Category: News

A new estate agency Code of Practice is to be written by a group set up by the Royal Institution of Chartered Surveyors and The Property Ombudsman.

It will be led by a Labour peer and should produce the code by the end of this year.

The steering group – which also includes representatives from ARLA and NAEA Propertymark, Trading Standards and sales and lettings industry trade bodies – is charged with developing what RICS and TPO call “an overarching code of conduct for residential property agents”.

It will be independent under the chair, Baroness Dianne Hayter, and is the first attempt to enact one of the many recommendations put forward a year ago by the Regulation of Property Agents Working Group.

That group called for an independent regulator, licensing for all agents, a new code of conduct, mandatory qualifications and a new form of redress more powerful than existing operators: until now, none of these recommendations had been acted on, and even this morning’s new announcement addresses only one of the proposals.

The new Code of Practice is likely to be a single, high-level set of principles to be applied to all residential property agents; there will also be a number of other more detailed sections developed that are specific to various aspects of the residential property agent sector, such as sales, lettings and management.

A statement from RICS and TPO says the code is being prepared so that it can be “handed over” to the new regulator once that role is established.

The Code of Practice Steering Group will consist of consumer and sector representatives who “will work collaboratively and in the public interest, and those participating in the group do so voluntarily, in good faith.”

No names or organisations have been named so far as being involved.

A draft on the new code will go out for consultation this month, July, when according to the TPO and RICS “feedback from users, professionals, buyers, sellers, lenders, tenants and landlords will be sought.”

Baroness Hayter is a Labour peer whose CV includes being Chair of the Legal Services Consumer Panel, Vice Chair of the Financial Services Consumer Panel and a member of the National Consumer Council. She also chaired the Property Standards Board.

“The forthcoming combined code will ensure that consumers are clear what standards they should expect from property professionals, and it will enable them to be confident that all residential property agents will be held to account in meeting them” she says.

“The independent Steering Group is undertaking this work to prepare an over-arching Code of Practice for the new regulator, very much within the public interest.  With both consumer representatives and cross-sector support and commitment to achieving this goal of a combined code, as proposed in the Regulation of Property Agents Report, it will raise standards and trust in the industry” she continues

The launch statement of the new body includes a quote from Housing Minister Chris Pincher who says: “Baroness Hayter’s appointment is an important development for property agents as they further raise standards in their industry and protect their customers. I look forward to continuing to work with all to ensure customers are treated fairly and that all agents work to the same high standards.”

Estate agents are likely to get through the next five to six months even if the market falls away – but November is most likely the critical month.

That’s the forecast from the chief executive of property recruitment firm Rayner Personnel who says the immediate future should be easy for agents to get through.

This is because portal fees are on offer and the furlough scheme is still at its most generous.

However, Josh Rayner is forecasting problems later in the year.

“[There’s] a problem coming down the tracks as the government support starts to dilute because it’s as this happens that cashflow will potentially be most vulnerable – a combination of landlords insisting on backdated rent payments, Rightmove and Zoopla support waning and an absence of deal completions from a barren lockdown period – all make for a collision of circumstances that some agencies may not easily cope with come November” he forecasts.

From the end of the summer estate agency employers like every other will be required to support the cost of furlough in respect of funding employer national insurance and pension contributions.

From September an additional 10 per cent will have to be paid by agency owners as government insists employers pay the difference between the current 80 per cent furlough threshold and a revised 70 per cent government contribution – and then 60 per cent from October.

Typically an estate agent in the UK earns £28,800 annually according to the average from the Office for National Statistics and other sources; on that basis, the total salary burden for the whole agency industry would be up to £122m per month once furloughing is scrapped entirely.

Data released this morning by Rightmove suggests that agents in England have agreed no fewer than 40,000 sales since the market reopened little more than four weeks ago.

The data, from Rightmove, shows that over the past month in total sales are still down some 36 per cent on the comparable period last year; however, a snapshot from early June alone shows that sales are running at just three per cent lower than a year ago.

The portal – in another statement showing how influential it believes itself to be in the sales process  – says 10 of its busiest-ever traffic have been recorded in the past month.

The busiest single day for time spent on the site was Saturday June 6 with people collectively spending over 955,000 hours.

This rush of demand has had an effect on prices too.

The portal says asking prices in England are now some 1.9 per cent more than they were in the beginning of March, the last time there was sufficient data to make a meaningful comparison. This data applies to England only, as the market is still restricted in Scotland and Wales thanks to Coronavirus lockdowns.

New supply in England is also starting to recover, though there are over 175,000 missing sellers that would have come to market between March 24 and May 12 when compared to the same period in 2019.

“Whilst it’s still early days, Rightmove’s statistics covering 95 per cent of the market indicate far more resilience than had been expected, with a strong initial bounce-back in all metrics” reports the portal.

Rightmove has made a specific analysis of over 7,000 newly agreed sales provided by major corporates and property groups, and this study indicates that buyers are agreeing to pay closer to the asking price than they were at the beginning of the year.

In recent weeks, buyers were having offers accepted at 97.7 per cent of the last advertised asking price on Rightmove; although these sales have not yet completed, they are the most up-to-date view of sales agreed prices until completion data is available in a few months’ time.

Analysis of completion data from Land Registry for February shows an average of 96.6 per cent achieved of the last advertised price on Rightmove.

“This indicates that sales agreed after the market reopened have not only shown price stability but a likelihood of modest upwards price pressure” says the portal.

Today is one month since the government lifted restrictions on agents and the housing market – and since that time the largest increase in business has been for mortgages.

In the past month the total mortgage search volumes using FinTech service Twenty7Tec has doubled from 479,000 searches to 955,000.

“We’ve also seen the volumes of first time buyers’ searches quadruple since that announcement. First Time Buyers accounted for 39.4 per cent of all purchase searches in the past month – up from a lockdown low of 31.82 per cent just days before the [market opening] announcement” explains James Tucker, Twenty7Tec’s chief executive.

He adds: “There are still some major challenges ahead. Payment holidays are now in place for one in seven UK mortgages and we need to see how those are going to transition back to normal payments in challenging employment conditions.

“We hope that there’s a new price point that emerges quickly between first time buyers and lenders that will continue to reinvigorate the market. Currently, demand well outstrips supply with only 50 per cent of the volumes of mortgage products available pre-Covid now available.”