As you are probably aware, new Consumer Protection Regulations (CPRs) came into effect on 26th May 2008. These were introduced across the European Community to prevent commercial practices that could be or were unfair to consumers. The regulations were not written specifically for real estate matters, but do apply to estate and lettings agents (as for all retail activities).
The new regulations are to be policed by Trading Standards, and the potential penalties are very high - an agent could face civil or even criminal sanctions.
Until now, we have relied on the Property Misdescription Act 1991 and The Estate Agents Act 1979 for clear direction on how we should operate our business.
The OFT has since issued guidance (September 2012) on how the new regulations apply to estate agents, and in particular emphasising that although the agent is instructed by the seller, he/she must be even-handed and fair with prospective buyers and potential viewers.
This means, in effect, that ‘Caveat Emptor’ no longer applies and a duty of care falls on the agent to ascertain and share any information that might be considered ‘material’ by the buyer. The test is whether the ‘average consumer’ would have taken a different transactional decision if he/she had known any fact that was not revealed prior to purchase.
Therefore the responsibility falls on the agent to establish all the pertinent information and share this with the applicant. This might include avoiding disclaimers, making available previous survey results and any Green Deal arrangements on the property, or even any sensitive issues (although these might be disclosed separately once a strong interest in the property from the potential buyer has been established).
The Ombudsman is preparing some guidance notes for agents with regard to CPRs, but to date there is no clear definition of what should be considered as ‘material’ – it is for the agent to make this judgement on an individual case basis!
What is clear is that each agent should always carry out a thorough fact find of the property and the potential applicant to better determine their needs in order to make a suitably informed transactional decision.
Fine & Country is in the process of amending its own Code of Conduct to ensure that it complies with the CPR regulations, and you may wish to review your own documents similarly.
Click here for current advice and information from the OFT.
As soon as we receive further guidance from either the OFT or The Ombudsman, we will make this available to you.