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Conditional selling continued...

ended 03. May 2023

This morning FTAdviser ran a big article on “rampant” conditional selling being practised by housing associations and estate agents, with plenty of Newspagers featured. You can read it >> here <<. Given that conditional selling is “illegal under the Estate Agents Act 1979”, two short questions…

  • If it's illegal, why is it allowed to happen and why is nobody coming down on it like a ton of bricks?
  • Who needs to take ownership of conditional selling and how can the practice be eradicated once and for all (if at all)?

8 responses from the Newspage community

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Editor
Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
Conditional selling remains prevalent in the housing market, despite being illegal under the Estate Agents Act 1979. The practice involves agents and housing associations insisting that buyers use their in-house mortgage and legal services (to extract commissions from unsuspecting buyers) before an offer can be put through to the seller. This corruption persists mainly due to a lack of enforcement and political will.

To eradicate this illegal practice, all parties need to take ownership - Regulators need more resources to investigate and punish those who engage in the practice, while consumers ought to be educated about their rights and be empowered to report instances of conditional selling. It is time to restore trust in the industry.

Conditional selling harms buyer confidence and damages the reputation of the sector. Stricter penalties, better education, and more resources for regulatory bodies are required to stamp out this illegal practice in the housing market.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
As with many aspects of life, simply coming up with a rule doesn't mean that everyone automatically complies with it. Many people, estate agency staff included, don't know the rules contained within the Acts and Codes that govern property transactions in the UK, which then allows the unscrupulous players in the market to prosper. There is also no direct supervising regulator for the sector, so therefore there is no one actively watching and enforcing the rules, allowing these bad actors to easily continue unchallenged. Reactive action can be taken by the likes of Trading Standards and the Property Ombudsman, but this relies on customers raising a complaint; which in turn involves them knowing that rules exist, what those rules are and when they are being broken.
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Gary Bush
Financial Adviser at MortgageShop.com
On why "special arrangements" are used by Housing Associations and Estate Agents I think they wield too much power and they seem to think that they are beyond reproach in these circumstances - it's clear any qualified adviser confirming an applicant's suitability to purchase a property should be good enough under these circumstances. This borders on cartel-like activity and in days gone by your local Trading Standards Officer would deal with evidence of this - I don't even know if such exists anymore - if they don't then as these transactions involve hundreds of thousands of pounds the FCA should look to take up this position.
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Austyn Johnson
Founder at Mortgages For Actors
Its absolutely awful how many people we get come to us who have already had declines or bad service from 'recommended brokers'. They have mostly all been forced into using the EA's mortgage and solicitor partners, some of which in the office on the same day as the enquiry.

There should be some sort of proper regulator who will actually attack this. Maybe even a letter to ask if it happened to you when you looked for your house. Mystery shoppers need to be much more common.
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Paul Neal
Mortgages & Equity Release Advisor at First Choice Financial Services
Many things are illegal, speeding is illegal yet how many of us broke the law on the way to work today?
It's incredibly difficult to police and I would say even more difficult to prove.
The FCA needs to get a grip on it, but it would be a mammoth task to take on
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Steven Morris
Advising Director at Advantage Financial Solutions
As someone who lives in Bristol and regularly used to walk through Castlepark (if you know, you know), I see an obvious comparison: Conditional selling is a bit like smoking weed; Illegal but rarely enforced. Until committing a certain offence actually has a consequence, people will keep doing it. If someone won't regulate estate agents properly, those in neighbouring industries should do something and the more vigilante the better in my eyes. I have long pondered the idea of setting up an anonynous linkedin account, where mortgage brokers and the like can post evidence of estate agents conditional selling and tag their businesses and owners. Oh, the only small error in my weed analogy is that, whilst not to my taste, smoking weed isn't morally reprehensible, like some estate agents conduct is.
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Jamie Lennox
Director at Dimora Mortgages
Lack of real regulation is the main issue here, there may be rules in place but no one to truly enforce them on a day-to-day basis. With some of these practices truly ingrained in their business culture, they've faced no repercussions for years on end and therefore continue as normal with no fear of the comeback.
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
We all know it goes on but getting enough clients to go on record is the challenge.

If you like I actually have a broker that approached me on linkedin with a story about Bellway that you could talk to with an example? It's shocking.