The complete legal term and definition of a real estate agent within the UK are available on the Office of Fair Trading (OFT) website. Enforcement of these regulations is also the duty of the OFT.
In the United Kingdom, residential estate agents are regulated by the Estate Agents Act 1979 and the Property Misdescriptions Act 1991 that is scheduled to go in October 2013, in addition to, the recently enacted Consumers, Estate Agents and Redress Act 2007.
In September 2012 CPRs (consumer protection regulation) was introduced which currently regulates the residential sales process.
For residential property, in addition, there are a couple of trade associations for estate agents, INEA The Independent Network of Estate Agents and National Association of Estate Agents (NAEA). NAEA members can be disciplined for breaches of the code of conduct. Their disciplinary process includes everything from warnings and warnings directly through to more severe penalties of up to #5,000 for each rule breached.
Some estate agents are members of the Royal Institution of Chartered Surveyors (RICS), the main body for UK real estate professionals, dealing with both residential, commercial and agricultural land. Members, called “Chartered Surveyors”, are chosen based on examination and have to adhere to a code of conduct, including regulations about looking after their customers’ money and professional indemnity insurance in case of error or negligence.
These firms all seek to provide the full range of property advisory services, not just agency.
Only a handful of large firms trade in both commercial and residential property.
Estate agents fees are charged to the seller of the property. Estate agents normally charge the seller, on a ‘no sale, no fee’ basis, so that if property doesn’t sell, then the customer will not pay anything to the estate agent and the agent will have worked for the customer, free of charge. If the seller does sell the property and complete the sale of their property to a buyer that was introduced by the estate agent, then the estate agent will charge anything from 1% to 2%, with the average being reported as 1.3% and this is calculated based on the sale price of the property.
Alternative estate agency models, most notably online estate agents, generally offer a choice of fees, most of which are paid up front. Fees range from around #300 to #800, which is payable up front. Some online estate agents offer this as a deferred payment, which means there is nothing to pay up front, but a fee will become payable after a period of time.
Estate agents who handle lettings of commercial property normally charge a fee of 7 to 15% of the first year’s rent, plus the whole of the first month’s rent. If two agents are charging 10%, they will split the fee between them. Estate agents selling commercial property (known as investment agents) typically charge 1% of the sale price.
The fees charged by residential letting agents vary, depending on whether the agent manages the property or simply procures new tenants. Charges to prospective tenants can vary from zero to #300 in non-refundable fees usually described as “Application”, “Administration” or “Processing” fees (or all three). There are no guidelines for permitting agents on fees, except that they’re prohibited by law to charge a fee for a list of properties. All fees to tenants are prohibited in Scotland.  Otherwise, they are free to charge as they please in England and Wales.
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