Estate Agents and Sellers – Property Information Legislation Changes

Estate agents and house sellers now have a duty to inform potential buyers and even potential property viewers about certain information that may affect their decision to purchase a property and land.

The Consumer Protection from Unfair Trading Regulations (SI 2008/1277) (‘CPR’) came into force on 26 May 2008, and these Regulations primarily deal with business-to-consumer practices. In addition the Business Protection from Misleading Marketing Regulations 2008 (SI 2008/1276) (‘BPR’) came into force on 26 May 2008 and primarily deal with business-to-business advertisements and activities.

In light of the Property Misdescriptions Act 1991 repeal taking effect on 1 October 2013, and effectively now being superseded by the BPR, now is a suitable time to revisit the CPR and BPR.

To assist with the interpretation of these Regulations the Office of Fair Trading (OFT) has published specific guidance for the property sector to assist estate agents, property developers and other relevant parties. The guidance is designed to help parties involved in property sales understand their responsibilities under the Consumer and Business Protection Regulations. This includes identifying examples of trading practices that could breach the Regulations, and practical steps that businesses can take when advertising, marketing properties and taking new instructions.

The OFT guidance identifies a number of trading practices that could breach the Regulations and practical steps that businesses can take to comply with the law, examples include:-

  • Providing all ‘material information’ that the average consumer needs to make an informed transactional decision.
  • Ensuring that any information provided (including in writing, in pictures or given verbally) is accurate when advertising for new business or when marketing property.
  • Important information that consumers need to make informed decisions must not be left out of the information provided to a potential buyer. Throughout the buying and selling process, businesses must provide the necessary information to enable informed choices to be made on viewing a property, making an offer or instructing conveyancers or surveyors.
  • Undue pressure must not be put on consumers to act quickly, for example to put in an offer, raise their price, skip the survey or exchange contracts.
  • An effective customer complaints procedure must be in place that is understood and followed by all staff members that come into contact with the public.

The OFT guidance advises that in the most straightforward transactions the ‘material’ information and facts that should be given to potential buyers may be quite basic. This for example may include the asking price, location, number and size of rooms, and whether the property is freehold or leasehold.

However, depending on the circumstances of each sale, material facts and information could include the length of the lease, the charges payable under a lease, known title issues, major structural defects, planning permission issues, lack of connection to mains services etc. Arguably this includes any material information that could affect a potential buyer’s decision to make an offer on a property.

Whilst a property agent is not expected to research issues that are outside the relevant line of business (eg. structural issues), should they become aware of such information later on this cannot be ignored or suppressed. If the information is material, it must be disclosed to the potential buyer, in accordance with the OFT guidance.

The BPRs ban misleading advertising to businesses that are likely to deceive a business and either affect its economic behaviour, or injure or be likely to injure a competitor. Examples include causing a business to incur expenses that they would not otherwise have incurred and/or causing a business to buy or sell a property when they would not otherwise have bought or sold.

Non-compliance with the CPRs and BPRs may lead to enforcement action under the Enterprise Act 2002. This could see a trader being made to give undertakings, or being subject to civil court proceedings to stop a breach of the Regulations. It may also lead to criminal enforcement action, an unlimited fine and up to two years’ imprisonment for a conviction in the Crown Court.

The OFT Guidance (all 66 pages) is available for download and we would suggest that owing to recent changes now is a suitable time to revisit it, and possibly review business policy and practices.

To discuss this blog in more detail email Daniel Woolnough.