ROOF Blog

Estate agents are to be given a clean bill of health and escape a regulatory crackdown when a year-long investigation by the Office of Fair Trading (OFT) reports its findings later today. Despite repeated calls over a number of years by consumer bodies and even some agents’ groups, the OFT will conclude that the industry is generally working in consumers’ best interests and that a regulatory regime is not required. Over the last 12 months, the OFT has been investigating all aspects of the process of buying and selling homes in the UK, including price competition, quality of service, and whether the industry needs to be regulated. Peter Bolton King, chief executive of the National Association of Estate Agents, said: ‘Buying a home is often the largest single transaction of a person’s life and it is disappointing that the OFT has not thought it appropriate to acknowledge that a robust and appropriate level of consumer protection is needed.’

The Financial Services Authority (FSA) has called the buy-to-let market ‘unsustainable’, with high incidences of mortgage fraud and arrears a major reason for them to act as regulators.

If buy-to-let remained outside its remit, borrowers who were turned down for residential mortgages – which are already regulated and will be subject to tougher rules under the FSA’s proposals – may try to obtain unregulated buy-to-let loans instead; a process it called ‘gaming’.

The FSA said: ‘Bringing buy-to-let within regulation…would address an identified risk to market sustainability, strengthen oversight arrangements and offer the potential for protecting consumers making investment decisions on property’.

Extending the FSA’s scope to include buy-to-let mortgages would require approval from the Government.

Borrowers have been warned of soaring mortgage fees after the Financial Services Authority (FSA) called for lenders to assess income and spending in greater detail before approving loans.

Lenders are already under fire for introducing application charges of up to £1,000, which you lose if you back out or the loan offer is withdrawn – a problem not uncommon in today’s mortgage market.

Brokers say that plans by the Financial Services Authority (FSA) to make all borrowers pass an ‘affordability test’ that scrutinises their spending habits mean that fees could go even higher.

Savills Private Finance broker Melanie Bien said: ‘Any step-up in regulation means more cost, and higher costs tend to be passed on to consumers.

‘Lenders are likely to favour higher charges over the alternative option of increasing interest rates as it is a less visible way of raising costs.

‘This will be unhelpful, especially for first-time buyers, for whom every penny counts.’

The number of households in fuel poverty, where at least 10 per cent of income is spent on gas and electricity, rose by 15 per cent to four million in 2007, statistics from the Department for Energy and Climate Change show. A projection for this year suggests there are 6.6 million British homes in fuel poverty, almost treble the number five years ago. Campaigners said ministers would miss their target of removing all households containing the elderly, disabled and poor from fuel poverty by next year. The biggest factor in the increase is the doubling of energy prices since 2002. Responding to these figures, the government announced a four-step plan to help the fuel poor, including forcing suppliers to increase insulation, funding energy efficiency makeovers for 90,000 homes, making social tariffs compulsory and toughening regulation to combat ‘market abuse’.

The City watchdog’s proposals for the mortgage market received a cautious welcome from the industry today. But trade bodies expressed concerns about how some of the Financial Services Authority’s (FSA) measures would be implemented, as well as the impact a ban on self-certification mortgages would have on certain borrowers. Paul Broadhead, head of mortgage policy at the Building Societies Association, said: ‘We need a sensible balance between appropriate regulation and allowing people to buy their own home when they can afford to do so.’ The Council of Mortgage Lenders said the FSA seemed to believe that regulation could not rely on borrowers behaving in their own interests, but that consumers instead needed measures to be introduced to protect them from themselves. However, Shelter, the housing and homelessness charity, called on the FSA to implement the changes it was proposing urgently to ensure the ‘dark days of reckless lending never return.’