The three price-fixing estate agent cartels that colluded to fix fees for letting and selling properties have now been broken up by the Competition and Markets Authority (CMA).
Price-fixing results in homeowners being ‘denied the chance of securing the best possible deal’, when they were unable to shop around for a better commission rate. The CMA has asked property buyers and homeowners to report estate agents they suspect of cooperating illegally when they set fees.
In June 2019, three estate agents in Berkshire were fined over Â£600,000 when the CMA found they had fixed their minimum commission rates. There have been other instances of commission fixing over the last few years, where estate agents have been found to be exploiting home buyers and those renting property.
Four estate agents, Romans, Michael Hardy, Richard Worth and Prospect, were found to have broken competition laws when the companies were found to have set a minimum commission rate of 1.8% for properties dating back to September 2008.
At this minimum rate, the 1.8% commission rate would equate to an average Â£9,000 per property sale. Without price-fixing, a slightly lower rate of perhaps 1.5% would mean a saving to the average home seller of Â£1,500.
The estate agents collaborated for nearly seven years, and the exploitation affected home buyers in Bracknell, Crowthorne, Warfield, winnersh and Wokenham. They exchanged confidential information and held meetings to conspire to ensure the minimum commission rates were maintained and enforced. They even agreed a penalty system in the event that one of the cartel varied from the agreed rules.
Romans, which has 140 branches throughout the UK, was exempted as it reported the issue to the CMA and has cooperated with the investigation. Romans said that in June 2017 senior directors discovered a ‘small number’ of its residential sales executives in some of its branches had acted ‘contrary to the standards and values’.
Members of Three Counties estate agents were previously fined over Â£700,000 when they were found to have broken competition fees for price-fixing letting and estate agent fees, and in Somerset two years ago a cartel of four estate agents were fined Â£370,000 for the same offence.
The fines set reflected the behaviour of the estate agents, and a discount was given to Michael Hardy and Prospect after they admitted their actions and cooperated with the investigation. The two estate agents have now reviewed their practices.
If you’re buying a property anywhere in England and Wales, ask a Property Surveying Chartered Surveyor for a building survey.