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Plan to class internet property sites as estate agents may cost vendors thousands.

HOUSE sellers may have to pay thousands of pounds to estate agents even if they sell through a property website, according to a ruling from Britain’s competition watchdog.

The Office of Fair Trading (OFT) has said that companies that allow homeowners to sell their properties online and offer a supporting service, such as a for sale board, should be classified as estate agents.

Until now many homeowners have managed to avoid estate agents’ fees — of between 1 and 2.5 per cent of the sale price — by marketing their homes online for a flat fee of about £100, even if they had signed with an agent.

The websites usually provide for sale boards with a phone line to answer queries, but vendors are left to arrange and conduct viewings and negotiate with buyers.

But now the OFT has concluded that if website users have a sole agency arrangement with a high street estate agent they should pay the commission even if the agent was not involved in the sale. That is because, under the new ruling, an estate agent could claim that use of the website had breached the sole agency agreement, just as if the property had been sold by a second high street agent.

The ruling, made at the end of the year, could lead to dozens of private sale websites going out of business.

Estate agents and property websites contacted by The Times yesterday agreed that the area was murky and needed to be clarified.

The OFT said that it had clarified existing rules to tell consumers that they might have to pay two fees — to the high street agent and to the online firm. The guidance is not legally binding but estate agents, furious that online firms are taking away their business, are eagerly awaiting a test case.

Keith Davis, managing director of propertybroker.com, a private sale website based in London and the Home Counties, described the ruling as absurd, saying that it clearly worked against consumers’ interests.

“If the OFT’s opinion is upheld by the courts, consumers will be forced to choose between using an estate agent and trying to sell their home privately,” he said.

The OFT says that a website would be classified as an estate agent if it introduced a client by sending out particulars, receiving and fielding queries from people wanting to buy or sell a property or put up a for sale board outside. It warns the site owners: “You will be misleading consumers if you state that you are not doing estate agency work when you are. If you are acting as an estate agent, you must comply with your legal duties.”

Christine Burke, a property developer from West London, who has simultaneously advertised renovated flats with estate agents and private sale websites, called the OFT’s definition ridiculous. She said: “I don’t see why an agent has the right to take a commission when they have done nothing.”

If the OFT’s interpretation becomes law, it would also mean that most private sale websites would become subject to the Estate Agents Act 1979 which, Mr Davis argues, could force many out of business.

“The Act requires companies selling properties to fulfil formal procedures such as informing vendors in writing of buyer offers,” he said. “Private sale websites never pass on these details because they are not involved in the negotiating.”

David Philpott, the OFT deputy director of enforcement, defended the move, saying that it helped consumers. “We have sought to clarify the law. Many private sale websites were claiming that they were not acting as estate agents when they were. People can still choose to go to property retailers but they need to know the risks.”

www.timesonline.co.uk/property

It pays to tread carefully when getting your foot on the first rung of the property ladder.
The great crash that was meant to reduce the cost of that nice little two-bedroom Victorian conversion never happened. Instead, the price of a home is rising again as the market picks up. Last month alone, house prices rose by 1.4 per cent, according to the Nationwide. Had you bought a year ago, you may have seen the value of your home rise by more than 4 per cent, by the building society’s measure.
For many first-time buyers, it no longer makes sense to sit on the sidelines and pour money into their landlord’s pocket, and estate agents report that they are beginning to see the return of the same faces they first met six months ago. Many have decided to stop renting and start buying. But where do you start?

Although there was some slackening of prices in certain areas in 2005, there were no falls that were big enough to make a dramatic difference to the average first-time buyer. Research by the Halifax shows that nine out of ten of the most affordable towns are outside the South of England, with Gosport in Hampshire the exception. The lender says that Nelson in Lancashire is the most affordable town in the UK, with property prices just over three times higher than a first-time buyer’s average income. Here a new buyer can snap up a two-bedroom terrace for £55,000. But you would have a difficult commute if you work in the South East. Buy in the capital or Home Counties and you can expect to pay well over ten times what you earn for a home. In Gerrards Cross in Buckinghamshire, the town branded least affordable by the Halifax, you would struggle to buy a two-bedroom flat for less than £275,000.

The good news is that house-price statistics tell only a fraction of the story. The market is becoming increasingly fragmented. A property’s appearance, positioning and state of repair now has a greater effect on a property’s value than it did a couple of years ago, when the market was booming. If you are prepared to compromise you could find something affordable in the least expected places. For example, the average cost of a flat in Westminster in Central London is roughly £600,000. But Capital Agencies (020-7727 4000) recently sold a one-bedroom flat in Bayswater for £220,000. The property is just around the corner from Hyde Park and the shops. But it is relatively cheap because it is on the ground floor of an ex-local authority block.

Location, location, location might be a property cliché but it is even more important for those who are about to take their first step on the ladder. One tactic is to seek out up-and-coming areas. Buying on the periphery of a smart postcode or in neighbourhoods that are being regenerated can be a clever move if you spot the right places. In London the boroughs of Greenwich, Newham, Tower Hamlets, Waltham Forest and Hackney are hoping to benefit from the spin-off effect of the 2012 Olympics. Jules Pipe, the Mayor of Hackney, says that the borough has secured £109 million from Transport for London to improve rail services. That means more trains to Dalston, Haggerston, Hoxton and Shoreditch, although a Tube link remains elusive.

Improvements such as these can push up the cost of property in an area — but do not count on it. According to figures from Hometrack, property prices last year remained flat in most of the London boroughs that will be affected by the Olympics. Tower Hamlets was the only exception. Here prices have been rising since London won the Olympic bid in July.

Some property experts counsel first-time buyers against being too speculative when looking for a first home. It is also worth remembering that areas that have fast rises in property prices during a boom are often the first places to suffer a bust. As most first-time buyers trade up after a few years, it might be best to opt for a property that is likely to sell well even in a slow market. Look for good transport links that already exist and proximity to shops. Can you buy a pint of milk within walking distance? Good bars and restaurants near by also push up the value of your home. If the property is big enough to house a family, being in the catchment area of a good school will also help when you come to sell.

Edward Stoyle, of Townends in Putney (020-8785 4244), says that flexibility and an open mind are also essential. “People start off wanting a garden flat on a quiet road just off the shops on the high street. They end up realising that what they can afford stretches to the flat above the shops.” If your finances are limited, you may have to compromise. Stoyle says: “Something smaller in a central location is preferable to a bigger flat farther from the shops and public transport. A lot of people want a spare bedroom to rent out. In the end they just use it as a dumping ground.”

Nick Allen, of Allen Briegel (020-8946 2323) in southwest London, goes one step farther and advises first-time buyers also to think about maintenance when they view a property. “A Victorian conversion flat is generally more spacious than something newly built because the ceilings are higher,” he says. “But buyers must make sure that they are not going to have to pay a fortune in repairs. For that reason, a flat in a good-quality development can be more reliable.”

If you can drive a hard bargain, buying new can also make financial sense. There is an oversupply of new two-bedroom flats in certain areas and developers are keen to sell. Some builders aim to attract first-time buyers by offering to pay the stamp duty or the deposit. It is worth asking even if nothing is advertised; at the very least you should be able to get some carpets thrown in.

The Times online