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Estate agents seeking ‘pre-contract deposits’ from buyers

Various estate agencies have come under fire for demanding additional fees from buyers to demonstrate their commitment to purchasing a property.

While in theory this may seem like a good way to ensure a buyer doesn’t back out of the purchase at the last second; in reality, there have been horrified reactions. It seems that agents are demanding the fee as a ‘pre-contact deposit’ before a homebuyer’s report has even been carried out.

For most people, buying a home is a case of seeing a house and falling in love with the idea of living there – and love can make you blind. Hence why we pay surveyors to investigate the potential serious issues that the untrained eye cannot see – and if a surveyor discovers major structural faults with a property, it is only fair that a potential buyer can back out of a purchase unscathed.

In Scotland, the practice of taking a pre-contract deposit is illegal, and until recently, the Property Ombudsman ruled that 95% of agents in England and Wales were also prohibited from doing so.

In late 2016, however, the Ombudsman decided to change the wording of the conventions so that agencies could demand fees if certain conditions were met.


Worryingly, the practice still took place even when it was considered ‘unethical’ and ‘wrong’ – mainly thanks to unprincipled agencies describing them as “non-refundable reservation fees”. This is despite the agents in question stating that the fee can be deducted from the total deposit payable – in short, a pre-contract deposit.

With the Ombudsman opening the floodgates with the ‘slight’ adjustments to the wording of their regulations, the issue is set to becoming much more prevalent according to property selling experts.

“Our point is, if this is a frowned-upon practice, why is it still going on, and why can’t the buyer in these cases then be given the whole fee back?” asked Geoffrey Taylor, who lost £900 to estate agency Property Link after their surveyor advised them to back out of the purchase.

He added: “In the eyes of the law it’s not ‘unlawful’ – but who makes these laws, and why is this not changed if someone like the ombudsman says it’s bad practice? As a consumer, I’m confused.”

Of course, using estate agencies is not a necessity. Property buying companies will buy any house for cash regardless of condition or location – and without the inclusion of pre-contract deposits.

For those who are looking to sell fast and choose to continue down the route of traditional estate agencies, there are fears that the allowance of fees will lead to further ‘code of conduct’ changes for member agents, leading to further confusion over what many consider to be an already excessively complex situation.

Prefer not to deal with estate agents? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.


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