PMA set to be replaced by new Euro law

The future of the Property Misdescriptions Act has a question mark over it after the launch of a new consultation.

Instead it could be replaced by a newer, non-property specific Euro law that is currently running in tandem with the PMA.

Legislation to phase out the PMA could be introduced later this year.  

The PMA was introduced in 1991 and came into force in 1993. It makes it illegal for agents to make false or misleading statements, whether deliberately or not, about a property for sale.

But more recently, the EU Unfair Commercial Practices Directive was implemented in the UK, in the form of the Consumer Protection from Unfair Trading Regulations (CPRS).

It means that consumers are now protected by two similar pieces of legislation.

The purpose of the consultation, by the Department for Business Innovation & Skills (BIS), is to ask whether the PMA should be repealed and replaced by the CPRS.

The PMA gives trading standards officers carte blanche to enter offers if they suspect a PMA offence and to seize documents.

The agent’s only defence is due diligence – that the agent took all reasonable steps, such as staff training, to prevent an offence being committed.

As a result, a small industry has grown up around PMA training and consultancy. As the consultation document says, estate agents have spent hundreds of thousands of pounds on complying with PMA.

So successful – apparently – has the regime been that the number of cases brought by trading standards officers under the PMA has shrunk from 26 in 2001 to just three in 2008/09, although they did bounce back up to 12 in 2009/10.

The CPRS is broadly aimed at stamping out dishonest, aggressive and misleading commercial practices as they affect consumers.

The important test it introduces is of ‘transactional decisions’ – the latter being matters that could influence someone into making a decision such as to enter an estate agent’s shop, view a property or commission a survey.

For example, if an agent described a three-bedroom property as having four, that would be a straightforward offence under PMA.

Under CPRS, the test would be if that description influenced a consumer to take a different transactional decision than would otherwise have been taken.

Under CPRS, trading standards have the same powers of entering premises and inspecting files, if they suspect a breach.

In the consultation, it is argued that the PMA has the advantage of being specific to property, and therefore easier to understand, whereas CPRS is a principle-based legislation that is not specific to property.

Agents, property auctioneers, developers and consumer groups are among those whose opinions are sought.

One possible difficulty is that there is plenty of case law under PMA but not much under CPRS. If the PMA is repealed, there might have to be interim guidance for agents until there was more practical enforcement experience of CPRS.

The consultation was published on January 11 and will close on April 5.

This consultation can be found at: Consultation on the repeal of the Property Misdescriptions Act 1991

It is also available from:
BIS Publications Orderline
ADMAIL 528
London SW1W 8YT
Tel: 0845 015 0010
Fax: 0845 015 0020
Minicom: 0845 015 0030