Boon Brokers carried out a survey of 1,000 people following the BBC Panorama documentary Undercover Estate Agent on conditional selling, which showed that some buyers were given the impression they would not be able to buy a home without using an in-house broker.
Some 18% of people who responded to the Boon Brokers survey suggested this was the case, as they said their offer would only be considered if they used the estate agent’s broker.
A fifth of people said they were only allowed to view a property if they used an in-house mortgage broker, and 42% had their viewings directly tied to mortgage appointments arranged by the estate agent.
Overall, 80% of respondents said they had seen a direct crossover between property access and the promotion of in-house mortgage brokers.
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Younger buyers most targeted?
The survey showed there might be a difference in how buyers were treated, depending on their age.
Some 45% of respondents aged 25-44 years old said they were only allowed to view a property if they used an estate agent’s broker, while just 6% of people aged 55 and over had a similar experience.
Boon Brokers said this was probably because younger buyers were less likely to have experience with the house-buying process, and for many, this would have been their first encounter.
The firm said conditional selling could restrict a buyer’s choice and independence if they felt there was a risk of losing the home they wanted.
A need for estate agent regulation
Additionally, people did not know that estate agents were not regulated by a governing body, as 85% said they were unaware.
Some 96% of respondents wanted stricter regulations brought in for estate agents in the UK.
Two-fifths of people said all buyers should get access to property viewings, regardless of which adviser they used, and 78% said estate agents should not have a direct relationship with mortgage brokers.
Since the documentary was released, mortgage adviser Emily Franks has launched a petition calling for the regulation of estate agents.
Gerard Boon, managing director of Boon Brokers, said: “There should be no association between brokers and estate agents. In conveyancing, the same solicitor firm – including subsidiaries – are not allowed to act for both buyers and sellers as it creates a conflict of interest. The same is true for estate agents that own mortgage brokerage firms or vice versa.
“The BBC’s Panorama documentary highlighted this clear conflict and how it causes unfair outcomes for consumers, who are often purchasing the most significant asset of their lifetime.”
Boon said the research highlighted the need for “urgent regulation to protect buyers and sellers from unfair outcomes”.
He added: “As it stands, one business group can own an estate agent and a mortgage brokerage simultaneously. This means they can act for both the buyer and seller in the same property transaction, creating an obvious conflict of interest.
“This conflict of interest was demonstrated in the BBC’s Undercover Estate Agent Panorama documentary. In the programme, an estate agent emphasised the desire to accept a bid for one of their listings from a ‘Hot Buyer’ instead of a buyer who used independent mortgage and conveyancing services. This is because it would result in far greater revenue for the company overall. A ‘Hot Buyer’ is a term used to describe a buyer who accepts the estate agent’s affiliated services – such as mortgages or conveyancing.”
“For buyers and sellers, conditional selling creates market failure in the housing market due to asymmetric information. As buyers and sellers do not usually speak to each other during a transaction, they rely on the integrity of estate agents to deliver honest information,” Boon added.
He continued: “As an industry, we can’t let this story be brushed under the carpet. Professionals in the sector need to express a desire for urgent change in regulation for the authorities to quash conditional selling. We believe that estate agents and mortgage brokers should have no financial affiliation, due to the evident conflict of interest caused.
“If it is illegal for the same conveyancer to act for buyers and sellers in a property transaction, why should the same business group – owning both an estate agency and a mortgage brokerage – be allowed to act for buyers and sellers? There is a clear regulatory contradiction here that needs to be resolved.”
