Clause 14 - Acting as an estate agent
Homes Bill
7:00 pm
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
As I pointed out, the definition in the 1979 Act includes several activities that do not come within the ambit of the Bill. To include them would be confusing, because it might imply a potential liability with respect to an offence. In fact we have carefully avoided that. For example, section 1(1)(a) of the Estate Agents Act 1979 mentions acting
with a view to . . . effecting the introduction to the client of a third person who wishes to acquire
a property. The hon. Gentleman's example, which he gave in an earlier discussion, of an estate agent acting perfectly properly within the ambit of estate agency work, would not come under the Bill. That is why the distinction is necessary.
As to the hon. Gentleman's argument that estate agents should be licensed, the Government, like their predecessor, do not favour regulation except where it is absolutely necessary. The Department of Trade and Industry is keeping an open mind on whether estate agents should be formally licensed. At present, the Department is not convinced that that would deliver a significant increase in the level of consumer protection. The Director General of Fair Trading already has powers to act against estate agents who breach the requirements of the Estate Agents Act 1979 and he has shown that he is prepared to use them where justified.
It would be helpful if I clarified a point that was twice raised on 18 January by the hon. Member for Cotswold. It concerns the position of an estate agent who introduces a client seeking to buy a property to another estate agent who is marketing a property, or to a seller. I have taken further advice. Where an estate agent acting for a potential buyer seeks to introduce him to another of his clients who is trying to sell a property, the agent will have to have a seller's pack in his possession. The requirement to have a pack will be by virtue of the fact that the estate agent is acting for the seller rather than because of the business relationship with the buyer. So where an estate agent acting for a buyer seeks to effect an introduction to a seller for whom the agent also acts, there will have to be a seller's pack.
However, an estate agent who acts only for the potential buyer is not required to have a seller's pack as he is not marketing anything nor is he acting on instructions from the seller. I hope that that clarifies the matter. The hon. Gentleman will now be aware of the distinction. I am grateful for the opportunity to set the record straight on that important matter, not least for the National Association of Estate Agents, who will be able to read our proceedings in the Official Report.
It is a common occurrence for more than one agent to be instructed by a seller to market the same property, a situation that is known as multiple agencies. Once the Bill comes into force, each agent so instructed will be required to have a copy of the seller's pack in his possession. That is logical.
However, the National Association of Estate Agents has raised the circumstance where an agent acts solely as a sub-agent for another and therefore has no relationship with the seller, that being solely the responsibility of the main agent. In such circumstances, it would be excessively onerous to require the sub-agent to have a seller's pack. Therefore, where the marketing is carried out by the main agent through sub-agents, the agent would have the obligation to hold the seller's pack at all times without the requirement applying to all sub-agents. That seems a practical and sensible way forward. I hope that it will comfort those worried about how the obligations of the Bill will apply on that complex issue.