The Office of Fair Trading has launched an investigation into estate agents amid claims of rip-off pricing and sharp practice.

The inquiry will examine whether agents are using spiralling house prices to exploit consumers in an industry worth £4.6 billion-a-year.

If it finds evidence of malpractice then it can recommend to Patricia Hewitt, the trade and industry secretary to instigate changes in the law.

It will focus on the practice of gazumping, overcharging customers and the attempts to get prospective buyers to take financial services.

Last year complaints to the industry's ombudsman reached a record 5,370. Most complaints concerned excessive fees and maladministration.

Hugh Dunsmore-Hardy, the chief executive of the National Association of Estate Agents, told ePolitix.com: "We await the detail of the OFT investigation. Any investigation is to be welcomed if it looks closely at the issues, in particular the process in which estate agents have to operate and their duties to the seller client.

"We will also welcome the investigation if it separates fact from anecdotal criticism of the estate agent profession."

Adrian Sanders, the Liberal Democrat shadow housing minister, claimed estate agents had been exploiting the housing boom.

"In today's Britain today there is too much money chasing too few houses," he said.

"Until the government provides local communities with affordable houses, both to buy and to rent, such accusations against estate agents will continue."