The Property Ombudsman has hit out at changes to legislation that will affect estate agents and their business environment.
He did so in his annual report for last year, which was officially published this week.
Christopher Hamer cited the Consumer Protection from Unfair Trading Regulations and repeal of the Property Misdescriptions Act, and the amendment to the Estate Agents Act which will allow ‘passive intermediaries’ to act beyond the scope of the law.
Hamer said that the ‘heightened application by enforcement bodies’ under the new consumer protection laws was already causing problems.
The Consumer Protection from Unfair Trading Regulations (CPRs) make it mandatory for agents not to leave out material information when marketing a property.
While Trading Standards has declared its intention to build up a bank of case law, so far the only case brought ended in defeat (for Wrexham Trading Standards) because of a failure to interview the branch manager and produce this in evidence.
In his report, Hamer says: “The CPRs introduce an approach which leaves matters open to interpretation related to the particular circumstances and essentially requires disclosure of all material information. One person’s definition of ‘material information’ could be very different to another person’s and I can foresee many arguments and many disputes arising from this aspect.
“It would seem that ‘caveat emptor’ (buyer beware) has now been abandoned.”
He warns that “realistically, an agent will not always get it right”. One agent that did not get it right, in Hamer’s view, ended up having to pay £330 to a couple who had wanted to buy a house only to find they had not been told it was of non-standard construction, which meant they could not get a mortgage.
Hamer says that while the CPRs are designed to apply generally to retail transactions, they are not property-specific in the same way as the Property Misdescriptions Act.
Hamer also highlights the forthcoming changes to existing legislation and, in particular, the amendment to the Estate Agents Act which is included in the Enterprise and Regulatory Reform Bill.
The change will allow ‘passive intermediaries’ to act outside of the requirements of that Act, yet provide an introduction service for buyers and sellers.
Hamer is scathing about the change, saying that he cannot see how “a blurring of the definition of ‘estate agency’ can best serve the consumer”.
He goes on: “The point I am concerned about here is if it says ‘estate agent’ on the tin, looks like an estate agent and acts like an estate agent, then the consumer will assume they are dealing with an estate agent.
“However, they will be unaware that, like a private sale, there is no free access to redress through TPO if a dispute arises and will be misled into a less structured environment. I assume also that such offerings will be at a price much reduced on the charges by a recognised agent.
“Inevitably that will attract more sellers to use those services, more buyers will therefore be innocently drawn in and overall more consumers will be involved in a transaction where the only independent redress mechanism is potentially expensive legal action.”