Ever wondered whether that rival bid on the flat you bought really existed? Or suspected something fishy behind the low price your elderly relative was offered for a property? Or even that an estate agent was trying to pressure you into buying a property they knew to be overvalued and knew you couldn’t afford? Millions of BBC1 viewers felt they had their fears about estate agents confirmed last month when the Whistleblower programme showed purported evidence of wrongdoing at top London estate agents. Agents were shown faking past sales prices to pressure surveyors into overvaluing a property, taking backhanders to sell a probate flat cheaply to a developer, and faking landlords’ signatures on contracts.
The undercover investigation has prompted renewed calls for the industry to be regulated, and sparked bitter recriminations between estate agents. One MP, Richard Younger-Ross, a Liberal Democrat, has asked the home secretary if the police and the Office of Fair Trading should investigate the Foxtons agency — which has 18 offices in London and 18 in Surrey — and other agents named in the programme.
“If agents are overinflating prices through fraudulent valuations and similar practices, then there may be a need for police action or further regulation of estate agents more generally,” says Younger-Ross.
The programme alleged Foxtons employees lied to buyers and sellers, and boasted of receiving confidential information about clients’ financial status from a sister firm, mortgage broker Alexander Hall.
Last week, estate agents who were not fingered in the programme sought to distance themselves from the named agencies as fears of a public backlash spread. “We won’t be employing anyone else who’s currently working as an agent or negotiator at Foxtons,” says Ivor Dickinson, managing director of Douglas & Gordon, which has nine offices in central London. “In the past we have, and, in some cases, within a few months they’ve been back to their old tricks.”
Another agent, Winkworth, which has 54 offices employing about 400 estate agents across Greater London, is following the same policy. “Any agent is very unwise to employ their (Foxtons) current staff,” says Simon Agace, chairman of Winkworth. “It’s a tragedy for the honest individuals there, many of whom came out of university to start what they thought was a good career. But they’ve now got a black mark against them for the rest of their professional lives.”
Other agents disagree. Savills and Knight Frank — each with more than 10 offices in the capital and with former Foxtons staff in senior positions — say the ban would be unfair.
“It’s like saying we should never work with Arthur Andersen because of its role in the Enron scandal,” says Dick Ford, who is in charge of the London offices of Knight Frank. “You can’t tar everyone with the same brush. We have an induction process and specific training on estate-agency law and our own code of conduct.”
Former employees of Foxtons have told The Sunday Times that the firm’s ruthless image comes from its commission-led salary structure. Although Foxtons’ recruitment advertisements talk of entry salaries of £20,000-£25,000, in practice, these usually last four months. “Then, normally, you’re dropped to £10,000 a year plus 10% of fees you earn as an agent,” says a former Foxtons agent now working for a rival. “The top earners in Foxtons get no salary at all and 20% of fees. As a result, they’re driven to do almost anything to clinch a deal; almost anything.”
Most agents working in other London firms earn a basic salary of about £25,000 and receive a share of the overall office commission, encouraging more teamwork and less competition between colleagues.
At Foxtons, agents attend weekly meetings where individual sales or lettings figures are read out. Colleagues are reportedly encouraged to boo or slow hand-clap those felt to be underperforming.
Foxtons was founded in 1981 by Jon Hunt, who, according to The Sunday Times Rich List, is now worth £345m and is the 148th richest man in Britain — and the single richest estate agent. He has also taken the Foxtons brand to America, where it operates in New York.
Foxtons issued a statement after the Whistleblower programme saying it prided itself on its professionalism. “Foxtons has in place a rigorous training process, during which its employees are told repeatedly of their statutory and contractual duties, and the high standards expected of them,” it says. It also said that the Foxtons employees shown in the BBC programme had since left the firm.
Foxtons told The Sunday Times last week it had no comment on suggestions that its business volumes had fallen since the programme was shown, or about its salary scheme, or calls made by rival agents to boycott the recruitment of its former employees.
Estate agents were not the only professionals criticised. The BBC also alleged that some valuing surveyors unquestioningly accepted the prices of comparable properties put before them by selling agents — despite being expected to seek independent evidence of the prices of homes on sale nearby. The show filmed a couple bidding on a Notting Hill flat that the Foxtons agent — actually a BBC undercover reporter — knew to be overvalued. When the mortgage surveyor said it was not worth the asking price, Foxtons, allegedly, fixed “comps” — lied about selling prices of comparable flats nearby — to try to convince a second surveyor the flat was worth the price tag.
“If I were a valuer who’d looked at a Foxtons property that’s been sold in the past year or so, I’d be checking my indemnity policy,” says Agace. “Problems surface in a few years when a property is resold or repossessed. If it appears a valuer has been sloppy in accepting comparable prices, he’s in trouble.”
The Ombudsman for Estate Agents (OEA) is also being asked by some estate agents to introduce a licensing system that would allow miscreant agents to be struck off, as they can be in other, regulated professions.
Until last week, only 40% of estate agents in Britain had joined the OEA, but from tomorrow that will rise to just over 60%, as individual members of the National Association of Estate Agents — which has about 10,000 members — will automatically be obliged to follow the ombudsman’s code of conduct. This allows aggrieved buyers or sellers to seek redress through the OEA, which can force agents to pay up to £25,000 in compensation.
However, as membership of the OEA will remain voluntary, any licensing scheme it operated would have very limited powers. The OEA points out that no company named in the BBC programme was a member of its scheme.
The Consumers’ Association says such voluntary systems are inadequate to tackle the problems in the industry, insisting, “only mandatory redress systems and new laws to regulate agents” would be effective.
