April 2009

Lettings disputes grow as market changes

OEA annual report also reveals Scheme’s largest-ever award

OMBUDSMAN for Estate Agents Christopher Hamer is seeing a major switch towards dealing with disputes covering lettings as the profile of the property market changes.

During 2008, the period covered by his latest annual report, membership of the scheme rose by 17 per cent.

But at a time when overall sales activity across the market dropped by as much as 60 per cent, disputes involving sales only dropped by three per cent, a figure which Mr Hamer described as surprising.

“I am surprised that my workload in sales disputes has not reduced more significantly,” said Mr Hamer. “Perhaps it shows that buyers and sellers have still higher expectations of agents’ service while there are so few properties being sold.”

While sales activity dwindled, the rise in the residential lettings market saw a 200 per cent increase in the lettings disputes handled by the OEA and Mr Hamer predicts that during 2009 lettings will become the major area of his activities.

“Lettings agents still only join the OEA on a voluntary basis and it is therefore satisfying to see so many firms opening up access to my scheme for their customers,” he added.

“Those firms will be operating in accordance with the standards laid down in the OEA’s Code of Practice.”

The Ombudsman also revealed that in 2008 he made the highest-ever award to a complainant in the 20-year history of the scheme, with the estate agent involved ordered to pay out £23,880 after conflicting advice had been given by staff and the agent had failed to act in the best interests of the client or negotiate effectively.

Of the total, Mr Hamer awarded £1,000 to cover the distress, aggravation and inconvenience suffered by the complainant — the rest was an award to recompense for indentifiable financial loss. The maximum award he can make under scheme rules is £25,000.

Mr Hamer received 1,043 new cases in 2008, split between 743 for sales and 300 for lettings, an increase of 20 per cent over 2007 but 78 per cent compared with the same figure for 2006.

In 65 per cent of cases, the complaint was upheld, resulting in awards totalling more than £385,000. The majority of awards were for between £100 and £499 but 18 were for amounts above £3,000.

Mr Hamer says there is still much confusion between redress as offered by an ombudsman scheme and regulation.

Many people mistakenly regard him as a regulator of estate agents but his purpose is to resolve disputes between agents and consumers.

However, Mr Hamer does have the means to take action against estate agents through the OEA’s Disciplinary and Standards Committee and during 2008 he referred 21 cases to the DSC, 16 involving sales and the rest lettings.

Mr Hamer said that talks were now under way with the Association of Residential Letting Agents to bring all its members within the scope of OEA.

At the same time, the Office of Fair Trading is also being asked to recognise the OEA lettings Code of Practice under its Consumer Codes Approval Scheme which will ensure consistency in the standards of services delivered across both the sales and lettings markets. It would also mean that both OEA Codes had received independent scrutiny and accreditation, enhancing their credibility for consumers.

Responding to industry calls for the OEA to give up ownership of its Codes of Practice, Mr Hamer sees it as more important that OFT accreditation of the codes is retained rather than who owns them.

“Given that around 95 per cent of estate agents offices are operating to the OEA Code I also think it would create confusion if a separate industry Code were to be drafted,” he added.

But he does think an independent body could do much to promote awareness of the house buying and letting processes and he also backs a licensing or registration scheme such as that recently proposed by Bill McClintock, chairman and chief executive officer of the OEA operating company.