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OFT: housing market would benefit from shake up

OFT: housing market would benefit from shake up

Category: Mortgages

Updated: 18/02/2010
First Published: 18/02/2010

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The housing market could benefit from a shake up, including making it easier for new entrants to enter the sector, the Office of Fair Trading (OFT) has said.

As part of its study into home buying and selling, the body has reported that the housing market remains dominated by traditional estate agents with weak competition on price.

Furthermore, as the price of property increases during boom periods, so do estate agents' fees.

A shake up of the arena – in particular through innovation in online services – could mean a better deal for both home buyers and home sellers.

More than a quarter of sellers (27 per cent) said they had considered alternative methods when trying to attract a buyer for their property. However, the OFT found that existing legislation may hinder the development of new business models.

The OFT said that, for example, current legislation should be overhauled so that new entrants that introduce private sellers to each other are not burdened with inappropriate regulation.

"In the present economic climate it is more important than ever that people get a good deal when buying or selling a home," commented John Fingleton, chief executive of the OFT.

"The Government can help this process by updating legislation and making sure regulation only applies where it is essential to protect consumers."

The OFT has also urged consumers to better negotiate the fees they pay to agents. Almost a third of those polled (32 per cent) who utilised the services of a traditional agent felt the fees they paid did not offer value for money.

Failing to shop around and negotiate agents' fees could be costing consumers up to £570 million a year, according to OFT analysis.

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