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Hate estate agents and rip-off property charges? You'll love this news.

There are few occupations more guaranteed to attract distrust than being an estate agent (though admitting to being a journalist always sparks a few raised eyebrows). While some undoubtedly do a great job, you probably know at least one person who has a horror story to tell.

However, a new report from the Office of Fair Trading on the housebuying process, while giving estate agents a pretty clean bill of health, includes recommendations that would drastically shift the way we shop for property in the future - and may stop estate agents being our first port of call.

The Tesco debacle

The report by the Office of Fair Trading was sparked by an unholy row a little over a year ago, when supermarket giant Tesco dared to dip its toe into the property market.

Back in 2007, the firm launched Tesco Property Market, allowing sellers to put their home on the market for just £199. For that they got a For Sale sign and online advertising space.

However, estate agents were outraged, arguing that far from offering a simple 'listing service', Tesco Property Market was effectively an estate agency, and so should be subject to the Estate Agency Bill 1979.

Amid threats of legal action, Tesco promptly dropped the venture.

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Time for some innovation

One thing that came out of the OFT report is that the watchdog is not happy about how little price competition there is between estate agents on the high street - no matter where you go, you are likely to be handing over the same percentage in commission to your agent.

And one way that the OFT believes that some real competition can be introduced into the market is by encouraging 'new business models' - in other words, outfits like Tesco Property Market.

How to encourage them?

So what does the OFT mean by 'encouraging new business models'? Essentially they want the legislation changed so that firms that are not offering a complete, traditional estate agency service are not subject to all of the same laws as those firms that are. It highlights that the definition of an estate agent was established in 1979, with little or no updates since then, while the property market has changed immeasurably.

It wants legislation to be updated to help us exploit these new models, rather than relying on the estate agent on the high street. It should surprise no-one that within hours of the report's publication, stories began emerging suggesting that Tesco Property Market may be relaunching imminently.

When you consider that use of alternative models for buying a home in the US now accounts for around 15% of the market, compared to 2-3% in the UK, there is clearly significant room for growth. And according to the OFT, the only way to realise that growth is through legislative changes.

The Google Factor

The elephant in the room in all of this is, of course, Google. Last year over in Australia, Google launched its own property portal allowing both estate agents and other property portals (including those with private listings) to list properties, for free.

There have long been industry rumours about the search engine giant making a similar move in the UK, and the suggested regulatory changes from the Office of Fair Trading only make that more likely.

And it's the brand that is key here, just as it was with the Tesco experiment. It will take a massive, household, trusted brand to provide the breakthrough. One of the reasons buyers are unlikely to use alternative models at the moment is trust - that barrier will disappear as soon as a firm like Tesco or Google makes their move.

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Estate agents are outraged

One group are unsurprisingly furious - estate agents. The National Association of Estate Agents has published an open letter deriding the OFT, and warning its suggestions undermined its role as a consumer protector.

The trade body savaged the idea of firms like Tesco being exempt from things like the Property Misdescriptions act of 1991, adding: "Presumably the OFT will also be excusing the supermarket chain the bother of having to comply with the Money Laundering Act and having to provide an Energy Performance Certificate or Home Information Pack. For a senior Director of the OFT to be happy to advocate the sweeping aside of carefully considered legislation aimed at consumer protection, energy conservation and anti-money laundering, defies belief."

What it means for us

New models for buying and selling property should be a good thing for all of us, so long as they are executed properly.

The Office of Fair Trading is right, in that the increased competition should mean a better deal for all of us, with real price competition appearing in the market.

It will also open up a different way of buying property. Sites like Rightmove have already changed the way that we search for properties to buy - no longer are we restricted to checking out the windows of high street estate agents for possible new homes. The next logical progression is for even more of the process to move online.

However, ensuring that buyers remain safe and protected by relevant legislation is of paramount importance.

This of course doesn't mean the death of the estate agent; far from it, as many will still prefer to rely on the experience and knowledge of the estate agent (they also remove a fair bit of hassle). But it does mean that the property market in five to ten years time is likely to look very different from today.

What do you think? Please share your views using the comments box below!

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