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TODAY'S OTHER NEWS

Concerns over agents' obligation to reveal property defects

There have been concerns raised over new trading standards guidance for estate agents on having to reveal ‘significant defects’ about properties to potential buyers. 

Yesterday we ran a story about the new National Trading Standards Estate Agency Team guidelines aiming to assist agents comply with the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and the Business Protection from Misleading Marketing Regulations 2008 (BPRs). 

But now the Royal Institution of Chartered Surveyors says that while the guidance is straightforward to read and understand, it is concerned at the requirement to declare significant structural defects to buyers.  

“The principle of declaring 'significant defects' that are 'material information' that may affect the 'transactional decision' of the 'average consumer' is fairly straight forward” it says. 

But it believes less serious defects are a matter of judgement as to whether they are 'significant' and could be 'material information'.  

“Since that judgement will be on a case-by-case basis specific to each property and its likely 'average consumer', it is simply impossible to set out definitive guidance on which defects are significant or material” explains RICS UK residential director Andrew Bulmer.

“NTSEAT have set out their guidance on this subject as clearly as anyone reasonably can and there is little we can add, beyond observing that case law will doubtless shine a light on where the boundary or boundaries may lie” he says.

Bulmer also says what precise information to give to buyers remains as unclear now as it did under the now-defunct guidelines from the former Office of Fair Trading. 

“For example, a potential buyer making a decision to arrange a viewing is making a transactional decision. But it is neither practical nor reasonable to display a structural engineer’s report in a shop window or press advert” he says.  

“The guidance does seek to address the principles of what information should be given and when, but agents will continue to face this challenge as previously.  What is key is that buyers should not experience surprises on their journey to buying a property” explains Bulmer.

RICS says the best way to approach the new guidelines is to adopt five courses of action - Read the new guidance carefully, Review CPR/BPR procedures and the information signposting for buyers, Keep solid records, Train all staff well, and Maintain a watching brief for further news or cases that come to light.

If you didn’t catch it yesterday, the new guidance document is here.

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    Surely, the best way that agents can ensure they are meeting their obligations in respect of informing prospective purchasers about potential defects in the property is to recommend that they obtain a good quality and detailed survey prior to making any buying decision. Making this recommendation to clients at an early stage would go a long way to demonstrating that they are complying with the guidance.
    I understand why agents have traditionally been reluctant to encourage buyers to obtain a survey, but the world is changing now. Certainly, speaking for the members of the RPSA, we like to approach our surveys in a positive way and see them as helping the selling and buying process, rather than hindering it. By conducting a thorough and detailed inspection the surveyor can, in most cases, explain the background and the nature of any defects in a calm and jargon free way, and avoid constant references to further investigations. Good quality reports, including lots of photos and clear, concise information, help validate a buying decision and ensure that agents are assisting buyers in making informed choices.
    Alan Milstein
    Chairman - Residential Property Surveyors Association

  • Jon  Tarrey

    Don't buyers have to have a survey done anyway, before they complete the transaction?

    Or are you saying they should have a survey before they decide to buy rather than when the wheels have been put in motion?

    If so, I agree with you. Will help nip things in the bud. It also seems shocking that agents don't, as a matter of course, point out potential defects to buyers - especially if these defects were potentially troublesome or harmful.

    Surveyors do seem to get a bit of a bad press from agents, but I think they do an underrated and valuable job. What is the main barrier to more agents using good-quality surveys, Alan? Cost? The possibility of delays?

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    Bring back HIP's including the Home Condition Report.

  • Algarve  Investor

    Does the Home Condition Report no longer exist, Phillip? Just typed it in on Google and it brings up quite a few recent results.

    From my experience, it's the cheapest and best way to get a thorough "health check" of your property.

  • icon

    No, there is no requirement on a buyer to obtain a condition survey of the property they are intending to buy. Those buying with the aid of a mortgage are required to obtain a valuation (usually carried out by the lender on behalf of the buyer) but this is not intended to provide the buyer with information about the condition of the property.
    Unfortunately, in the past, some surveyors have had a tendency to provide overly negative reports on properties in order to protect themselves from future claims.
    Certainly for those RPSA members that I represent this type of defensive surveying is a thing of the past and RPSA surveyors now approach the job in a positive way designed to help all of those involved in the selling and buying process.
    The Home Information Pack, cancelled by the newly elected coalition government in 2010 was originally to have included a survey of the property called a Home Condition Report (HCR). The HCR never made it into the HIP as the, then the Labour, government changed it from a mandatory to an optional element of the Home Information Pack, and effectively killed it.
    There is a product on the market called the Condition Report. This is a very brief review of a property which, to my mind, is not really fit for purpose as it does not require a surveyor to enter the roof space or lift up drain covers. I really can't see the point of carrying out a survey that is not complete and comprehensive.
    Many of the members of the RPSA offer the Home Condition Survey which is a full and thorough inspection provided in a report format that is jargon free and supported by multiple photographs. Typical costs for a Home Condition Survey would be £300-£600 for an average property.

  • Trevor Mealham

    The job of the agent is to be fair and honest. Agents on the whole are not surveyors and should present intel fairly.

    TS accept that there is a time and place to provide levels of information (which may mot be all up front straight away).

    As Philip says, the HIP was a good idea. But unfortunately was watered down on launch.

    The agent's need is to provide fair and honest info as would be expected by average consumers.

    For instance an average equestrian buyer would require specialist average intel as relevent to buying a equestrian property.

  • Daniel Roder

    Yep, agree with all this Trevor. If the agent does everything in a fair and honest manner, they can't be blamed at a later date.

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