In England, estate agents do not need any professional qualifications, licences or prior training. It is an outlier compared to neighbours such as Scotland, where agents have to be on a government register and undergo a “fit and proper person test”, and Wales – where they have to obtain a licence and complete a training course.
The committee first told the Government to fund a new regulator back in 2019, after former housing secretary Sajid Javid committed to regulating estate agents in 2017.
Lord Best said: “We want a comprehensive regulator of property agents. Everyone would feel a lot more secure and safe if agents adhered to a code of conduct with a regulator to back things up if things go wrong.
“A regulator would allow other agents who understand the law and can spot bad practice to inform their peers. It could go beyond compensation and put a firm out of business. It could come down on them like a ton of bricks.”
Currently, the Property Ombudsman and the Property Redress Scheme can offer consumers up to £25,000 in compensation if they fall victim to a rogue agent – but redress schemes have told the Telegraph that the full amount is rarely awarded.
Lord Best said this figure needs to at least be doubled, to reflect the harm caused if misinformation provided by an agent leads to a buyer ending up with a faulty, worthless home.
He added: “Regulation has been kicked down the road by the Government for five years. Now we need teeth.”
Trying to put a value on a property is a delicate business; a complex equation factoring in size, location, condition, rarity, kerb appeal, and the state of the housing market, present and future.
And some people believe that in a free market a property is simply worth what somebody is willing to pay for it.
This may be true for cash buyers, but for anybody who requires borrowing there is a complicating factor: the mortgage valuation. This is the process where, after a buyer has applied for a mortgage, their lender will get someone to check whether they think the property is worth what they’re asking to borrow.
In a jittery market, it is increasingly likely that the bank-employed surveyor who values your home will err on the side of caution and come in below the agreed sale price, leaving you facing a financial black hole and a serious problem.
Here, Telegraph Money explains why properties can get down valued – and what you can do to keep the deal.
Why do down valuations happen?
Greedy sellers are one cause of down valuations, according to buying agent Nigel Bishop of Recoco Property Search, who has seen a “clear increase” in cases over the past couple of years.
“Some sellers are still basing their asking price on the demand seen during the pandemic,” he said. “The market has very much adjusted since then, which leads to more lenders determining a lower property value.”
Mark Lawson, partner at The Buying Solution, says lack of confidence in the market is another factor.
“Given the slow start to the year, the lack of current deals, and the prospect of two major elections looming, coupled with turbulence in the Middle East and Europe – and therefore the potential for a slow market for the rest of 2024 – it is not surprising that valuers are being more cautious than usual,” he said.
But down valuations can also happen in a hot market. When buyers are competing against each other to buy, they may end up pushing offers above local ceiling prices in order to clinch a deal, and a surveyor may step in as a voice of reason.
And in any kind of market it can happen if a surveyor spots problems with the condition of the property, which they believe will impact its resale value, and has not been priced into the deal.
How to get around a down valuation
Whatever its exact cause, a down valuation is a property headache all round, whether you are a buyer, a seller, stuck in a chain, or hoping to remortgage.
The good news is that it doesn’t need to spell the death of a deal.
Increase your deposit
If a lender doesn’t agree to stump up the amount of borrowing it’s been asked for, the buyer can increase their deposit to cover the shortfall. According to research from HBB Solutions, a professional property buyer, the average down valuation stands at 2.8pc.
How feasible this is depends on the property price, and what the buyer can afford. With average house prices in England standing at just over £300,000, according to the Office for National Statistics, this represents a gap of around £8,000.
But in London, where the Halifax House Price Index finds the average price stands at almost £540,000, that gap jumps to around £15,000. A £1m home would see an average down valuation of almost £30,000.