Consumer redress against estate agents

Home Information Pack legislation means that estate agents in England and Wales marketing homes for sale with Home Information Packs are required to belong to an approved redress scheme for HIP-related complaints. This will guarantee home buyers and sellers access to redress for HIP-related complaints against estate agents. Since 14 December 2007 this has applied to all homes marketed for sale.

Q. Why do we need an estate agents' redress scheme?

A. Office of Fair Trading (OFT) research has shown that there is a high level of consumer dissatisfaction with estate agents and that consumers find it difficult to complain and obtain redress when problems occur. Although the majority of estate agents now voluntarily belong to an ombudsman scheme, there are still many that do not and so we need to ensure access to redress for consumers where they have any legitimate HIPs complaint against an estate agent.

Compulsory membership of an approved redress scheme will improve standards of service and provide a cost-effective means of redress for consumers. In fact, consumers will have free access to the approved schemes.

The Housing Act 2004 allows the Government to require all estate agents marketing homes with Home Information Packs to belong to an approved redress scheme. For more details on approved schemes please visit the Business, Enterprise and Regulatory Reform (BERR) website (external link).

Q. What sort of complaints will approved redress schemes deal with?

A. Approved redress schemes will be able to deal with a range of complaints about estate agents relating to their acts or omissions in relation to a Home Information Pack (including the giving of advice as to whether such a Pack is required) and award redress where complaints are upheld. In addition, administrators of approved redress schemes will have to pass information regarding misconduct of estate agents to Trading Standards and the Office of Fair Trading, which has the option of conducting a fitness test, which could lead to a ban, if it deems this to be appropriate.

Q. Will estate agents be banned if they refuse to join a HIPs redress scheme?

A. The refusal to comply with the requirement to join an approved redress scheme may lead to penalty charges (currently set at £200) and will be treated as if it were an undesirable practice under the Estate Agents Act 1979. Continued refusal to join a scheme could lead to the OFT conducting a fitness test, which may ultimately lead to a banning order being made under the 1979 Act. For further information please visit the Office of Fair Trading website (external link).

Q. Why don't the HIPs redress schemes cover general complaints about estate agents not connected to Home Information Packs?

A. Part 5 of the 2004 Act deals with marketing homes with HIPs rather than estate agents' activities in general. The scope of the Housing Bill did not allow the redress provisions to cover all complaints relating to the buying and selling of residential property throughout the UK.

Q. Will there be redress schemes to cover general complaints against estate agents?

A. Yes. The Department for Business, Enterprise and Regulatory Reform (BERR), as the Government Department with policy responsibility for estate agents, has brought in the Consumers, Estate Agents and Redress (CEAR) Act. Once the Act's provisions are brought into force, consumers will be able to seek independent redress for all legitimate complaints against estate agents in the UK related to the buying and selling of residential property.

Q. Will the CEAR Act redress scheme cover complaints on HIPs?

A. Yes. The Act contains provisions under which all estate agents in the UK can be required to join an approved redress scheme for all complaints relating to the buying and selling of residential property. This means that complaints about estate agents relating to HIPs will be covered by the UK-wide redress scheme. When these provisions in the Act are implemented, the Housing Act redress provisions will be revoked. Estate agents will therefore only be subject to one duty - to belong to a redress scheme that covers all estate agency related complaints. Estate agents will not have to belong to two schemes.

Q. How else are consumers protected when buying and selling a home?

A. Most of the other bodies involved in the home buying and selling process - for example, solicitors and licensed conveyancers - are already members of redress schemes through their professions. All accreditation and certification schemes for Domestic Energy Assessors and Home Inspectors respectively are required to have robust complaints and redress handling procedures. In addition there are voluntary redress schemes to which most major HIP providers and private search companies belong.