The property sector is at risk of serious reputational damage if it does not put in place more robust rules to curtail ‘double-dipping’, a major study has warned.
University of Leeds report on conflicts of interest in property, called for the RICS to produce “beefed-up” guidance, in order to better regulate the practice of agents from the same firm working on both sides of a deal.
The 160-page study, the first comprehensive examination of conflicts of interest in property, raised serious doubts over the industry’s ability to effectively self-regulate dual agency and said there were “clear risks” in relying on the use of “ad hoc” Chinese walls. These are meant to prevent the sharing of information within firms, but the report said the walls were “prone to being breached”.
Key findings of the report;
Market forces are of limited effectiveness in mitigating conflicts of interest in property
Conflicts of interest that undermine clients in subtle way may well go unnoticed and unpunished. Many clients will not have the time, expertise or information to adequately assess whether an unmanaged conflict has led to them receiving a poorer service than they would otherwise have received.
There are clear risks with relying on the self-management of conflicts by property agents, in particular by information walls.
“Over many years, tenants have been getting poor deals as a result of commercial agents acting on both sides of the transaction, at Challinor & Co we ensure that such conflicts of interest never arise by providing a dedicated, tenant representative service only”