Are estate agents to be regulated?

We received a very relevant question (sent to and featured on our Website www.muscat inglott.net about estate agents. Considering that we have been focusing on the exorbitant fees charged by local estate agents in our column for some time, this is well worth featuring:

Since there is no legislation covering estate agents, I am assuming that their mark-up can be as much as they like. I am referring to their charge as mark-up and not as commission since their rates are too high to be described accordingly.

I recently met with a specific estate agent who initially asked for Lm66,000 for a duplex maisonette with no garage but with its own roof. The same maisonette, through a sensar, who inserted an advertisement in The Times, told me that the owners are asking for Lm58,000. According to my calculation, that is 13.8%... nothing near the 5% we see mentioned in articles.

In view of this, if I were to buy through the sensar, does the estate agent have a legal stand on the ground that he was the first to take me to the place? I am not prepared to pay Lm8,000 more for the same property. Moreover, the competent authorities should work upon legislation controlling estate agents' work without delay. Those who are unlucky enough to have to buy property in these times are being subjected to great strain and sacrifice.

Furthermore, as Lisa D'Amato clearly explained, some properties are built in a way which makes them look like slums. Poor lighting, small shafts (some cannot have windows that open outwards but only sliding) and never-ending narrow stairways are the order of the day.

In the prevailing scenario, to add insult to injury, one would have to fork out Lm30,000-Lm40,000 for these properties in shell condition. (Ronald Cordina)

Since a reference has been made to Ms D'Amato's letter, also carried in our Website interact section, it makes sense to quote from it:

1. It is an undeniable fact that property prices are too exorbitant - there's no other way of putting it.

2. It is wrong to state that first-time buyers' expectations are too high, as most of today's young couples are opting for flats and maisonettes, and certainly not villas and bungalows as some people tend to believe. It is now a luxury to own a terraced house!

3. If a couple were to buy a two-bedroom flat or a studio apartment as a starter home, they would be constrained to take out a loan, as they cost only slightly less than a three-bedroom flat.

4. Flats that are currently being built are too small - including those having three bedrooms! I understand that we cannot construct the large houses we used to build 20-30 years ago, but the other extreme is just as bad. Architects please note!

5. Living/dining and kitchen areas are all crammed into one room with very little room to put a table and a sofa.

6. It is only fair that property prices ought to increase in proportion to our wage increments. I believe that price control regarding property is necessary as it is becoming increasingly difficult to find even very modest properties at decent prices. (Lisa D'Amato)

I asked Dr David Fabri for his comments:

As usual, I shall focus on the general issues involved, not on the particular case which I shall however use as a sort of case study. I do this because proper advice would require much more information and analysis. A Website and/or a column are hardly a fit substitute.

Moving now to the general issues raised in your enquiry, though I am aware that this is not a completely satisfactory answer, the point remains that the consumer can always say no. If the price is not right or the layout of the house is inadequate, nobody forces anyone to buy. Supply and demand is a basic feature in the way we buy, sell and carry on trade. Besides we have to get used to it.

Price control of houses is no longer with us. When conceived and adopted in the early Eighties, many abuses took place. It resulted in an administrative nightmare. Current prices for houses seem horrendously high, but from the point of view of the owners, that must be good news.

Regarding the problem with a client having used the services of two brokers, that may be a rather sticky question. In my view, it would be up to the first broker to have to prove to a court that his intervention led to the eventual sale being secured. He has to make a case for any compensation he may claim.

The potential buyer has to prove (a) that he bought the house solely through the intervention of the second sensar, and (b) that the first sensar had actually put him off because the high price tag he attached was unacceptable.

Then I think there would be a good chance that the first broker's claims could be rejected. The decision would revolve on the evidence that the parties would be able to produce. Of course I am here assuming that the case is a genuine one and that brokerage is being paid to the second broker for his services.