Agents should be careful to ensure they do not break competition law when they draft their adverts.
In particular, they must take their advertising decisions independently of their competitors – including whether to advertise fees or discounts.
The Property Ombudsman has issued a new supplementary membership guidance note. It was added to TPO’s site yesterday.
The note could be interpreted as positive encouragement for estate agents to display their fees – and possibly a step toward requiring agents to show what they charge. The Competition and Markets Authority said that agents who do advertise their fees play an important part in stimulating competition in the industry.
The new advice has been prepared with input from the Competition and Markets Authority which recently prosecuted a “cartel” of agents in Hampshire.
The new advice is designed to help agents understand their obligations under the revised Codes of Practice and ensure compliance with the Competition Act.
The revised TPO codes came into effect on October 1 and were approved by the Chartered Trading Standards Institute.
The new supplementary guidance underlines
Christopher Hamer, the Property Ombudsman, said: “As part of the most recent Codes of Practice review process, we have produced further guidance in collaboration with the Competition and Markets Authority to help support TPO members and improve standards within the industry.
“This guidance note supplements section 3 of the TPO Code of Practice for Residential Estate Agents and has been drafted with the aim of ensuring agents do not compromise honesty in relation to the advertising of fees.
“These guidelines come as a result of a well reported case that happened earlier this year where the CMA found that an association of estate agents and a newspaper publisher had entered into an illegal anti-competitive arrangement, breaking the competition.
“CMA imposed penalties of over £735,000.”
This guidance reflects updates to the Codes and the industry is expected to apply it.
Agents are being warned that non-compliance may result in sanctions from the CMA, and could also mean possible exclusion from membership of TPO.
Ann Pope, CMA senior director of Antitrust Enforcement, said: “It’s clear that some agents are still unclear how competition law applies to their business which is why we wanted this guidance to be disseminated widely.
“We wanted to assist agents and help the industry understand their responsibilities and what is seen as inappropriate practice.
“In particular, we wanted to highlight that the ability of agents to advertise their fees or discounts freely plays an important role in stimulating price competition between competitors.
“If agents are prevented from advertising their fees or discounts in the media fee levels may be artificially inflated and owners are likely to find it harder to assess which agents offer the best value for money.
“It could also make it harder for new entrants to enter the market and compete effectively with established agents.
“Agents that continue to restrict their advertising of fees or discounts in this way are breaking the law and may face severe consequences.”
The guidance is here
they can call and ask………. dont need more red tape pls.
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I don’t think that they are saying you must advertise your fees seenitall, rather that you cannot gang up on publishers who accept advertising from those who do choose to advertise their fees.
In this case, you should expect some pretty swingeing fines. The CMA don’t like any groups of competitors who collectively seek to block others from competing fairly.
Oops!
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Agreed.
My fees aren’t relevant until you agree to take something. If when I present my fees you are not happy, don’t take the property.
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It would be nice to have some parity on both sides of the industry.
From the buyers perspective it does make Estate Agents look a bit ‘cloak and dagger’ now compared to Letting Agents (enforced) ‘bare all’ approach.
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“If agents are prevented from advertising their fees or discounts in the media fee levels may be artificially inflated and owners are likely to find it harder to assess which agents offer the best value for money.”
Oh, dear. So CMA clearly believe that “best value for money” is best assessed by reading fees off a screen and making a decision.
Beggars belief.
I’m clearly not getting best value from CMA. Who do I make a complaint to?
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Couldn’t agree more. They seem to be looking in one direction, while some are looking very expensive, all cheap fee’s generate are monkeys trying to buy the customer.
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I can see how this would benefit lower priced agents and online agents. This allows new entrants into the mix – fair enough.
But why should the ones who charge more be penalized and potentially lose their instructions based on price (not value). lets hope this never comes a requirement
We all have to be given a fair opportunity to pick up instructions and how can everyone advertising their fees be fair, we all offer a different service to each other and having to advertise our prices will lose the individuality of our value. Requirements to advertise fees will then be a race to charge less, businesses will then suffer.
LEAVE IT ALONE
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It has been designed specifically for online agents.
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Restaurants have had to advertise their fees outside for years and I still see top end places full of people who see value in that sort of environment.
Playing devil’s advocate would it prevent people coming or would it prevent the ‘wrong’ people coming?
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I fully agree with ‘PeeBee’ and ‘Statement of Fact’. What concerns me nowadays is where are NAEA, ARLA and RICS hiding when these matters are first muted and why are they not consulting their members re these changes before they take place so that the ‘powers that be’ can get the full and proper picture. NFOPP and RICS are both on the board at TPO so why do they just seem to ‘roll over’ every time a change is suggested.
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No problem, our fee is 1.25% plus vat…..oops, it seems that the local competition are now all offering 1.2% plus vat….. how bizarre!
Surely common sense (if indeed they have any) would dictate that the fee may be dependant upon the sale value and the saleability of the property?
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‘Letmeout’ , I am sure what you were looking to say was “Our fee is 1.5% INCLUSIVE of VAT” ………….. All fees having to be Advertised as an inclusive of VAT rate is yet another regulation that we all have to follow.
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Letmeout… so funny giving prices +VAT!
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Sorry, I’ve been reading an article about Purplebricks.
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How about TPO making a case and explaining to the CMA why this is impracticable, why different properties require different marketing and why fee’s may need to vary depending on property type.
This could be where me and TPO part company. How about fighting our corner rather than writing a new bit of code every time some unreasonable bit legislation gets thrown at us. We need an organisation with a back bone more than ever.
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So much for offering a bespoke service which can incur additional charges.
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“How about TPO making a case and explaining to the CMA why this is impracticable, why different properties require different marketing and why fee’s may need to vary depending on property type.”
Unfortunately there is a fatal flaw in this notion, wardy – and that is that TPO DO NOT UNDERSTAND ESTATE AGENCY. They “resolve disputes” – although I would suggest that there will be no recorded cases where both parties would confirm they feel their dispute was resolved amicably.
They will not fight our corner because they are not there to – some would suggest the opposite be the case.
Our saviours and guardians are RICS and NAEA.
That’s it then – we’re right royally bu99ered!
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You just made my mind up for me!
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Totally agree Wardy but why are our own professional bodies to whom we pay large fees, and therefore ultimately their salaries, not fighting these corners for us?
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In a word….Laziness.
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Nothing more than you would expect from our so called trade body self appointed and answer mainly to themselves.
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I charge from 0% upwards – call to find out more.
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Actually @Ric I really like that – remember that your broadband provider gets away with advertising “Up To” speeds and rarely live up to their promise.
I think I’ll start now.
😉
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Why not, I think if we all do it, we can make the “Online Only Pay Up Front” agents look rather expensive!
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anonymous please don’t forget if we all follow suit we are creating a cartel………!!!!!!!
And that just isn’t cricket old chap.:-)
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Nice one Ric – a very good idea – One question though – If every agent quoted ‘0% upwards’ would CMA class that as, and I quote, ‘an illegal anti-competitive arrangement’ and sue us all. Now that would be interesting and at least it would take their minds off coming up with other ridiculous proposals!
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If those who charge from 0% upwards for their service display this; then no.
If you say you do but don’t then perhaps you may be in trouble but I am sure No Sale No Fee and the fact I can do a freebie when ever I feel like it means 0% is true!
I am just stating my fee’s for marketing your home openly which are from 0.00% upwards FACT.
No need to explain I am sure but if I don’t sell your home then I charge 0% for my services!!
If Online Only can say from £500 or £600 (inc VAT) but if you want X, Y or Z you pay more then I can say from my lowest.
I would imagine if they don’t allow me to say from I have an equal complaint for being treated unfairly and request the Online Only agents advertise their highest fee combination first and not their lowest.
What better competition for a consumer to entice them to talk to every agent to ensure every fee combination is explained and an informed decision is made.
I would call the 0% agent to ask why.
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If you offer No sale = No Fee ….. from 0% is perfectly acceptable as that is what you do. However you do have a duty to advice on fee if you do charge under consumer legislation & TPO code of practice.
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PS – I would much rather none of us advertise fee’s by the way but the outcome of being made to would be “from 0%” as we all undercut each other by 0.1% here or there and finally drive the industry into the ground for good.
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If all the high street agents had to advertise their rates to comply with the law, it sure would blow the online agent “savings” claims out of the water
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I may be mistaken here , but I am sure that when Rightmove spoke to me about using their “Premium products” (Local Homepages banners etc) they stipulated that agents were not allowed to advertise any rates/fees etc. Now their policy may have changed on this but perhaps that would be of interest to the CMA ……#justsaying
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Hi David M, I think they RM say you are not allowed to say 25% OFF or something like that. I think they do allow you to advertise an actual fee you charge, but no agent really wants to (I would imagine) for the fear of the next agent running their local homepage with a cheaper offer.
I wonder if RM will be made to display what they charge Agents, each agents fees written clearly on each agents BIO page – as we all know the rate card mean nowt. Just knowing your competitor pays £50 to £100 less per month can make us all warm and fuzzy inside.
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I imagine you are right. I’d like to believe that as we Estate agents are “Consumers” in relation to the service portals provide we too should have full clarity as to what they charge.
In addition surely it is in the public’s interest to understand how much the portals charge the agents and that year on year these rates increase significantly and this additional cost is then directly or indirectly passed onto the consumer (obviously!)
Perhaps they can show us examples of agents paying the rate card rates; otherwise that could be considered false advertising could it not?
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You have to if you do lettings since April 2015.
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