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.”
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Comments
Not a typing school obviously :0) Is attacking my spelling the best argument you can up with.....I can live with it.
"misdescibes" wot skool you wen to?
Michael
I totally agree an individual that knowingly misdescibes their property when advertising it should be penalised in the same way as an EA, i.e via the Consumer Protection from Unfair Trading Regulations (CPRs).
An intermidiary does not write a description the owner does, they are merely creating a vehicle to break the EA monopoly on access to the portals. If they describe the property for the client they are acting as an EA and fall under the EA act its very clear and simple.
However, the PMA was not robust enough or enforced, plenty of EA's lied, emblished or ommited relevant information when marketing their clients properties buyers came to expect it. So it was an irrelevant piece of legislation more often used to protect the traditional EA's business model rather than to protect consumers. Which is why it is being abolished.
Presumambly amauterish attempts wil not yield results, in such cases the amatuer EA would eventually go to a real EA to get results....so why would you care.
Please dont mask protectionism as consumer care.
Property Portal price hike!!!! we need to stand united and boycott these giants of the internet. without estate & letting agents, they would not exist but yet they are not helping by taking this arrogant stance. Stop using these websites!!!!!!
@HappyChappy re Gumtree types & the EA. I feel that any system that is working as a method of marketing houses should be responsible for their marketing, whether it is an estate agent or Gumtree, Tepilo etc.
In my own world, if a private person runs a massive campaign to market their house, and they misdescribe it then they should be subject to being penalised in the same sort of manner as an estate agent ... ignorance of the law is generally deemed to be no excuse, so whether an agent, a granny or Gumtree misdescribe a property, they should all be open to being penalised, ideally through a property related system rather than common law.
Houses are so expensive that if it is allowed, nay almost encouraged it seems, to develop amateurish marketing methods then the results can be predicted ... sellers will lie about their houses. Buyers will get angry & sue. It risks becoming a real mess.
to blame
Thank you for posting that link, how much will you save?
They big problem they will face is the slightly misleading sales pitch used by TPO i.e "one must be registered with the property ombudsman" rather than one must be registerd with a redress scheme.
Anyone who has signed up with TPO on that basis only has their own ignorance of the EA Act.
Just had the Ombudsman e mail with membership invoice for next year prices they have shot up! there is an alternative we are looking at massive saving....... http://www.ombudsman-services.org/property.html
Michael,
A fee being charged to market a house is very different to a fee being charged to provide a full agaecy service.
Hence why one is covered by the EA act and the other isn't. or in your world should the likes of Gumtree be covered by the EA act ?
@fencesitter ... no irony was intended in my posts. The 2 points that you make are valid and current (though a million miles from my own operation where our staff are licensed, qualified and experienced and we carry out no canvassing behaviour whatsoever, we concentrate on board presence and word of mouth).
My worry is that with these changes that seem likely to encourage a proliferation of low grade marketing, standards will drop and badly. Consumers will probably be hit & hurt by these reduced standards. Good agents who have enough cash in the bank to survive tough times for a few years may very well come though it all, but I think that many who don't will close. Objective businessmen may make the business decision to close as agents, run a different business for a few years & wait to see what happens before considering opening up again.
To me it is a retrograde step to encourage the handling of what is most people's most expensive asset, by discount marketers.
@michael
"...unlicensed, unqualified and perhaps inexperienced parties..." No change there, then! As for the second hand car analogy, that sounds exactly like the sort of so called "canvassing" tactics employed by dodgy agents as soon as a board appears in front of your house. Or have I completely missed the intended irony of your posts?
I guess I am not entirely objective, as it is also likely in tough economic times that these house marketers on the fringes of estate agency will indeed heavily undercut conventional high street agents, as they can afford to, causing conventional agents to close down. This is a shame, it will cause both job losses and a reduction (overall) in quality house sales transactions.
Somehow I also see an increase in the scam that is common when you offer a car for sale through cheap media, ie callers ringing to say that if you send them £nnn then they will send you the contact details of 3 people on their books all of whom will definitely buy your house.
I support the statement from the PO as pretty much exactly how I see the situation.
It is very regrettable to allow a fee to be charged for marketing a house by unlicensed, unqualified and perhaps inexperienced parties. I see a likely rise in both unethical and indeed criminal behaviour, not least amongst this could be money-laundering.
The PO is a nothing enterprise, just a bucket to collect spurious (mainly) complaints. The "lowest order of qualification" (if 'qualification' it is) for an "agent" and it means nothing. In my personal view, the public is being misled - as in many things. Mind you if ‘caveat emptor’ is being made redundant - that is very serious.
The maths is well beyond me but an outstandingly good post.
Well done Sir (or Madam)
Mr Hamer is simply calculating/devious/patronising (choose two) in the way he presents figures and draws sound bites from them
Under 16,000 complaints for both Estate agency which had about 730,000 completions last year and Property Lettings and management which looked after 3,600,000 tenancies last year.
Can he not get into his limited capacity skull that based on over 4,000,000 contractual property transactions 16,000 is a non figure in itself yet when one they looks at how many Agents were guilty of mis-doings only 6% of complaints made complaints were upheld by the TPO representing only 0.02% of all those who were actually treating with Agents.
If one expands the number of folk allegedly dealing with Estate Agents and Property Managers 14,000,000 per month according to RM and Zoopla the complaint ratio is a staggering 0.0006%.
Mr Hamer, based on your figures the Property profession should be congratulated for its incredibly low level of complaints and the miniscule number of agents against which complaints have been upheld. Let’s hope the government ministers you are lobbying so hard understand that the only ones benefiting from the TPO are the TPO themselves.
Lets hope too that those within the industry who support your business realise the undermining harm you are doing to RICS, NAEA and ARLA and that they do something to show that membership to TPO comes to be recognised as the lowest order of qualification to practice Agency, the last chance saloon for Agencies not competent or qualified enough to be members of the National regulating bodies.