x
By using this website, you agree to our use of cookies to enhance your experience.

By Aoife Cantillon, solicitor at law firm Seddons

Recent changes to legislation mean that sellers, and certainly selling agents, must now refocus their attention when marketing properties for sale.

Specifically, they should no longer look to rely solely on the long-standing “buyer beware” principle.

In October 2013, the Property Misdescriptions Act (PMA) was repealed and replaced by the provisions of the Consumer Protection from Unfair Trading Regulations 2008 (the Regulations) and the Business Protection from Misleading Marketing Regulations, which are far wider reaching in scope.

There is ongoing debate as to the lack of clarity in respect of the Regulations.

They provide that estate agents are required to treat the “consumer” fairly; among others, this encompasses viewers (prospective or actual) and prospective purchasers in addition to vendors.

The Regulations define activities that constitute unfairness, including misleading actions and misleading omissions, and they cover all forms of trading, thereby applying to letting agents and property management companies in addition to selling agents.

The Regulations also set out 31 prohibited commercial practices which are deemed inherently unfair. Provided the consumer is treated fairly, there should not be any cause for concern. However, the implications of a breach could prove costly.

In terms of practical implications, crucially, estate agents must not be deemed to be carrying out unfair commercial practices by saying, doing or omitting to do something which causes (or is likely to cause) “the average consumer” to take a different transactional decision than would otherwise have been the case.

Such a decision includes viewing a property or commissioning a survey in addition to purchasing. In order to assist in ensuring an informed transactional decision is made, agents should provide all material information to the consumer and should not expect them to take small print into account unless key points have clearly been brought to their attention.

Agents should be aware that the definition of an average consumer is interchangeable, i.e. it may refer to a member of a particular group of consumers (e.g. those considered vulnerable to commercial practice such as the elderly or first-time buyers) and not just the average consumer generally.

In practice, the application of the Regulations will depend on the circumstances of each case; this is one of the factors encouraging debate at present.

The Office of Fair Trading (OFT) and The Property Ombudsman have published guidance on compliance with the Regulations.

Agents are required to take reasonable steps in relation to obtaining information, and broadly speaking, the following should be noted:

* Misleading information includes misleading advertising: if there is any uncertainty regarding information obtained, such points should be checked carefully with the client and it will be necessary to look into any areas of concern. Further enquiries may be appropriate if matters appear unusual or, for example, where there are clear inconsistencies with other properties on the same road. Caution must also be exercised when using general or anecdotal descriptions.

* When relying on information from others, agents must be able to demonstrate that they are justified in making a decision on this basis and that it is reasonable to do so.

* When preparing to market a property the following should be borne in mind:

1.   Providing a correct and detailed description of all aspects of the property including outlook; tenure; local services; ground rent/service charge arrangements; etc. Many leasehold properties will also include a share in the freehold and many will have short lease terms. Further considerations should therefore be brought to the consumer’s attention, i.e. potential extension of the lease term and relevant factors associated with this process.

2.   Photographs must give an accurate portrayal of the property including any neighbouring features that are likely to directly affect a consumer’s transactional decision.

3.   Disclosure must be made of anything brought to an agent’s attention via an abortive sale or during the course of a transaction. When dealing with properties at which murders or suicides have occurred, this should be relayed to the consumer as soon as possible and certainly at any viewing.

4.   If applicable, the fact that a referral fee exists in relation to third party services should be disclosed to the consumer.

5.   It is advisable for agents to maintain a clear paper / audit trail, in the event of any alleged non-compliance with the Regulations. It may also be appropriate to review current safeguards and staff training.

Non-compliance with theRegulations, including misleading and aggressive commercial practices, could result in civil and / or criminal enforcement action.

A defence of due diligence may apply to certain breaches.

In the coming weeks and months it will be essential to maintain a cautious approach and ensure a proactive and open dialogue is adopted with both staff and expert advisers.

In doing so, agents should be able to steer clear of any potential non-compliance.

For further guidance, visit the links below:

The Property Ombudsman Guidance for Estate Agents (setting out property specific guidance):

https://www.tpos.co.uk/downloads/CPR%20Guidance%20doc%20March%202013.pdf

Office of Fair Trading (“OFT”) guidance on property sales

https://www.oft.gov.uk/shared_oft/estate-agents/OFT1364.pdf

OFT Guidance for Estate Agents – a consultation document

https://www.oft.gov.uk/shared_oft/consultations/oft1364con.pdf

Comments

  • icon

    Hmmm... what is more worrying here:

    1. That the author thinks that this is "new" legislation?

    2. That those in our own profession know so little about CPRs?

    3. That in my opinion, we have more to fear with regard to the TPOs interpretation of the CPRs than we do the TSOs who will be enforcing them?

    • 16 December 2013 15:24 PM
  • icon

    Testing my login

    • 12 December 2013 07:48 AM
MovePal MovePal MovePal