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07th February 2012

Martin and Co supports OFT approach to unscrupulous agents

Local lettings specialists Martin&Co have given a ‘big thumbs up’ to steps now being taken against agents who deliberately over-value properties in order to gain an instruction.

This practice is particularly singled out in the Office of Fair Trading (OFT) consultation on guidance to estate agents, aiming to help them comply with the law when dealing with land and property.

The new guidance focuses on 2 pieces of law – The Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and the Business Protection from Misleading Marketing Regulations 2008 (BPRs). In consultation with the OFT and Trading Standards, Martin&Co revamped all its documentation to make sure that it was fully compliant with these regulations.

The rules are aimed at preventing agents from giving misleading information, or omitting information, that lead to consumers making decisions that they would not otherwise have done. Deliberate over valuing as a ploy to get an instruction is cited as a classic example of breaking the regulations.

Martin&Co Director Peter Simpson believes that ‘Deliberate over valuing of properties being put up for sale played a major role in the stagnation of the housing market. At one stage the gap between asking prices and what they were sold for was about 20%! Worse still of course, many sales just did not happen at all’.

‘Sadly, we have seen the same problem spreading into the lettings market over the last year or so, with even specialist letting agents adopting this tactic as a means of gaining instructions in a competitive market. The impact of this can be greater than it would be in the sales market, because needlessly untenanted properties cost landlords money. These houses and apartments often stand empty for too long, before being rented at the kind of figure that should have been quoted in the first place!’

With the growth of so-called ‘accidental landlords’ – those who have only become landlords through circumstances such as not being able to sell a property – Peter is concerned that this group especially is vulnerable to over valuing and other suspect practices.

‘Rents are rising and it’s a market in which it’s worth chancing your arm a bit, but we have seen some ludicrous valuations. Occasionally it’s through incompetence – an agent that doesn’t do much in lettings, or is unfamiliar with a particular part of the lettings market, simply does not have enough evidence and experience to draw upon to set a realistic figure, and will over or under price.

All too often however, agents who should know better are deliberately raising false expectations because they feel that landlords will appoint the agent suggesting the highest rental valuation. It’s just a con that brings the whole industry into disrepute, and often costs the landlord who falls for it’.

‘It’s the agent’s job to get the best rental price they can, but to also minimise void periods and maximise tenant quality. That’s almost as much an art as a science, but with us letting as much as we do across Staffordshire and Derbyshire, we are uniquely well placed to have the best up to the minute insight on market rentals’.