Tesco could re-enter estate agency

Giant retailer Tesco may enter the property market as an estate agent.

Following the Office of Fair Trading’s (OFT's) year-long investigation into the estate agent sector, the regulator has proposed changes to the law which would allow supermarkets and serach engines, for example, to sell property for a flat fee.

That contrasts with current practice, with agents charging a percentage of the sale price, raging from the cheapest online agencies who ask for just 0.1%, to the most expensive charging anything up to 3.5%. The typical charge is 1.8%.

Some agencies, in areas where property prices are very low, do charge flat fees, but this is unusual.

If the OFT’s propositions are introduced the existing legal requirements for verifying the details of properties put up for sale would be abandoned.

That would reduce costs, allowing firms such as Tesco and Google to enter the sector.

Tesco attempted to set up an online estate agency last year, charging customers £199 to sell their property, but the website was shut down as it did not comply with legal restrictions.

The Property Misdescriptions Act 1991 currently forbids those acting as estate agents to make false or misleading statements about a property put on the market.

To comply with the law, Tesco would have to send a member of staff to every home advertised on its website to ensure the information was accurate.

Under the OFT proposals, a firm such as Tesco would be exempt from the need to check the accuracy of each house sale advertisement on its website. The seller would be responsible.

OFT spokeswoman Heather Clayton says:

“We think there needs to be a jolt. We need to challenge the traditional way of doing things and the traditional contracts and challenge the sticky commission rates.

“We don't need everybody to abandon their traditional estate agent and use online sites, but we just need enough to start shaking things up and putting pressure on the traditional model.”