Estate Agents Accused Of Adopting Illegal ‘conditional Selling’ Tactics

Given that housing market conditions have slowed, with fewer property transactions taking place, more estate agents are likely to become more reliant on financial services, and seek to earn more in broker and solicitor fees, procuration fees from lenders and potential commissions for home insurance and life insurance, by insisting that buyers use their in-house advice service, it has been claimed.

The Times reports that independent mortgage brokers are once again concerned about skyrocketing conditional selling practices at certain corporate estate agencies, most notably Connells.

The negotiators at these agencies are accused of essentially intimating to prospective buyers that their offers to purchase a property will not be put forward for consideration to the seller unless they agree to additional in-house services offered, such as mortgage advice or legal services.

It is alleged that some agents at Connells, which has 1,250 branches including affiliates under its umbrella, are adopting conditional sales tactics, despite the fact that they are against the rules in the Property Ombudsman’s Code of Practice.

The Estate Agents Act 1979 states that every offer must be put forward to a seller regardless of which mortgage broker the buyer uses. Yet the practice is rife, according to several independent mortgage brokers that spoke to The Times.

Lewis Shaw, owner of Riverside Mortgages in Teesside, believes that estate agents could become more reliant on financial services, amid a slow housing market, but says that it is difficult to prove instances of conditional selling because the methods are subtle.

He explained: “They [estate agents] won’t put it in writing, but they’ll say we can’t put forward your offer unless you come into the office and meet with our in-house financial adviser. But you should not have to come in if you have a mortgage in principle in place already, and you’ve got a bank statement showing proof of deposit, a solicitor [lined up] and proof of ID.”

Imran Hussain, director of Harmony Financial Services in Nottingham, believes that his clients have been pressured to use the in-house mortgage services of Connells or Countrywide five times in the past year.

“I’ve always experienced it with first-time buyer clients. They’ll try to force you to see their in-house adviser under the guise of financially qualifying you,” he said.

Jamie Lennox, director of Dimora Mortgages in Norwich, has had similar experiences with the Connells group. “We’ve had it happen to us ten-plus times over the past year and have lost clients because of it.”

Rhys Schofield, a broker with Peak Mortgages and Protection in Derbyshire, adds: “Connells is the name that comes up in broker forums… But some of the new-build companies are just as bad. My frustration with conditional selling is nothing ever happens unless the customer complains. But they don’t want to go on the record because they don’t want to lose out on the property.”

The Times spoke to another mortgage broker in the northwest, who asked not to be named to protect her client’s transaction. She lost the client to an agent at Entwistle Green, a Connells-owned agent in the region. She was told by the agent that the likelihood of buyers having their offer accepted was “a lot higher” if they used the in-house mortgage broker, and that if they didn’t “it could jeopardise [an] offer”.

In August 2022 FTAdviser reported that Peter Speak, a legal consultant for Connells, said that some staff were “perhaps overexuberant” and “push too hard” on in-house financial services, but insisted that mandatory appointments with in-house brokers were to perform anti-money laundering checks and could be misinterpreted by buyers as pressure to use their broker.

Scott Taylor-Barr, financial adviser for Carl Summers Financial Services in Shropshire, is not surprised to hear allegations against Connells, but thinks it is down to their sheer size, not necessarily company culture. “They’re the biggest. So if it happens in, say, one in ten branches, and you’ve got one organisation with a thousand branches, it’s happening a lot more often.”

Connells told the press: “We do not comment on findings of internal investigations. Connells Group’s in-house mortgage services are entirely optional, have no bearing whatsoever on a buyer’s ability to secure a property through one of our branches. We take allegations of pressurised selling very seriously as it is Connells Group policy to treat all buyers equally, regardless of whether they opt to use additional services. Clear directives are issued to staff that we do not tolerate pressurised selling of in-house services.”