HouseLadder Confirmed as an “Estate Agent” by the OFT, paves the way for Double Fee Claims

We received an email from a private individual who had been following our thread regarding private sale websites. He was in the process of selling his property in Surrey through a local agent and contacted HouseLadder to ask about their services. A HL representative gave him the usual line that they were “not acting as an estate agent”. Suspicious of the claim that HL could provide ‘For Sale’ signs and facilitate buyer/communication and still not be an estate agent, Mr H (name is withheld) decided to contact the OFT for their opinion. BrightSale has seen a copy of the OFT’s opinion, given by Mr Chris Garland on 28th November 2007. In the opinion, Mr Garland states very plainly:

“In the OFT's view, assuming that you sign a 'sole agency' contract with your local agent, you would be liable to pay them their commission if you were to locate your buyer via Houseladder. This is because the agent is entitled to his commission if, during the period he is instructed, he finds the buyer or another estate agent finds the buyer; and it is the OFT's view that Houseladder is engaging in estate agency work.”

Mr Garland does say that a court would be the ultimate arbiter (of course), but he hints rather darkly:
“I can assure you that the OFT is closely monitoring the internet property retailer market and will, where appropriate, take enforcement action in respect of breaches of the relevant legislation.”

We understand that Mr H has registered a formal complaint with the OFT against HouseLadder and is awaiting a further response. Mr H specifically objected to HL’s claims on the home page of its website that he would not be liable for a double fee when the OFT’s view is plainly the opposite.

Perhaps most interestingly of all, we have further learnt that at least one financial claims company is looking into marketing a service to estate agents to recover the double fees on properties which have been sold on HL whilst they were under sole agency contract. Given the strength of the OFT’s view - and clearly Tesco’s lawyers gave them the same opinion – it is likely that a private sales website client is likely to get a bill for a double fee very soon now.

Whether HL or any of the others decide to fight in court will be an interesting decision. In our opinion, it would be very healthy to have this tested in court now, so the market can operate in the certainty that private sales sites like HouseLadder either are, or are not, acting as estate agents.

The OFT have made their view clear. It is time for the High Court to do the same.