Calls for a new regulator to “come down like a ton of bricks” on cowboy estate agents have been renewed by a lords committee.
Lord Best, who sits on the House of Lords Industry and Regulators Committee, told the Telegraph the Government “needs to show some teeth” after kicking regulation of estate agents down the road for years.
The social housing leader has written to levelling up secretary Michael Gove, citing the “overwhelming evidence of harm that some people experience” when dealing with letting agents. It is calling for a new regulator and a licensing scheme to stamp out “mis-selling” and “exorbitant charges”.
It follows reports that sellers are losing money because they are being deliberately put off high bids from buyers with independent mortgages.
Consumer body Trading Standards said sellers could be missing out on best offers because of commission deals.
Many estate agents receive referral fees by recommending mortgage brokers, solicitors, surveyors and other third party services.
But the boss of the enforcement authority said these fees can be so high that it becomes more lucrative to choose a buyer using these preferred services.
Property experts have also previously warned buyers about agents faking bids to drive prices up.
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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.”
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The hope is that the Government will add a clause to either its Leasehold and Freehold Bill or its Renters Reform Bill – both of which are making their way through parliament.
This would then allow Mr Gove to dish out powers and insist that estate agents are better qualified. It would also cover managing agents who oversee much-debated service charges paid by flat owners who own leasehold properties.
Labour’s shadow housing minister Matthew Pennycook has already tabled an amendment to the Leasehold and Freehold Bill to do this.
Timothy Douglas, policy and campaigns head at estate agent trade body Propertymark, said mandatory qualifications, a statutory code of practice and regulatory oversight was “vital” in order for the industry to comply with incoming legislation.
A spokesperson for the Department for Levelling Up, Housing and Communities said it is “committed to promoting fairness and transparency for tenants and homeowners and making sure that consumers are protected from abuse and poor service”.
They added: “We continue to work with industry on improving best practice across the property agent sector, and measures in both those bills will help to drive up overall standards.”
The Industry and Regulators Committee has urged the Government to get on with establishing a regulator of property agents, four years after it committed to doing so.
In a letter to Rt Hon Michael Gove MP, Secretary of State for Levelling Up, Housing and Communities, the Committee warned that the Government’s delay is impacting tenants, leaseholders and others, who continue to be exposed to malpractice.
After hearing evidence from campaigners for leaseholders and tenants, professional bodies representing property agents, The Property Ombudsman, the Leasehold Advisory Service and National Trading Standards, the Committee found that current forms of self-regulation, enforcement and redress in the sector are reactive or limited in scope.
In addition, it found that a new regulator would make a significant difference by driving up standards in the sector and that the Leasehold and Freehold Reform Bill does not sufficiently address the issues that leaseholders face and needs to be supported by greater regulation.
As a result of these findings, the Committee is calling for the implementation of legislation to establish a new regulator, or, at the very least, a full published response from the Government to the report of the Working Group that recommended establishing one.
It has also called for new mandatory qualifications for property agents, industry codes of practice operated by the new regulator, and for the Government to legislate statutory consumer representation in the sector.
Baroness Taylor, chair of the Industry and Regulators Committee said: “During our inquiry, there was near unanimous evidence from consumers, industry and existing bodies on the need for statutory regulation of property agents and the establishment of a new regulator.
“The Government has been sitting on its hands for four years by not acting on the report of the Working Group it set up. In the meantime, the impact of poor regulation is being felt by tenants and leaseholders, and the sector has been left in limbo.
“I have also expressed to the Secretary of State that we would have appreciated a minister from his department providing oral evidence to the inquiry.”
The government plans to intensify revenue collection from landlords through a crackdown on unlicensed property agents.
Through the Estate Agents Registration Board (EARB), the state will in the coming days begin reigning in unlicensed property agents.
Lack of proper database has made it difficult for the government to ensure landlords contribute their fair share of taxes, which has seen the government miss its revenue targets from landlords over the years.
For instance, for the year 2022 the state recorded a shortfall of Sh27 billion in revenue from residential rental income taxes compared to initial projections.
“In order for the EARB to continue protecting the interest of the public and enhance professionalism in the real estate sector, consumers are advised to deal with registered estate agents only” EARB said in a notice by the registrar Hellen Abuya.
KRA has identified landlords as high net-worth individuals with high potential for growing revenue.
In January 2024, KRA revised the taxation framework and raised the rate that landlords will pay as taxes.
The taxman raised the rate of tax to 7.5 percent; effective from January 1, on the gross rent received and is final tax.
It noted that no expenses, losses or capital deductions are allowed for deduction from the gross rent.
However, this has still been a challenge for the government, despite the tax authorities introducing the latest modifications.
The latest move follows National Treasury’s directive last month to expand its team of property agents to assist KRA in tackling tax evasion among landlords, particularly due to significant shortfalls in rental tax collections.
The Estate Agents Act requires practitioners to register with the board and be issued with an annual practicing certificate.
A person practicing without the registrations faces a fine of as much as Sh20, 000 or a jail term of up to two years or both upon conviction under the law.
EARB said registration of estate agents is open to full members of the Institution of Surveyors of Kenya practising in valuation and estate management, building and land management, or a holder of a degree, diploma, or license from a university or college recognised by the board.
An incident involving a Malaysian woman and a property agent has sparked outrage and condemnation online. The woman took to social media last week (10 Jan) to share her experience of a racial remark made by the now ex-agent while house hunting.
The woman, Kalvin, revealed that the real estate agent she contacted, identified as Alan Chia, initially responded positively to her inquiry.
However, the situation took a turn when she disclosed her name and ethnicity, leading the agent to explicitly express a refusal to deal with Indian and Punjabi individuals.
I don’t normally do this but this is completely UNACCEPTABLE. Contacted a property agent, his response was fine initially, but immediately after obtaining my name and race, he was rude. When I questioned him, see what he says.
He blocked me right after. pic.twitter.com/UAhNUdFnih
— Kalvin (@kalvinderks_) January 10, 2024
“This is truly unacceptable. Today it’s against Indians and Punjabis. Tomorrow it’ll be against Malays,” Kalvin expressed in her viral tweet on X.
The post gained widespread attention, prompting the real estate agent’s company, IQI Global, to conduct an investigation.
Agent terminated from employment, releases apology video
In a statement responding to the incident, the company revealed that the agent had been terminated from employment based on both the investigation’s findings and the agent’s admission to the remarks.
After investigation and given Alan Chia’s admission of the facts of the issue, we have terminated Alan Chia with immediate effect and he no longer acts as an agent of IQI.
We have a very diverse group of staff and agents from different countries including Malaysia, Philippines,… https://t.co/Hnz0tE82RS
— IQI Global (@IQIGlobal) January 10, 2024
“We are strongly opposed to any form of discrimination and do and will continue to respond to it strongly,” the company asserted in their official response.
Following his termination, the former agent, identified as Alan Chia, took to social media platform X to issue a public apology.
In the message, Chia extended his apologies to the Malaysian community, specifically to the Indians, Punjabis and Kalvin. He expressed regret and acknowledged the gravity of his actions.
“For all Malaysians, especially Indian friends, Punjabi friends, and Ms. Kalvin, please accept my apology. I will take responsibility for what I did today. I deeply regret my actions and am currently feeling stressed. I sincerely apologise,” he wrote in his apology.
For all the malaysian especially indian friend, punjabi friend and Ms Kalvin. Please accept my apologise and i will be responsible on what i have did today. I’m very regret and feeling stress now. Sincerely apologise from me Alan Chia pic.twitter.com/2D9jMJZyP1
— Alanchia (@alanchia1993) January 10, 2024
Kalvin’s response to the apology
In response to the apology, Kalvin told Yahoo Southeast Asia that she was glad he apologised.
“Glad he did apologise. I didn’t intend to defame him as I understand he has his whole life ahead to earn a living. But I wanted to convey a strict message that racial remarks are not acceptable and never will be acceptable.”
She felt that property agents should not have preferences when conducting business, and that their role is to cater to the seller/owner’s requests transparently without bringing personal biases into the equation.
Kalvin concluded by encouraging others who face racial discrimination from property agents to lodge complaints with the Board of Valuers, Appraisers, Estate Agents and Property Managers (BOVAEP).
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SINGAPORE: Despite facing headwinds in the property market, the number of property agents in Singapore continues to rise in the real estate sector, according to data from the Council for Estate Agencies (CEA), The Straits Times reports on Monday, Jan 15.
As of Jan 1, 2024, there were 35,251 property agents, marking a modest rise from 34,427 at the beginning of 2023 and 32,414 in 2022.
PropNex retained its position as the largest agency, boasting a sales force of 12,017 agents as of Jan 10, reflecting a 3% increase from the previous year.
ERA secured the second spot with 8,918 agents, followed by Huttons Asia with 5,310 agents.
OrangeTee & Tie, which fell out of the top three in 2022, reported a decline of approximately 11% in its sales force headcount, making it the only agency among the top five to experience a decrease.
Meanwhile, Huttons recorded the highest growth, with a close to 9% increase.
In 2023, 2,170 new property agents joined the sector, slightly fewer than the 2,179 in 2022 and 2,308 in 2021. Despite the challenges in the industry, 96% of property agents renewed their registrations for 2024, according to a CEA spokeswoman.
The real estate market faced a 15% drop in private home sales in 2023, reaching the lowest levels since 2016, and a slower growth rate of 6.7% in private home prices compared to 8.6% in 2022.
Amidst the changing landscape, top agencies witnessed significant shifts in their senior management. OrangeTee & Tie appointed Justin Quek as its new CEO, while former ERA Singapore COO Thomas Tan joined SRI as the CEO.
PropNex revealed a new leadership masterplan, appointing Kelvin Fong as deputy CEO and Eddie Lim as chief agency officer.
Despite the challenges, the influx of new agents can be attributed to the dynamic and fast-paced nature of the profession, resonating particularly with younger individuals.
ERA Singapore CEO Eugene Lim highlighted the consistent influx of new home buyers and upgraders as a driving force for a growing sales force.
PropNex’s executive chairman and CEO, Ismail Gafoor, acknowledged market challenges in 2023, emphasising the need for guidance and direction for the sales force to improve productivity. Gafoor stated:
“Our focus in 2024 is to grow our market share by expanding our team of salespersons and enhancing operational productivity by leveraging technology development and training programmes.”
OrangeTee & Tie acknowledged the impact of the external business landscape on its 2023 performance, citing market volatility and policy changes.
The agency looks towards 2024 with a focus to “stay ahead of the curve” through senior management changes and adapting to technological advancements.
Huttons Asia’s CEO, Mark Yip, highlighted the evolving role of property agents in 2024, emphasising the increased use of digital tools for customer relationship management, data analytics, and marketing channels.
He said, “Agents will need to rely more on data to gain insights into market trends, buyer and seller preferences, to provide valuable advice to clients and help them make more informed decisions. “
Property agents may become involved in more international transactions as the real estate landscape evolves.
Huttons has already marketed properties in eight countries: Japan, Australia, Vietnam, Cambodia, and Indonesia. /TISG