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OFT slates quick house sale market for dodgy practices

OFT slates quick house sale market for dodgy practices

The OFT has issued a highly critical report of the ‘quick house sales’ business.

However, it has stopped a long way short of proposing to regulate it – even though it says it has identified practices that could be breaking the law.

The Property Ombudsman criticised the OFT for not proposing legislation, while Which? called for the OFT to take firm action.

The OFT only launched its study of the sector in April and the report’s publication was apparently at extremely short notice. The OFT had been concerned at possible similarities between the quick house sales business and the now outlawed sale-and rent back sector.

Quick house sales operators offer distressed, and often vulnerable, home owners a discount price for their property in return for a quick sale. The original discount offer price is often reduced later, to an even greater discount.

The report says that consumers are often not given enough information about the original offer and that last minute, often significant, cuts to the offer price “raise concerns”.

It also says that while operators offer ‘quick’ sales, in practice they often tie home sellers in to lengthy periods of exclusivity.

The report says that the law which in particular is at risk of being broken is the Consumer Protection from Unfair Regulations, because of misleading claims or the omission of material facts.

The OFT has written to 120 operators in the sector, to ‘advise’ them of issues identified in its report, and warns that those who act as brokers – ie, by introducing a buyer to the seller – are in fact carrying out estate agency work and must comply with the Estate Agents Act.

The OFT has also opened an investigation into three providers, which it has not named, but says could have lost consumers “tens of thousands of pounds”.

The study contains some tips for home sellers and contains typical case studies. In one case, a home seller close to retirement wanted to sell as quickly as possible as they could not keep up with repayments. They accepted an offer of £73,000. The provider subsequently reduced the offer to £58,000 and sent a courier round that evening with new documents for signature.

In another case, the 87-year-old seller was offered £120,000 which was later dropped to £85,000.

The OFT report was immediately criticised by The Property Ombudsman.

Christopher Hamer said: “This report reveals that there is yet another area of the property sector where there is no formal regulatory framework.

“As with the residential lettings sector there is a minority, albeit sizeable, number of ‘quick house sale’ firms that do not appear to follow established standards or acceptable trading practices.

“The result is an unsafe environment for consumers at a time when they are making important decisions concerning the sale of their home, perhaps when under severe financial or health pressures.
 
“Consumers using ‘quick house sale’ firms have no access to independent redress and the risks associated with this are significant.

“Whilst I note that the OFT is pursuing  a self-regulatory approach, the only way of realistically ensuring all such firms provide consistent service is through legislation.”

Which? said the OFT should take firm action and called on it to name the three quick sale operators it is investigating.