OFT tightens up rules for overseas property agents

Thousands of British estate agents helping overseas investors buy or sell homes must obey strict money-laundering regulations after a leading agent lost an appeal against complying with the rules.

Real estate firm Mansell McTaggart, based in Sussex, lost an appeal against a £3,000 fine from the Office of Fair Trading for failing to register as an estate agent.

The decision means unregistered firms must sign up with the Office of Fair Trading and comply with money-laundering regulations that demand they identify customers and report suspicious financial activity to the Serious Fraud Office.

Estate agents and property companies must observe the rules from October 1, 2012 and register with a regulator under money laundering rules by March 2013. Failure to do so could result in a fine and/or prosecution.

Disrupt financial crime

The OFT welcomed the decision of the First-Tier Tribunal in the Mansell McTaggart case.

The tribunal decided the fine was appropriate. Mansell McTaggart is now registered with the OFT under money laundering regulations.

David Fisher, OFT Director of Anti Money Laundering, said: “The changes to the regulations will help to deter, detect and disrupt financial crime by reducing businesses’ vulnerability to being used for money laundering or the financing of terrorism.

“It is important that businesses comply with the regulations and register with the OFT. As shown by our action against Mansell McTaggart, where they do not, we will impose penalties.’

Around 7,000 estate agents and 6,000 consumer credit lenders have registered with the OFT under the regulations.

Below market value deals slammed

The decision comes on the heels of several recent decisions by the Advertising Standards Authority banning advertising by property investment firms offering guaranteed rates of return, or yields, on investments.

Several companies that are not registered as estate agents but act as ‘property investment clubs’ have faced criticism from the ASA for sending out marketing materials that are misleading to investors because the yields on investment properties cannot be proved.

The ASA argues that the only time a yield is known is when a property is valued by a surveyor, and many investment firms quote figures that are discounts on unsubstantiated asking prices.

Many of the firms the ASA warns against offer ‘below market value’ or property that is reduced in price for quick sales with rental projections that are unlikely to be achieved.