News In Focus

OFT issues estate agency guidance

14 September 2012

Guidance to help estate agents and others involved in property sales understand their responsibilities under consumer and business protection regulations has been published by the Office of Fair Trading.

In addition to estate agents and property developers, it has advice for intermediate websites that facilitate contact between buyers and sellers.

The guidance specifically covers two sets of regulations: the Consumer Protection from Unfair Trading Regulations 2008, and the Business Protection from Misleading Marketing Regulations 2008. These regulations have largely superseded the Property Misdescriptions Act 1991, which the Government announced yesterday it intends to repeal.

It identifies examples of trading practices that could breach the regulations, and includes practical steps that property sales businesses can take to comply with the law, for example:

• Ensuring that any information provided, whether in writing, in pictures or given verbally, is accurate when advertising for new business or when marketing property. Breaches of the regulations might include falsely claiming to be a member of a professional body, misdescribing a property for sale or making unfair comparisons with competitors.
• Not leaving out important information that consumers need to make informed decisions. For example, 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.
• Not putting undue pressure on consumers to act quickly, for example to put in an offer, or raise their price.
• Having an effective customer complaints procedure that is understood and followed by all staff who come into contact with the public.

Non-compliance with the regulations may lead to enforcement action under the Enterprise Act 2002, or to criminal enforcement action, with an unlimited fine and up to two years' imprisonment on a conviction.

Cavendish Elithorn, senior director of the OFT's Goods and Consumer Group, said: "Unfair business practices can cause substantial losses or frustration to buyers and sellers either when transactions collapse or afterwards when the truth is uncovered.

"In response to feedback, this guidance has been developed with help from the property sales industry and Trading Standards Services, to provide clear and comprehensive, but practical, advice."

Ambiguity

However Malcolm Cannon, chief executive of Edinburgh Solicitors Property Centre, was critical of the proposed legal changes. He commented: “Any efforts to improve the process of buying and selling property must be welcomed. However, what has been outlined by the UK Government does raise issues.

“By removing the detailed consumer protection contained within the Property Misdescriptions Act and relying upon the principles-based approach of Consumer Protection from Unfair Trading Regulations, they are opening up the opportunity for confusion and ambiguity. In effect we are going from detailed and specific protection to the vague.

“We believe this drawback is compounded when combined with the introduction of intermediaries who can operate outside the obligations of the Estate Agents Act based on whether they provide personal advice or not. This is diluting protection for consumers, especially when you consider the confusion that does arise in relation to whether advice or information is being provided.

Click here to access the guidance.