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Cooling off regulations prove hotly controversial

11 March 2009
Written by Rosalind Renshaw

Cooling off regulations which came into effect last October 1 are causing heated controversy among agents.

Meanwhile, a far sterner new European Directive is in the offing. This would lengthen the cooling off period from seven days to a fortnight, and extend it to some letting contracts. Unlike the current regulations, it allows no ways round the legislation. If it goes through, it is feared that marketing could be seriously delayed, especially given the April 6 changes to HIPs.

The current regulations (the Cancellation of Contracts Made in a Consumer’s Home or Place of Work Etc Regulations 2008) specify that people who sign contracts in their own home or workplace must have a seven-day cooling off period. During this time they can change their minds. The rules apply whether the trader’s visit to the client is solicited or unsolicited.

However, the regulations exclude contracts for “the construction, sale or rental of immovable property”, the only exceptions being home improvements and building work such as double glazing and driveways.

Some agents believe this means that the exemption means that they do not have to comply with the regulations.

However, Office of Fair Trading advice is that they must – or face being policed by Trading Standards and fined up to £5,000 if they break the rules.

The regulations stipulate that consumers must be told in writing that they have a seven-day cooling off period if they have signed, or agreed verbally to, agreements away from a trader’s own workplace.

The OFT advice is that such agreements include agency agreements but not contracts to buy, sell, rent or let.

However, leading agent Paul Smith of Spicerhaart has poured scorn on the OFT advice after seeking his own legal opinion. He said other major agents had also taken legal advice and come to the same conclusion.

Smith said: “We have been advised, and strongly believe, that the immovable property exemption means that estate agents are not subject to the cooling off period.

“Houses or flats are immovable property. The legal position is that “a contract concerning rights relating to immovable property” is excluded from the cooling off regulations unless it relates to construction, large items to be incorporated into a house, or repairs to a property. Construction of conservatories, indoor swimming pools and driveway repairs are all subject to the cooling off period.

“When a seller instructs an agent to sell his property, what the consumer is in fact doing is asking the agent to represent him in selling the most important right a consumer has in that property: the Ownership Right. Similarly, when an agent is appointed to let a property, the agent has been contracted to deal with probably the second most important right a consumer has in that property, namely the Occupation Right.

“For the OFT to suggest that a contract instructing an agent to deal with the consumer’s Ownership Right or Occupation Right is not “a contract[s] dealing with rights relating to immovable property” defies all logic and basic common sense.”

He added: “It is also important to note that the immovable property exemption wording is taken directly from the EU Directive 85/557/EC (the “Directive”) on which the UK laws are supposed to be firmly based.

“This means that the meaning of the immovable property exemption needs to be interpreted in accordance with EU law, not something our Government lawyers are particularly at home with. The legal meaning of particular phrases needs to be looked at from a ‘purposive’ or common sense approach, another skill which is sadly lacking in Government circles.”

Meanwhile the NAEA is contesting the major provisions in the new draft EU directive. This seeks to lengthen the seven-day cooling off period to 14 days, and extend cooling off to tenancy agreements.

The NAEA has argued in its official response to the consultation that seven days is long enough, that cooling off should not apply to tenancy agreements, and that cooling off should only apply to unsolicited visits.

Comments

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    I think you will find that although contracts for the sale of immovable property are excluded, in real terms this would mean the actual sale contract or letting contract. What we as agents are doing is selling OUR SERVICE for a fee and therefore it (albeit frustratingly) makes sense to me that as agents we must comply with this legislation to cover our own backs.

    • 11 January 2010 16:00 PM
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    after recently reading a contract froom Haart. They have now put in the 7 day cooling off period, but also addes if a vendor does withdraw in this time then a cgarge of £500 plus vat is applicable. £ 500 in 7 days has got be be worth signing up vendors and then making them withdraw !!!. Further more the same agent made the seller sign for a £480 HIP-on a credit agreement. I am sure the agent would get some sort of kick back !! Also within the contract it stated if instrctions were not withdrawn within 7 days ( wit the £500 paid- thanks very much) then the contract continiued for a minimum period of 16 weeks (gotcha !!. Therofre if the seller wanted to cahnge agency they could not or risk fcaing paying two fees. The seller told me that the agent was very clever and just skimmed over everything juts telling her the good bits - like how much her house was worth and reported an extremely high price- suffice to say 6 weeks later the house has not sold- has not had any offers and the agent is now telling her it is over priced !!!. These guys/girls at Haart must be trained in a similar to the "electric bed companies" seen on watchdog. Looks like Paul Smith of Spicerhaart should be features on watchdog

    • 24 October 2009 09:23 AM
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    If we are legally bound to have clear and transparent terms of business, why on earth aren't the government charged with the same basic decent rules? ARE WE OBLIGED TO GIVE 7 DAYS OR NOT? Has anyone ever read the actual bill etc, it might as well be in morse code without the dots!

    • 11 August 2009 12:01 PM
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    Just had a visit from the trading standards officer re this matter. Very helpful and whilst he understood our concerns re other agents sharp practice and doing work upfront etc he said a couple of things as fact.

    1) We offer a service therefore we ARE COVERED BY THIS LEGISLATION and must provided within, or attached to, our contract a cancellation clause. IT IS A CRIMINAL OFFENCE NOT TO. Here's the good part any contract you have signed since the 1st October 2008 that hasn't had the cancellation notice is in the eyes of trading standards null and void!! This means that if your client decides not to pay you trading standards will uphold their action.

    How do you put this right? Easy to do, just go onto your search engine and type in The cancellation of contracts made in a consumer's home or place of work etc regulations 2008. Then go onto the ipos website and you'll find the exact wording you need.

    2) In the same agreement you can have a 'tear off' right to waiver so your client, that you just signed up, can allow you to get on with things straight away. After all I'm sure he/she doesn't want to wait 7 days before you come round to do the details/photos etc. As long as this is on your file you're fine.

    On all your previous instructions you must send them this and the right to cancel will be effective for seven days from the date of receipt. Maybe it's a great oportunity to do revisits etc.

    I learn't along time ago just accept it, work it right and you'll never have any problems.

    Any client who doesn't want to waive their right would make me wary and I would not do a thing until the 7 days have elapsed.

    PS When 1st day marketing ends 7 days will seem like a breeze.

    PPS All those know it all head buriers must have bundles of cash to throw away!?

    • 12 March 2009 15:39 PM
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    the regulations exclude contracts for “the construction, sale or rental of immovable property”. Why get the hang up over a legislation that was intended clearly to do with protecting the owner from workman/traders eg double glazing salesman. It is clear that it excludes sale or rental. Period.

    • 11 March 2009 15:43 PM
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    Why don't they just ban Estate Agents or put us all up against the wall and shoot us??

    So no ordering HIPs for 7 days now in case they change their mind. Hmmmm, "we'll have you on the market 2 weeks on Wednesday Mrs Smith" FABULOUS!

    • 11 March 2009 15:37 PM
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    Surely any law that is so vague will only benefit the lawyers who are employed to "interpret" the law. Why do they find it so difficult to draft a law that is clear cut ie Does it apply to estate agents or not? Yes or No.

    • 11 March 2009 10:43 AM
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    It is about time that the industry slows down a bit and allows vendors, landlords and tenants the opportunity to browse through their contracts before being tied in. Another great idea from Brussells. Well Done! (note the hint of sarcasm)

    • 11 March 2009 10:33 AM
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    Viva La Revolucion!

    • 11 March 2009 10:29 AM
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    Paul smith is absoloutley spot on in his thoughts. The whole issue is totally ridiculos, yet another non sensical idea.

    • 11 March 2009 07:38 AM
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