Estate agents are pressurising buyers to spend thousands more on overpriced in-house services

One in four homebuyers have felt under pressure to buy a mortgage or another financial service from an estate agent

Consumers could be getting a raw deal by getting a mortgage through an estate agent (PA)

Property buyers pressured into using estate agents’ in-house services, such as mortgage brokers, could be unnecessarily spending thousands of pounds in fees, new research shows.

A study by the campaign group HomeOwners Alliance published on Wednesday found that 25 per cent of buyers who have used an estate agent have felt under pressure to use the agent’s in-house services in order to land their dream home, something that could mean that they are missing out on better deals.

In-house brokers can charge hundreds if not thousands of pounds to set up a mortgage, whereas independent brokers often offer advice for free, the HomeOwners Alliance said.

The figures also showed that 24 per cent of sellers felt pressured into using in-house estate agent services.

There are other downsides to using an estate agents’ in-house services, the Alliance said.

In order for a mortgage broker to find the best possible mortgage for customers, they need to be able to access as wide a range of products as possible. Brokers who can do this are known as ‘whole of market brokers’.

However, some can only access mortgages from a limited panel of lenders, which is often the case with in-house advisers at estate agents.

This means consumers might not get the best deal and end up paying more for their mortgage.

By discussing their financial situation with an in-house broker the estate agent will also be aware of how much a buyer can afford, which means they could lose their negotiating power.

On the back of these findings, the HomeOwners Alliance is calling on the Government to ban estate agents from being able to sell in-house services to parties on both sides of the same transaction.

“This clear conflict of interest can be incredibly detrimental to both buyers and sellers, and is banned in other professional sectors such as accountancy or law,” said Paula Higgins, chief executive at HomeOwners Alliance.

“As a minimum, there needs to better enforcement of the existing regulation that requires all estate agents to declare their referral fees, so those estate agents taking advantage of their unique position are penalised,” she added.

While estate agents are required by the Property Ombudsman to declare referral fees, the HomeOwners Alliance said it had seen little evidence of this happening.

“The great majority of estate agents are upstanding and a vital part of the home buying and selling process, but sadly a small number may be encouraging their clients to use their services for all the wrong reasons, not to help smooth the process but for financial gain,” Ms Higgins said.

“It’s not good if buyers and sellers feel under pressure to use an estate agent’s services because they are led to believe doing so will put them in a better position for securing their dream home or get them a preferential treatment by the estate agent,” she said.

“They should be encouraged to shop around to find the best deal,” she added.