The new unscrupulous estate agent deposit loophole. Buyer Beware

March 10, 2022 March 10, 2022

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The latest guidance from the Code of Practice for Residential Estate Agents has altered the previous statement on deposits as follows: Unless requested by a property developer, you should not generally facilitate pre-contract deposits.

Here is a link to the extracted PDF --> https://www.whatdotheyknow.com/request/477055/response/1141622/attach/html/3/Code%20of%20Practice%20Residential%20Estate%20Agents%20effective%201%20October%202016.pdf.html

Here is a link to the real PDF --> https://www.whatdotheyknow.com/request/477055/response/1141622/attach/3/Code%20of%20Practice%20Residential%20Estate%20Agents%20effective%201%20October%202016.pdf?cookie_passthrough=1

An article from the Guardian. Extracted. https://www.theguardian.com/money/2017/feb/04/estate-agents-ask-homebuyers-pay-up-pre-contract-deposit

Are you a serious buyer? Estate agents can now ask you to pay up to prove it

Homebuyers are being hit with demands for hefty payments to ‘show they are committed’. And changes to the Property Ombudsman’s code of conduct could make matters worse

If you were putting in an offer on a house, how would you feel if the estate agent asked you to hand over £1,000 to prove you were a “serious” buyer? Would you pay up, or assume this was illegal and tell them where to get off?

Growing numbers of homebuyers are in effect being charged for the privilege of having their offer accepted, when the agent is already pocketing a fee from the seller. And if the buyer ends up pulling out – for example, because the survey reveals a problem with the property – they often lose all the money or only get back a small part of it.

In Scotland, estate agents are banned from accepting pre-contract deposits, as such payments are known, but they are not illegal in England and Wales. However, the estate agents’ code of practice operated by the Property Ombudsman in effect outlaws them – or at least it did.

Until recently the code, which covers 95% of sales agents, told firms unequivocally that “you should not take pre-contract deposits” (though sales of newly built homes were exempt). But Guardian Money can reveal that late last year, in a little-noticed move, the ombudsman changed the wording of the code to allow agents to take them, provided conditions were met.

Money has been contacted by a number of angry would-be homebuyers who handed over cash to an estate agent and are now battling to get it back. They include first-time buyers Geoffrey Taylor and his partner, Gemma Swistak, both 32, who paid the agent they were dealing with £900, and Ramesh Nehru, who handed over £1,000 to a different firm. In both cases they paid the money before the code of conduct was revised.....