Q&A: Estate agents and you

The Office of Fair Trading (OFT) has reported on the estate agency industry. BBC News Online examines the OFT's conclusions and what rights you have with estate agents.

Why has the OFT investigated?

More than nine out of ten people buying and selling a home in England and Wales use an estate agent: the industry is worth an estimated £2.5bn annually.

But anyone can set themselves up as an estate agent and play a crucial role in the most important purchase most people will ever make.

The OFT investigation was prompted by a rising tide of complaints.

During 2002 the industry ombudsman saw complaints rise by 16%.

The majority of complaints from sellers involved disputes about fees and dissatisfaction with the agent's financial evaluation of a buyer's ability to purchase the property.

There were also doubts about the initial valuation of the property.

Most complaints from the buyers' side were that sales literature inaccurately described the property or that their offer had been unfairly handled by the agent

What is more, the complaints received by the ombudsman could be the tip of the iceberg: only one-third of estate agents are members of the scheme.

What did the OFT conclude?

The OFT inquiry, which took nearly two years, focused on fees, competition and how well the 1979 Estate Agents Act, which governs estate agents' behaviour and the transaction process, is working.

The OFT said that there was not enough competition over fees in the industry.

The watchdog focused on the widespread use of fixed "pricing points", with the majority of fees being set at a quarter-point increments between 1% and 2%.

The OFT concluded that there was general dissatisfaction with the day-to-day performance of estate agents.

According to an OFT survey, one-quarter of recent sellers said they were dissatisfied with the service they received from their estate agent, citing poor value for money, delays in the sale and inadequate communication.

What is to be done?

The OFT has recommended some changes to the Estate Agents Act.

In future, estate agents should be required to maintain written records of offers.

Estate agency contracts should be clearer, in plain English, so that consumers fully understand the terms of their agreement before signing it.

To encourage greater price competition the OFT said it would be embarking on a campaign to raise consumer awareness that by shopping around money can be saved.

But the OFT, to the chagrin of some consumer groups, has stopped short of introducing an industry-wide compulsory code of conduct.

The Consumers Association said that OFT report left the industry open to "rogue traders."

How can I protect myself if my agent lets me down?

An individual's right to reproach about their individual treatment depends on whether an estate agent is a member of a scheme.

The Royal Institution of Chartered Surveyors and the National Association of Estate Agents operate internal complaints procedures.

The Ombudsman for Estate Agents offers a complaints service for its member agencies.

But the current voluntary scheme covers only one-third of agents.

The ombudsman can award compensation of up to £25,000 for breaches of its codes, although many awards are for much less.

The ombudsman publishes a list of members on its website.

To whom else can I complain?

If a buyer or seller believes that an agency has failed to meet its obligations they could complain to their local trading standards department.

The OFT can also issue warnings and banning orders if it has sufficient evidence of a breach of law.

At present, the OFT is investigating 120 complaints against estate agents.

Further information:

The OFT has a free booklet, called "Using an estate agent", which is available from its website or by calling 0870 6060321.

The guidance covers England, Wales and Northern Ireland.