The Office of Fair Trading today (25 February) launched a market study into home buying and selling, following two months of consultation on the scope of the project.

It will examine the level of competition between estate agents, and look at the relationship between estate agents and other service providers - including solicitors, surveyors, mortgage brokers and other professional advisers.

The agency will also look at whether the existing regulatory framework provides the right balance between protecting consumers and ensuring the market remains open to competition and innovation. The prospects for entry into the market of new business models - including those based on the internet - are also in its agenda.

The study will cover the whole of the UK and is expected to be completed by the end of the year.

Heather Clayton, senior director of infrastructure at the OFT, said: ‘With the economic downturn, we need to ensure that consumers receive a good service when buying and selling a home, from a market that is competitive, innovative and well-functioning.’

At a meeting this week, the E-Homebuying Forum lobby group proposed that merging solicitor and estate agent practices could be a viable business model for the future of conveyancing post-Legal Services Act. For more on that story see tomorrow’s Gazette.

Commenting on the review, Law Society President Paul Marsh said: ‘A detailed review which includes consideration of the lack of transparency around the role, responsibilities and payment of estate agents is desperately needed. There is a clear distinction between advertising properties for sale and the much more complex handling of detailed negotiations between a buyer and a seller. An independent review of HIPs has been needed since it was first introduced and we are extremely pleased that at last it is going ahead.

‘We are committed to an open, transparent and efficient conveyancing market in which all sides work constructively and on a level playing field. A holistic approach between all stakeholders in the home-buying process has been needed for a long time. The Law Society has been asking for a review of this kind for more than five years and it is clear that the lack of clarity regarding the legal obligations of estate agents in the market to be a problem for all involved - we are developing our own thoughts to achieve this.’

He added: ‘The review sits well with the work that the Law Society is leading relating to e-conveyancing and simplifying the home-buying process. Solicitors are highly regulated and the system has been reformed recently by the Legal Services Act. It is about time that everyone involved in the property market stepped up to an appropriate level of regulation for the benefit of the consumers and for fair competition.’