A Royal Institution of Chartered Surveyors working group has claimed that the UK property industry contains definite transparency gaps with regards to the professional fees charged, and that thorough regulation is required in the real estate sector in the UK. The RICS working group also discovered a number of examples of bad practise as well as inconsistencies in the level of openness regarding the professional fees charged within the industry. The report says that, as a result, customers in the real estate market end up being unaware of what exactly the are paying for when they purchase services.

The RICS has called upon the government to launch a review in order to significantly improve industry regulations, as the report details that consumers in the real estate sector want a clear and detailed breakdown of all professional fees charged, including commission earned, as well as all relevant information necessary in order for them to make fully informed decisions and choices. The President of the RICS and Chairman of their Working Transparency Group, Max Crofts, stated that the group has witnessed a change in the banking world whilst working on the report. He said that the current focus was on ’sensible lending, transparency and proper risk management.’ He went on to say that the consultation had served to highlight the good and bad of how the property market operates, although he claimed that current solutions were ‘piecemeal, at best’.

He concluded that the consultation provided an excellent chance for those in the industry to work together in order to build on existing good practise, as well as to eradicate the more unwelcome practices in the sector to improve regulation and standard and increase customer protection. ‘Greater regulation is needed from government’, he said.

The main recommendations of the consultation point towards the need for landlords, managing and letting agents to be subject to appropriate legislation so that sufficient customer protection and market efficiency and consistency can be ensured.

The RICS also recommended that industry regulation should be undertaken by an independent body that would approve and enforce the agreed standards and codes of industry practise. It stated that this should be backed up with government legislation giving the body sufficient authority to ensure compliance throughout the industry, as well as providing a review of current legislation within the residential sector.

Finally the RICS is convinced that the industry as a whole must ensure that consumer clients are aware of the exact payments made, including remuneration, commission and insurance.

Should proper regulation not be focused on this may greatly impact many home owners and potential home owners alike, possible preventing them for getting the best value possible for a home on their mortgage as well as prevent many first-time buyers from acquiring a good home or even directly affecting re-mortgage value.

A new report released by Britain’s Office of Fair Trading has stated that house buyers and sellers are in desperate need of an alternative to the traditional estate agent market model in order that they receive overall better value. The report goes on to say that actual price competition between estate agents is not especially strong, and that rises in agent fees and commission rates typically happens during property boom whilst it tends to drop again when the market contracts.

The year-long study by the OFT also showed that the internet has also revolutionised how people look for new homes, but they also found that Internet portals also remained dominated by the traditional estate agents. The OFT went on to suggest that innovation in respect of Internet services could have a huge impact on just how much it costs to buy and sell a home to the benefit of both buyer and seller. The report further stated that current legislation should be brought up to date in order that alternatives to the traditional estate agent models could be better fitted into the market so that the market in general is as malleable as it can be to new models.

The report also exhorts policy-makers to investigate methods of coming down on possible conflicts of interest in the property-buying market – especially with regard to payments for such related services as conveyanving and mortgage advice and weighs in heavily to criticise the introduction fees that estate agents pay to other companies for introducing business to them. The OFT’s report has suggested that such fee could even be banned. It does not, however, press the case for extra regulating, stating that existing laws that date back to 1979 work perfectly well. They also argued that a licensing system was unnecessary.

John Fingleton, the OFT’s chief executive, stated that the encouragement of new ways of doing business within the sector such as online estate agents and private vendor platforms could well result in positive pressure being applied to traditional models and ways of buying and selling houses, helping those seeking homes to lock in the best mortgage rates possible, and might end in improved value for both buyers and sellers – particularly for first-time buyers and those seeking valued re-mortgages.

One of the UK’s leading housebuilders, Redrow, has pledged to return to building traditional homes including garages and gardens rather than what it refers to as ‘the Stalingrad-style apartments’ that have sprung up in recent years. The company has said that it plans to focus on building properties that have simple, decent and functional design, saying that people want a return to such housing.

Redrow has recently launched its  new range of homes called ‘Heritage’-based on the early 1900s arts and crafts movement.  Top Redrow executives came to the conclusion that people had ceased purchasing newly-built homes, and they felt that action was necessary. There was a genuine feeling that home-buyers desired a return to more traditional housing values. The company has also been somewhat dismayed at the insistence of planning regulators of encouraging apartment developments.

Redrow’s Heritage Collection showcases 34 different home designs, all featuring traditional exterior features like garages and gardens. Company bosses have said that they fully anticipate the new collection, featuring period-style properties, to account for some 80% of the company’s output within the next two years.

Redrow’s desire to instigate the new collection rapidly has been curtailed due to a land shortage as well as the lack of offerings in the mortgage market. These factors, along with planning policy, are halting construction as well as turning away possible purchasers. The planning process in particular has been slammed for its lengthy red-tape approach as well as contributing to the UK’s lack of housing stock. 

At the apex of the last housing boom Redrow was outputting some 5,000 homes, as compared to only 2,100 last year.  Its new plans include opening ten new show complexes by May 2010, with prices ranging from £110,000 to 600,000. It is hoped that this will significantly increase the average selling price of the group. The group forecasts that, although the upcoming year is likely to be a tough one for the housing market and the house building industry, a double-dip recession is unlikely in the UK. This will hopefully encourage many more first time buyers to invest in the new home style as well as help ensure good fixed rate mortgage offerings into the coming months.