NEWS EXTRA: OFT publishes new advice on how estate agents should act
Tuesday 20th September 2011
Agents who deliberately overvalue in order to gain an instruction will be guilty of a breach of the law, new guidance has underlined.
It also emphasises that manipulating images could land an agent in trouble.
Breaches could mean a criminal record: magistrates have the power to levy fines up to £5,000 and Crown Courts to impose unlimited fines or up to two years’ prison.
The Office of Fair Trading has launched a new consultation on guidance to estate agents which aims to help them comply with the law when selling land and property.
In it, the practice of ‘recommending an asking price in the market appraisal that is unrealistic given current market conditions (in order to gain the instruction)’ is specifically picked out as an example of breaking the law.
The guidance also says that ‘significantly altering images to omit uncomplimentary features’ is also an example of misleading activity.
The new guidance – which is also aimed at developers who market and sell their own developments, auctioneers and online estate agents – focuses on two pieces of law: the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and the Business Protection from Misleading Marketing Regulations 2008 (BPRs).
Both sets of regulations are aimed at preventing agents from giving misleading information, or omitting information, that lead to consumers making decisions that they would not otherwise have done.
The guidance says misleading information can be given verbally, in writing or visually – the latter, for example, in photographs, video clips, floor plans, artist’s impressions or models of show homes.
Misleading information that could land an agent in trouble could be a false claim that their business has a presence in a particular area, when it does not, or has more offices than it actually has. It is also misleading to claim in flyers that you have buyers lined up for particular types of property when this is not true.
Claiming that a property has been newly decorated or has double glazing, when the description only applies to part, but not all, of the property, is cited as another example of misleading activity, as is providing a seller with invented or exaggerated feedback from viewings.
Failing to mention ‘significant’ non-standard features that the agent is aware of – for example, a public right of way through the garden – would also be a breach.
In some cases, importantly, whether the agent knew they were concealing information would not be relevant, if the existence of the information was foreseeable and the agent failed to take reasonable steps to obtain it.
Aggressive behaviour by agents would also breach the CPRs. ‘Aggressive’ practices include pressurising buyers to act quickly or to take out associated services such as mortgages or conveyancing.
The BPRs guidance deals with misleading advertising. Some of this guidance seems obvious, parts of it less so. For example, agents are told that an advertisement can be deceptive if it contains false information or leaves out important facts, or ‘creates a false impression (even where the information itself is literally true)’.
The advertising guidance also deals with the potential pitfalls of ‘comparative’ advertising – for example, where one agent claims to be better than others.
The guidance on trading practices is also intended for enforcers such as Trading Standards, trade bodies like the NAEA, and the Ombudsmen.
It follows the OFT’s Home Buying and Selling Study which found that many estate agents said the industry needed more guidance on the law. The OFT is also planning half-day workshops during the consultation period.
The consultation closes on December 9.
A copy of the draft guidance can be found at:
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