Estate agent

Origin

The term originally referred to a person responsible for managing a landed estate, while those engaged in the buying and selling of homes were house agents, and those selling land were land agents. However, sometime during the 20th century 'estate agent' started to be used as a generic term, perhaps because it was thought to sound more impressive.

Regulation

In the United Kingdom residential estate agents are largely unregulated (although legal provision exists to introduce regulation). Some estate agents are members of the Royal Institution of Chartered Surveyors (RICS), the principal body for UK real estate professionals. However, the vast majority of RICS members - known as Chartered Surveyors - who practice estate agency do so on commercial property.

For residential property a trade association, the National Association of Estate Agents (NAEA), exists, but as a non-professional body it has limited scope for disciplining members when appropriate. There is no legal requirement to belong to this organisation in order to trade as an estate agent. Due to the lack of effective regulation, dishonest and fraudulent practices are widespread in the industry.

Industrial structure

Few national residential estate agents chains exist, with the majority being locally or regionally specialised companies.

Several multi-national commercial agencies exist, typically being Anglo-American, pan-European or global. These firms all seek to provide the full range of property advisory services, not just agency.

Only a handful of large firms trade in both commercial and residential property.

Fees

Estate agents leasing commercial property normally charge between 7-10% of the first years rent as fees, this is in addition to taking the first month's rent in its entirety. This will be the total fee. If, say, two agents are charging 10%, they split this between them. Estate agents selling commercial property (known as investment agents) typical charge 1% of the sale price.

Estate agents selling residential property generally charge between 0.5-3% of the sale price plus VAT, depending on the contractual arrangement and whether an individual firm has sole rights to the sale.

Residential letting agent's fees are extremely variable, depending on whether the agent manages the property or simply arranges new tenants. Charges to prospective tenants can vary from zero to £300 in non-refundable fees usually described as "Application", "Administration" or "Processing" fees (or all three). There are no guidelines for letting agents with regard to charges except that they are forbidden by law to charge a fee for seeing a list of properties, otherwise they are free to charge as they please. The first month's rent in advance plus a refundable bond (usually equal to a month's rent) is also generally required. Most residential lettings in the UK are effected through a particular form of contract known as an "assured shorthold tenancy". Assured shorthold tenancies give less statutory protection in terms of security of tenure than earlier, mostly obsolete, types of residential lease. Assured Shorthold Tenancy agreements are standard contracts generally available from legal stationers and the internet for around £1, the average letting agent will charge £30 to provide such a contract.

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