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Online Estate Agent Versus High Street

An online agent which said that it provided “a complete estate agency service at a fraction of the cost” has been found not guilty of illegal or misleading advertising.

In an important case, the Advertising Standards Authority this week refused to uphold a complaint against Hatched.co.uk

Another agent, Country Properties,  had complained to the ASA about Hatched’s claims on its website.

The Hatched website said: “A complete estate agency service at a fraction of the cost.”

It stated: “With over 90% of house sale enquiries now coming via the internet, we recognised that there was no longer any need for estate agents to have expensive high street offices in multiple locations, company cars, and newspaper adverts. So we’ve done away with all of these – and are passing the savings on to you.”

Country Properties challenged whether the claim “a complete estate agency service…” was misleading and could be substantiated, because Hatched did not offer, or perform, a number of services that other high street agents did, such as providing office windows, local newspaper advertising and property particulars.

In addition, they believed that Hatched did not possess local knowledge when deciding on an asking price, were not able to make “properties more saleable by working up and down chains” and were unable to “piece together sales”.

Hatched was invited by the ASA to respond to the complaint.

Hatched argued that there was no legal definition of the phrase a “complete estate agency service” and no guidance from any professional body or any law as to what estate agents should or should not offer in terms of a “service”.

They highlighted three references that they judged to be significant: The Estate Agents Act 1979, The Property Ombudsman’s Code of Practice and the NAEA Code of Conduct. They said they fulfilled the criteria set out by the Act and were members of both TPOS and the NAEA and adhered to the relevant codes.

Hatched said there was no obligation for estate agents to offer a window display or to advertise in local newspapers. Hatched argued that the priority for an agent was to get properties seen by as many members of the public as possible, which is what Hatched did by listing their properties on numerous property portals including Rightmove, Zoopla and Primelocation.

Hatched claimed that the elements suggested by CP as a “complete service” were actually embellishments not mandated by law or by the relevant regulatory bodies. They stated that every agent was different.

Hatched said that, although they didn’t offer some services as standard, they would make the required arrangements if a client so desired. They explained that they prepared a pdf brochure for every client and produced a glossy brochure if required, and provided an example of a glossy brochure they had recently produced on a client’s instruction.

They said they were able to advertise their properties in their office or in a window, but that none of their clients had ever instructed them to do so.

They also stated that no agent could offer a window display to all of their clients as the number of properties on an agent’s books would vastly exceed the number that could be advertised in their window.

With regard to newspaper advertising, Hatched said the majority of their clients instructed them not to do so, and that they actively advised against it, as it was a costly exercise for the seller now that the internet was the starting point for most searches. However, they provided a recent example of an ad they had placed in a local paper after the client had instructed them to do so.

Hatched denied having a lack of local knowledge when valuing houses, and explained that they researched areas using various sources such as Rightmove, Zoopla and checkmyarea.com, as well as the Land Registry and Ofsted websites.

They explained that those resources helped them to locate local amenities such as schools or stations that would impact upon the price of the property, and listed recently sold houses along with the price they sold at and competing properties on the market. Hatched also highlighted that they visited every property to undertake a valuation.

Hatched also believed that they were better placed than many agents to “work up and down chains” because they covered the whole of England and Wales.

In addition, Hatched stated that they offered several “extra” services as standard including: floor plans, unlimited photos, text messaging to set up viewings, a vendor login area and a conveyancing department. They claimed that they were the only estate agent to cover the whole of England and Wales.

They stated that they actively encouraged their customers to sell their houses in a different way from a conventional high street estate agent because there was a substantial cost saving to be made, but that they achieved the same result which was to sell a house for the best price possible. They therefore considered that Hatched offered a “complete” service.

The ASA did not uphold the complaint, saying that Hatched fulfils the criteria set out by the Estate Agents Act 1979 and was a member of the TPOS and NAEA.

While it acknowledged CP’s concern that Hatched lacked local knowledge, it noted that Hatched used a number of different resources to gain local insight and to help them reach a suitable asking price for a property.

The ASA also said it recognised that a consumer would have different expectations with regard to an online estate agent and a high street agent, and in approaching an online agency, would already anticipate that the methods used might vary from those of a high street agent.

Are Surveyors Losing Their Bottle?

The RICS has hit back at persistent reports that, as the housing market picks up, sales are falling through because of mortgage valuation delays caused by lack of surveyors.

The RICS said the problem has nothing to do with surveyor numbers, which it insists are adequate.

Instead, it blames market conditions, including low pay and the very real risk of being sued, for the reluctance of some surveyors to take on mortgage valuation work at all.

It says that some valuation jobs are simply not worth doing, because lender panel fees have been squeezed so much that the work is unprofitable. Unsubstantiated negligence claims, with the strain placed on surveyors’ insurance premiums, add to the problem.

The Times said there were delays in arranging valuations in the most sought-after postcodes.

It said mortgage brokers have reported that some buyers are having to wait five weeks for their prospective purchases to be valued.

It quoted Springtide Capital which said that six months ago, it was usually possible to get a property valued within three days, but it now took a week or longer.

Similar stories have appeared elsewhere, putting valuation delays down to a lack of residential valuers.

But the RICS said that around 8,500 residential valuers are currently registered in the UK.

In a statement, the RICS went on: “However, with so many qualified valuers out there, the issue is not one of capacity but of the unsustainable market conditions under which valuation professionals are forced to operate.

“Of the 8,500 residential valuers currently registered, 5,500 list residential valuation as their primary activity, and around 2,000 work for the largest 20 firms in the UK, while the remainder are SMEs or independent practitioners.

“Since the housing market crash of 2007, a great number of valuers have been subject to unsubstantiated negligence claims from lenders, an insignificant number of which actually go to court. These have forced many insurers to greatly increase premiums for Professional Indemnity Insurance (compulsory for all valuers).

“In tandem with this, the amount valuers are paid per valuation by the company panels concerned has reduced to such an extent in recent years that the expenditure involved in carrying out a job often outweighs the reward and the risks which are forced onto the valuer.

“Significantly, in many cases, the surveyor carrying out the valuation receives only a fraction of the arrangement fee paid by the consumer. All this results in it not being in the valuer’s interest to take work which is unprofitable.”

The RICS said it is committed to helping the industry find an answer to this conundrum and is bringing together the key players, including banks and insurers, to find a sustainable solution for the valuation profession and the market.

It is now calling for evidence to feed into a new independent commission.

Alan Collett, RICS president, said: “There are enough valuers out there to meet market demand, many working in small and regional practices.

“The problem isn’t one of capacity but the fact that the market in which they’re operating is wholly unsustainable. Insurance premiums have risen so considerably in recent years due to the sheer volume of unsubstantiated negligence claims against valuers.

“What’s more, the fees professionals receive per job are being squeezed and they simply are not willing to carry out the work where it is unprofitable.

“Clearly, there is a serious problem with the market, but blaming a shortage of valuers is not addressing the real issue.

“We are wholeheartedly committed to helping the industry find a solution to this problem and are in ongoing talks with all concerned. What we want to see is a sustainable market operating in the public interest. At present, we are far from this becoming a reality.”

New Laws For Sale Of Park Homes

New laws have come into force this week governing the buying and selling of park homes.

From now on, park home operators will not be allowed to buy and sell properties on their site. The owners of the properties will instead be free to sell their homes on the open market, including using estate agents.

The change of rules has come in to protect residents of park homes, who frequently found they had no choice but to sell at a cut price to the operator, only for the operator to sell on for a massive profit. A Commons select committee report last year said many residents suffered intimidation.

Housing minister Mark Prisk said: “For too long, some unscrupulous operators have made residents’ lives a misery, intimidating people and manipulating the rules to turn a quick profit. So we’ve closed the loopholes to root out the rogues and ensure that those who run an honest business will flourish.

“We’ve also given councils the power they need to protect the vulnerable, so park home residents who know their rights will be able to enjoy their rural retreats in peace.”

The changes are in the Mobile Homes Act 2013, which also gives new powers of prosecution on the grounds of harassment. The Government has also set up a park homes advice line, which is being run by the Leasehold Advisory Service.

There are an estimated  84,000 households living in park homes on 2,000 sites in England. Most of the residents are elderly people.

National Minimum Wage To Increase

The Government has accepted the independent Low Pay Commission’s recommendations for this year’s adult and youth National Minimum Wage rates.

However, the Government has concluded that the apprentice rate should be increased rather than frozen as recommended by the LPC. The LPC based this recommendation on concerns about level of compliance with the apprentice rate.

The following rates will come into effect on 1 October 2013:

  • The adult rate will increase by 12p to £6.31 an hour;
  • The rate for 18-20 year olds will increase by 5p to £5.03 an hour;
  • The rate for 16-17 year olds will increase by 4p to £3.72 an hour;
  • The apprentice rate will increase by 3p to £2.68 an hour;
  • The accommodation offset increases from the current £4.82 to £4.91

Business Secretary Vince Cable said: “The independent Low Pay Commission plays a crucial role in advising the Government when setting the National Minimum Wage every year. It balances wages of low paid workers against employment prospects if the rate was set too high.

“We are accepting its recommendations for the adult and youth National Minimum Wage rate increases, which I am confident strikes this balance. However, there is worrying evidence that a significant number of employers are not paying apprentices the relevant minimum wage rate.

“Apprenticeships are at the heart of our goal to support a stronger economy, and so it is important to continue to make them attractive to young people. Therefore, I am not taking forward the LPC’s recommendation to freeze the apprenticeship rate due to non-compliance, but instead am raising it in line with the youth rates. We are working on a series of tough new measures to ensure we tackle non-compliance issues across the board.”