A network of estate agents who colluded to set commissions at high levels in Berkshire have been busted and collectively fined over £600,000.
Estate agents, who have handled most property sales in Wokingham and other parts of Berkshire, conspired to keep commissions at rates above 1.8% on each home sale, and even set up a system of penalties for agents who broke their rules.
The Competition and Markets Authority broke up the cartel after one of the agents, Romans in Wokingham, south-west England, exposed the long-standing local practice.
A similar cartel was uncovered in Somerset two years ago, and the latest case will raise fears about the wider extent of price-fixing by estate agents across the UK.
Price fixing in Berkshire went undetected for more than seven years before Romans revealed it to competition authorities.
The CMA said four agencies – Michael Hardy, Prospect, Richard Worth and Romans – conspired to set minimum commission rates for the sale of residential properties in Wokingham, Winnersh, Crowthorne, Bracknell and Warfield. In each of the cities, they were the main real estate agents at the time.
CMA’s Michael Grenfell said: “It is disappointing that we have found yet another case of estate agents breaching competition law. We hope today’s fines reinforce our message that we expect the industry to clean up and make sure customers don’t get ripped off in this way.
The cost to home sellers, in an area with high house prices, was in the thousands. The average price of a house in Wokingham is around £500,000. A commission rate of 1.8% means the estate agent would have received an average of £9,000 per sale. If there had been no price fixing and the rate was, say, 1.5%, the seller of a £500,000 house would have paid £7,500.
The CMA said the fixed rate charged to sellers varied over time, but in the early years of the deal it was believed to have been around 1.8%.
Prospect, which has 10 branches and describes itself as ‘one of the largest independent estate agencies in the Thames Valley region’, was handed the biggest fine of the group, £268,765, after admitting being part of the cartel.
Richard Worth, described on his website as ‘a multi-award-winning company…rated as one of the best estate agents in the country’, was fined £193,911.
Michael Hardy, with branches in Wokingham and Crowthorne, advertises its ‘Gold Trust Service Award’ on its website. He was fined £142,843.
Romans, part of the nationwide Leaders chain, which has 140 branches across the UK, was exempted from the fines because he spoke out against the cartel.
Peter Kavanagh, Managing Director of Romans, said: “In June 2017, senior Romans managers became aware that a few years ago a small number of Romans residential sales managers in a few branches had acted as a completely contrary to the norms and values of Romans. the company. We immediately alerted the CMA.
Michael Hardy and Prospect’s fines were reduced to reflect the fact that they admitted illegal behavior and agreed to cooperate with the AMC.
Michael Hardy managing director Neal Mackenzie said: “A very bad decision was made and it is hard not to conclude that a line which should not have been crossed was.”
Mark Hayward, chief executive of the National Association of Estate Agents, said: “We are very aware of the implications of the formation of an estate agent cartel and have been vigorous in our promotion of the Stop Cartels campaign. AMC to educate agents on price fixing, market sharing and bid rigging We continue to urge all of our members to adhere to applicable legislation to ensure best practices to avoid breaking the law.