Self-employed Local Property Experts may or may not need to register with a redress scheme such as The Property Ombudsman, with the regulator saying it is not prepared to give public judgement.
After new additional guidance on redress schemes was published yesterday by the National Trading Standards Estate Agency Team, EYE asked for clarification as to whether self-employed LPEs need to belong to a redress scheme.
We received the following response from the industry regulator.
NTSEAT said:
“In relation to redress scheme membership:
1. It is a legal requirement that every person who carries out residential estate agency work must be a member of an approved redress scheme.
2. The requirement does not apply to a person employed by a business (assuming that the business itself is signed up with a scheme).
3. People and businesses may choose to sign up with a redress scheme even if they are not legally obliged to join.
4. The redress schemes may set their own terms of reference which require certain elements of a business to be registered, along with the business itself (e.g. branch offices etc).
The position regarding self-employed agents who work as Local Property Experts for online agents will depend on their activities and their employment status. Assuming they are carrying out estate agency work in relation to residential property, then the question is whether or not they are ‘engaging in that work in the course of their employment’. If the answer to this is ‘yes’, then they don’t legally need to register; if the answer is ‘no’, then they do need to register.
The NTSEAT is not prepared to give a public judgment as to whether or not a particular person or business is complying (or not) with the law; hence the response above.
If a person or business is not complying with the law then the matter will be investigated and action taken in accordance with our enforcement policy (which is part of the NTSEAT business plan – available at www.powys.gov.uk/estateagency).”
Comments (30)
Claiming to be self-employed raises the question …. the contract with RM & Z would require individual LPE to sig up and pay the monthly charges as per other agents. Is it not correct that they do not? Is it not correct that RM & Z have an arrangement of price fixing with the lead company which is out of proportion to high street agents contracts? Does this not raise the spectre of collusion and breach of regulations as per the south east case where agents price rigged with the newspaper with a commercial advantage compared to their competitors?
I looked round a property today that is for sale with Purplebricks. The online enquiry form, viewing booking process,, offer pages & the website generally are all quite slick.
I spoke to the LPE and asked him how it all worked and he said he was self employed and had a licence type agreement with Purplebricks. He was registered with a redress scheme as an individual. He didn’t handle any client money nor did he do any money laundering checks as this was done by Purplebricks.
He did say that Purplebricks are the 3rd largest Estate Agent in the Country based on properties sold .
I did also ask for an online conveyancing quote and they have a tie up with Premier Property Lawyers a subsidiary of myhomemove and the fees look very expensive (over £1040 inc VAT for their fees (excluding searches) for a purchase of a lowish value leasehold flat with no mortgage), with loads of extra add ons for money laundering checks, TT fees , file storage fees etc.
You have discovered what we all know but the public are not until the dripping quill is shoved in front of them ……. it sounded so cheap …. it was too good to be true! There is a clause under the Estate Agency Act requiring declaring other business connections and commission but is often left to the very last second when someone is being signed up. It should be made clearer long before in advertising and not with that stupid meaningless “Terms & Conditions apply” which I saw Sarah Beany used last night TV add.
The question is, is their advertising misleading as the point they make out is they are cheaper but maybe not with all the add-on and hide behind the guise, they only refer to Agents commission. I seem to recall their is case law that suggest where someone intentionally misleads costs, knowing that they intend to charge more …. is fraud.
Personally, I believe Z need to get a grip of this unsatisfactory situation as it simply would not do should they ever decide to have a sharing relationship with any such questionable company?
RM as always, may have this covered ?
Did you by any chance read the same children’s story book with Sarah B.
Once upon a time there was a very powerful Baron who somehow managed to persuade 1000s of his feudal land owners to pay him to build a magnificent castle.
When the castle was completed he locked these land owners outside to face the ravages of some lawless, well funded militia, trying to capture their land.
The really clever part was that this Baron then charged these land owners more money to allow them into the protection of the castle that they had built and paid for but did nothing to protect their land.
When those smaller land owners could no longer afford to pay the Baron as they had lost the income from their land he did a deal with the largest locally based militia allowing them to pillage the land so long as he got a further cut of the proceeds whilst still being paid for protection by those richer land owners.
One day these small land owners realised that if they truly joined forces and united under real leadership their militia was much bigger than the others and over threw the Baron and took back control of the castle that they had built and paid for.
The moral of this story is do powerful Barons ever change, unless challenged by a viable and united force with the will and leadership to enact this?
Sometimes fairy tales are not so imaginary with the right story teller?
PeeBee you may have a challenger.
Mmmmm. A thin line. Any agency boss who has taken in a commission only neg under the boss’s brand will know their accountant gets touchy when the neg spends most of their time working under the boss’s brand and is seen as an employee.
Or are LPE’s buying into a franchise area and being boss’s in their own rights with own accounts.
Someone has to be responsible for CPR’s and BPR’s so consumers have a place for redress.
and that is why contracts needs examining. It is intended to be a thin line to the advantage of the business or they wouldn’t have need to do it. Blowing close to the wind is what PB is all about.
Self-employed people generally find their own work rather than being provided with work by an employer, earning income from a trade or business that they operate.
clarifying whether an individual is self-employed or engaged in disguised employment, often described as the pretense of a contractual intra-business relationship to hide what is otherwise a simple employer-employee relationship.
Re: “Self-employed Local Property Experts may or may not need to register with a redress scheme such as The Property Ombudsman, with the regulator saying it is not prepared to give public judgement.”
Aren’t all owners of independent estate agents self employed?
And the difference is?
No Property Paddy, owners of independent estate agents are not usually self-employed. Most will draw part of their income as PAYE wages.
HMRC rules about self-employment are simple in essence. And because of their simplicity, very hard to get round. There’s some basic tests applied to the circumstances of the work to identify true self-employment.
Isn’t is about time that a PB spokesperson made a statement confirming just what status LPEs hold? The silence is deafening.
Sorry but so very wrong.
Sole traders and partners are classed as self-employed by HM Revenue and Customs (HMRC). This includes selling goods or services (‘trading’), unless you’re just selling a few unwanted items occasionally.
I fail to see how this is any different from us, Belvoir, Winkworth etc. PB is effectively a franchise operation. If you are employed, you are covered by your employer. If you are not you must comply as an individual or separate limited company. Every one in our network must meet the criteria as a separately owned business. It seems crystal clear. If you don’t have a contract of employment, you must comply.
Your staff employees do not need separate redress because the company provides it. Its that definition of when is a self-employed member of staff an employee for redress cover. If the contract for examples say the company is responsible for self-employed actions and services, they are still elf-employed but treated as employees for responsibilities?
Purplebricks have publicly stated that they do not deem themselves liable for the actions of whomever their LPEs hire. What does that say about Purplebricks own opinion on the status of LPEs and where redress should lie?
I would suggest PurpleBricks and other agents using a similar model read case law and TPO rules on sub-agencies, third party liability in tort and duty of care.
Given that anything you try and do with Purplebricks goes to 1 central office, I would not disagree with you.
It is quite clear that self-employed LPEs are regarded in law as independent business entities and, as such, are required to comply with redress scheme requirements, VAT, ICO and money laundering legislation requiremnents. That Purplebricks suddenly and apparently panic bulk-registered all of their LPEs in June after 3 years of trading prior to that event suggests strongly that their legal advice at the time agrees with that interpretation. QED.
I would say you are correct Chris, there is a loophole that they can exploit and PB are not that daft to not have lawyers looking at each way they can scam and cover their backs. For this is how the operations of the company is all about.
Perfect – if they are not required to be part of a redress scheme, then they cannot be classed as proper estate agents and so Rightmove and Zoopla can refuse them entry to their temples !!!
RM and Z should not be exposing the public to the dangers of companies purporting to be professional estate agents when they ( the public) have no where to go to if they have serious issues.
Rightmove and Zoopla have satisfied themselves that all agents comply with redress otherwise they wouldn’t be on the site. Rightmove and Zoopla correctly believe about 202 out of a claimed 300 reps have independent redress (but not necessarily ICO for data protection) those 202 are self employed but the 98 or so who don’t have redress are either employed or don’t have redress.
It really is quite simple with so many reps and from what it seems some cross pollination between (pay to list not sell) firms no-one has a clue what is going on, no-one is in charge and so when chaos ensues anarchy reigns.
RM said they wouldn’t deal with go-betweens of private sellers …. isn’t that exactly what PB are? They have no high street presence and scammed the system by having a call centre and now scam the system by having people working as self-employed. The more I see how PB operates and the misrepresentations in advertising …. the regulators are not fit for purpose, they are supposed to be there to protect the public and a responsibility to the industry who pays their fees.
They claim to be full service estate agents so their ‘much cheapness’ usp is compared with agents commission.
Holding themselves out to be agents offering expert advice is fine but it brings with it the responsibility to be correct and the duties set out in case law.
Again there appears to be deliberate blurring of the line between passive intermediary (no responsibility) pay to list service and full responsibility pay for results agency.
I genuinely can’t believe how and AIM listed firm can apparently be run in such a shambolic and cavalier way.
If agents used portals that do not allow companies like this, the problem may go away. I can only think of one that came about for this very reason but shhhhh.
Uncertain contract terms? this is a sort of shabby chic wardrobe of compliance, none of it goes together, nothing matches, it looks a bit of a mess but wearing it with arrogance & confidence, to hell with everyone else you’re gonna wear it anyway.
The listing reps are either employed or they aren’t. If they are employed there is one set of rules – they are covered for redress by head office, head office are vicariously liable for every negligent valuation, every bit of duff advice, comment or action.
If they are self employed and personally liable for litigation they need redress.
If they are employed things like national insurance, minimum wage, holiday entitlement health and safety regulations etc need to be complied with.
If they are not employed they have to prove they are not employed, they can’t work for a single employer as a means of evading employment legislation. tax etc.
This isn’t a matter for NTSEAT to rule on, it is down to HMRC to make a judgement whether the reps are employed or not.
You really would have thought theses basics would have been clarified before the did or didn’t employ anyone.
You really think these things would have been clarified before they had a multi-million pound float on the stock market.
That’s the problem you can be self-employed and still be classed as an employee with HMRC. It all depends on the contract and levels of service provided between the two. One shouldn’t get blinkered into the generic perception of thinking self-employed means you work for yourself and have no responsibility to or from anyone else. NTSEAT and TPO are fudging responsibility publically for the scenario of LPEs was never envisaged and they don’t know what to do …. meanwhile LPE are doing estate agency work which is covered by Redress legislation. It is actually a very simple matter to investigate but Powys Council who frankly are inept and no EA experience haven’t the resources to get in the car, drive to PB HQ and demand the contracts given to LPE’s. That would make it very clear, very quick and simple. Meanwhile TPO only acts if the public complain? about an LPE.
A formal complaint has now been registered.