensing requirement. Many agents are, in fact, qualified as surveyors and/or auctioneers, but this is by no means universal. The organisational structure is as varied as the qualifications of agents, varying from large coxporations down to one-man businesses. In the 1980s, estate agencies were seen as a lucrative investment by building societies and insurance companies, which bought up many agencies and amalgamated them into large chains under subsidiary companies. Many small agencies, however, still exist. It is clear that in the sale of private houses, consumers are virtually forced to employ an agent.l Thus, from a consumer viewpoint, the total honesty and integrity of the agent are essential features. This is often lacking. The scope for minor 'fiddles' is enormous and the Office of Fair Trading (OFT) has uncovered evidence of a number of activities of a more seriously fraudulent nature. It is not surprising to find that estate agents are generally regarded with extreme suspicion by the public. Their honesty is often the subject of 'music hall jokes'. Such an approach is perhaps unfair on some of the corporate agents, although even they sometimes have difficulty controlling the activities at branch level of some of those who work for them. Of course, the general law of agency is applicable to the arrangement. The estate agent is bound by a contract, express or implied, with specific limits, but in practice the contract is drafted by the agent, and will contain many terms ill-understood by the client and usually very much in favour of the agent. Any deficiencies amounting to a breach of the agency contract can be enforced by the principal in a civil action for breach of contract. However, the expense and difficulty of civil enforcement, together with the willingness of agents to appeal as far as the House of Lords on occasion,2 have made it impracticable in most cases to take this step. With this background, one might expect the sort of comprehensive regulatory approach of the legislators, as one has seen in relation to car salesmen, by the application of the criminal law3 or the more recent licensing approach in relation