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LONDON-The UK Government’s Office of Fair Trading has announced an inquiry into the estate agency market, currently worth £4 billion ($5.8 billion) annually. It plans a comprehensive study of buying and selling residential property in England and Wales in order to establish wheter there is a truly competitive market; whether fee structures offer consumers value for money and whether the Estate Agents Act is protecting consumers.

The UK’s runaway housing market, with prices soaring by up to 20% in the past 12 months, has partly been driven by a shortage of properties on the market at a time of cheap borrowing and low unemployment. But low transaction volumes have meant that the boom has not necessarily translated into a bonanza for brokers.

Estate agency fees have generally remained static in a band around 2% of sale value for sole agency, and 3% for joint agency. But there have been allegations that brokers have been offering preferential treatment to potential purchaser who agree to take out mortages or insurance products through the brokers’ financial services operations. Last year the Ombudsman for Estate Agents received over 5,500 complaints from consumers, up 25% on the previous year. And local trading standards offices investigated almost 5,000 complaints, mostly related to selling techniques.

John Vickers, Director General of Fair Trading said: “Buying or selling a home is the largest transaction that most people make, so it is essential that consumers are able to understand the process and the options open to them. This comprehensive study will tell us whether the market is working well for consumers.”

The investigation is expected to take about a year.

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