Agents’ qualifications will cut competition and inc...

Estate agent licensing will reduce competition, make buying and selling homes more expensive, and add another layer of red tape to people wanting to get a sales position.

That’s the controversial view of Len Shackleton, who is a research fellow at the Institute of Economic Affairs, professor of economics at the University of Buckingham and editor of the publication Economic Affairs.

Shackleton, writing on the IEA website, is hugely critical of the government proposals outlined earlier this month to insist that agents should have a so-far unspecified formal professional qualification before being able to operate.

Shackleton says this adds estate agents to roughly one fifth of the workforce who require some form of government-backed consent before they can operate.

He believes the motivation behind the government initiative is purely political - to be seen to be ‘doing something’ about the wider shortage of homes and the high price of properties for those wishing the buy.

“About the only new evidence that emerged in the ‘consultation’ period following the [Conservative Party] conference seems to be the survey finding that ‘six out of 10 buyers and sellers have experienced stress’” says Shackleton.

“The only surprising thing about this is that it is not 10 out of 10, but this anyway tells us little in itself. The things which most concern buyers and sellers are probably gazumping and its equally evil twin gazundering (which could be minimised by bringing in Scottish-style conveyancing rules) and the high charges made by estate agents who may be acting for both parties as the law stands. Nothing is being done about these issues” he says.

Shackleton reserves much of his criticism for the agency industry itself, pointing out that the National Association of Estate Agents says it has wanted such measures for years, while there is worry amongst many agents about falling sales and the rise of Purplebricks and other online operators.

“The NAEA is on the face of it a classic example of Milton Friedman’s dictum that the pressure for licensing ‘invariably comes from members of the occupation itself’ rather than the general public. It is itself a provider of professional qualifications which stands to gain from compulsion” says Shackleton.

He says the role of agents may be something of a side-issue “compared with the problem of insufficient and over-priced housing” but warns that agent licensing “will almost certainly reduce competition amongst estate agents, raise the costs of buying and selling houses, and restrict access to yet another occupation by requiring people to jump through unnecessary hoops before taking on what is essentially a selling role like many others.”