A ring of estate agency firms that colluded to fix commissions at high levels across Berkshire has been broken up and collectively fined more than £600,000.
The estate agents, which handled most property sales in Wokingham and other parts of Berkshire, conspired to keep commissions at rates understood to be above 1.8% on each house sale, and even set up a penalty system for agents who broke their rules.
The Competition and Markets Authority broke up the cartel after one of the agents, Romans in Wokingham, in south-west England, blew the whistle on the longstanding local practice.
A similar cartel was uncovered in Somerset two years ago, and the latest case will raise fears about the broader scale of price-fixing by estate agents across the UK.
The price-fixing in Berkshire carried on undetected for more than seven years before Romans revealed it to the 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 towns they were the leading estate agents at the time.
Michael Grenfell, of the CMA, said: “It is disappointing we’ve found yet another case of estate agents breaking competition law. We trust that the fines issued today will reinforce our message that we expect the sector to clean up its act and make sure customers are not being ripped off in this way.
The cost to house sellers, in an area where property prices are high, ran into the thousands. The average price of a home in Wokingham is around £500,000. A commission rate of 1.8% means the estate agent would have received on average £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 cartel it was understood 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 area”, received the largest fine of the group, £268,765, after admitting to being part of the cartel.
Richard Worth, described on its website as “a multi-award-winning company … assessed as amongst the top estate agents in the country”, was fined £193,911.
Michael Hardy, with branches in Wokingham and Crowthorne, advertises its “gold trusted service award” on its website. It was fined £142,843.
Romans, part of the national Leaders chain, which has 140 branches across the UK, was exempted from the fines as it had blown the whistle on the cartel.
Peter Kavanagh, the chief executive of Romans said: “In June 2017, senior directors of Romans became aware that some years ago a small number of Romans residential sales executives across a few branches had acted in a manner totally contrary to the standards and values of the company. We immediately alerted the CMA.”
Michael Hardy’s and Prospect’s fines were discounted to reflect the fact they admitted to illegal behaviour and agreed to cooperate with the CMA.
Michael Hardy’s managing director, Neal Mackenzie, said: “A very poor decision was made and it is difficult not to conclude that a line that 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 forming an estate agents’ cartel and have been vigorous in our promotion of the CMA’s Stop Cartels campaign to educate agents about price-fixing, market sharing and bid rigging. We continue to urge all our members to adhere to current legislation to ensure best practice to avoid falling foul of the law.”
