Setting up a real estate agency in the UK is no easy feat. You need to be patient and persevere through rough waters until your business achieves stability. Although the good thing is that you do not need prior experience or any rigid professional qualification to set up a real estate agency business model in the UK, being mindful of the legal requirements is imperative.
The lucrative opportunities, financial freedom, and work-life balance that come with setting up a real estate agency are unmatched. To find your niche within the ever-booming property/estate market of the United Kingdom, your business should have a clean, error-free, and 'healthy' start. Nevertheless, the looming question is, how do you ensure such a successful start to your business? Well, by adhering to the underlying legal regulations. Are you curious to know what they are? If yes, then read ahead!
To establish your real estate agency, you must follow all the relevant provisions set out in the following acts –
The Estate Agents Act 1979 – It regulates the work of a real estate agent and aims to ensure that an agency works in the best interests of clients. The act has an exhaustive list of information about who is an estate agent, who is a client, what are the responsibilities of an estate agent, what are misleading claims, and much more. As per the act, you are an estate agent if –
● You interact with clients who are interested in purchasing or selling freehold or leasehold real estate. ● You deal with buying and selling of property as part of a business ● You act on the instructions of a client
In addition, the Estate Agents Act 1979 also states that you cannot start your real estate business plan if you are an undischarged bankrupt. Likewise, to be considered a real estate agency, your business has to perform the following work –
● Offering personal advice to potential buyers or sellers ● Sending out property particulars ● Arranging property viewings ● Receiving and handling queries from potential buyers or sellers and passing on details to clients ● Offering clients with a 'For Sale' board with your contact details ● Giving or arranging for an EPC to be given
It is noteworthy to remember that the act also specifies that you must give potential clients transparent information about your fees, services to potential buyers, and terms of business.
The Consumer Protection from Unfair Trading Regulations (CPRs) 2008 – To be eligible to set up an estate agency business model in the UK, you should also comply with CPRs. The regulation controls unfair trade practices, including real estate agents, when dealing with consumers. It also creates criminal offences for unfair traders and breaches them. The CPRs prohibit 'misleading actions' and 'misleading omissions' that may cause the average consumer to make a purchase they otherwise would not have taken. The four different practices that are barred under the CPR 2008 are –
● Practices prohibited in all circumstances ● Misleading actions and omissions ● General duty not to trade unfairly ● Aggressive practices
Moreover, the CPR also provides a list of banned practices, which include –
● False endorsements or authorizations ● Misleading context ● Pyramid scheme ● Misleading availability ● Aggressive Sales
Third, to set up a real estate agency business plan in the UK, under the Consumers, Estate Agents, and Redress Act of 2007, all agents working for the company must be members of a redress program recognized by the government.
The UK's residential real estate industry is highly competitive; therefore, having a real estate licence will help your company stand out from the crowd and attain consumer trust. You can opt for one of the following qualifications –
● Propertymark ● RICS ● The Guild of Professional Estate Agents ● The Property Ombudsman
It is essential to remember that although there are no legal industry qualifications to set up a real estate agency in England and Wales, Propertymark – UK's leading membership body for property owners, highly endorses estate agencies with industry qualifications.
Lastly, setting up a real estate agency business model in the UK mandates you to remain abreast of all the latest legal happenings in the real estate industry. For instance, in 2019, the UK government asked the RoPA or Regulation of Property Agents Working Group to devise a new regulatory framework to raise the real estate industry standards in the country. RoPA had brought out a series of recommendations regarding transparency of service charges, industry licensing, qualifications, etc. A breakthrough proposal has been that real estate agencies and agents should hold and display licences to practice their business. The group also expressed the desire to see agents possessing minimum standards of qualification and ongoing training to become real estate agents.
Although RoPA's recommendations are being considered and evaluated, it would be wise to go through the report before you set up your agency. This would ensure that your business is well placed in case RoPA's proposals become law shortly. So, there we have a brief overview of legal requirements for a real estate agency in the UK.
The interested parties must first construct a business plan. The strategy mentions aims, branding, projections, and other specifics.
Secondly, the realtors choose between residential and commercial properties. Residential realtors deal in flats and houses. On the other hand, commercial realtors sell warehouses, office spaces, and farms.
Thirdly setting a radius for your real estate agency is also essential. Therefore, decide how far the staff travels to sell or view properties.
Pay close attention to the running costs of the business. Analyse the rent, salaries, and utilities to survive the market. You can upgrade or downsize as necessary.
The last step is advertising the real estate agency. The realtors can distribute leaflets to local homes. In addition, posting properties on well-known websites is also advised. Thirdly, engage with the audience/clients looking for the properties in the UK through social media.
Adhering to legal requirements is the first step in setting up a successful real estate agency in the UK, just like TRPE. With forty years of experience in London properties, TRPE has been an exemplary real estate agency that has set the record for others to follow. With transparent policies, customer-oriented policies, and a robust team of qualified agents, TRPE stands out as a steller estate agency business model in the UK.
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