Following the launch last week by National Trading Standards of a new initiative to improve the provision of material information in property sales and lettings, here are more details as to why change is important.
The debate about how much information should be provided in property particulars and listings has been going on for years. ‘Caveat emptor’ isn’t heard so much today but is still quoted by some agents who feel that it is the responsibility of the purchaser to avail themselves of all the information they need when buying or renting a property. On its own caveat emptor is often used as a means of disclaiming all liability on behalf of the seller. The phrase from which it originates however is ‘Caveat emptor, quia ignorare non debuit quod jus alienum emit’ which adds the point that the purchaser should not be ignorant about the nature of the thing they are buying.
Agents are not surveyors, nor are they lawyers or conveyancers, but they are responsible for ensuring that the properties they market for sale or rent on behalf of their clients are accurately described so as to give potential buyers or tenants the information they need to make an informed decision about whether to make further enquiries about the property or indeed go on to view and then buy or rent. Having material information available upfront can bring many benefits for all concerned – from reducing time wasted on unnecessary enquiries and viewings, to fewer transaction fall-throughs, and shorter overall transaction times.
Those with long memories will remember the introduction of the Property Misdescriptions Act 1991 which governed the activities of estate agents (and developers) when describing property. The Act made it a criminal offence to make false or misleading statements about properties. The legislation didn’t however require the specific information to be given, merely that if information was given it had to be accurate. Some say this contributed to the lack of information we see today because agents and developers were failing to disclose details for fear of falling foul of the law, and this culture has continued to this day.
The year 2008 saw the introduction of the Consumer Protection from Unfair Trading Regulations – the ‘CPRs’ (or ‘CPUTRs’ if you’re a first aider and don’t want to get confused), and in 2013 the PMA was repealed on the basis that the CPRs provided broadly similar protection. The CPRs apply to all businesses, not just property agents, and impose a general statutory duty to behave honestly and in good faith with consumers. The CPRs introduce the concept of ‘material information’ – information that a consumer needs in order to make an informed transactional decision. Case law has established that this information needs to be provided at the earliest opportunity.
What exactly is ‘material information’, and why does it cause such difficulty in the property industry? And why is it so important for estate and letting agents to get this right? It’s a tough job marketing property: you’re dealing with a unique product that often comes with a whole lot of history and can have a multitude of different things affecting it. Sorting out the information that people need, as opposed to what they just want, is complicated and will be different for each property. Let’s not forget you’ve also got to market the property in its best light whilst ensuring that potential buyers or tenants have all the information they need, before they make enquiries.
Working out what people need to know can be tricky – some information is obviously needed and is binary in its nature. Take the tenure of a property for example – for a potential buyer this will invariably be something they need to know – and in the main it will either be freehold or leasehold. So, the tenure of a property is material – but what if it’s leasehold? Leasehold brings a raft of other issues – the years left on the lease, the amount of ground rent and service charges (plus the review periods and planned increases) – some of this information will be more important (for example if there’s less than 85 years on a lease), other information less so (e.g. if there is a peppercorn ground rent).
The CPRs create some unwelcome challenges for agents, especially when it comes to sensitive issues. If a vendor has been recently convicted of serious violent or sexual offences, should agents disclose this? If a property has got unsafe cladding – how should agents go about marketing such properties? We are working with government, industry groups, professional bodies and the redress schemes to help agents interpret legislation in a constructive way. We can then work with local enforcement authorities and primary authorities to ensure that advice and enforcement is consistent around the country.
We would like to see agents encouraging sellers to engage a lawyer or conveyancer at the outset to make sure that all the necessary information is collected, and that issues such as problems with title, restrictive covenants and other matters are addressed at an early stage. More and more agents are checking the title plan and title deeds for properties – these are available online at minimal cost and can provide valuable information about rights of way and other information which should be disclosed on the property particulars. How many agents have been told by a seller about the boundaries of the garden only for it turn out that the bit of garden at the end doesn’t actually belong to the property?
The introduction of property information questionnaires for use by agents is a great step forward. Getting properties ‘market ready’ is welcome news. The aim of getting market ready is to smooth the journey for agents and their customers – reducing the time taken, with fewer abandoned transactions. Why wait for people to find things out further down the line? If sales agents could convince vendors to instruct lawyers or conveyancers at the outset, so much more could be done at an earlier stage, which would ultimately save time and money for all concerned.
Getting it wrong doesn’t just delay transaction times – complaints can result in the redress schemes getting involved. Look at the Property Ombudsman case studies and news reports to see examples of what happens when things go wrong. In addition if someone has entered into a contract and the omission of information is a significant factor they may have grounds to claim compensation. In serious cases local Trading Standards can take prosecutions, and our team can take action under the Estate Agents Act to prohibit individuals or business from carrying out estate agency work in the future.
Click here to see the new Case for Change that was published, and complete the survey for letting and estate agents here.
The National Trading Standards Estate and Letting Agency Team is developing guidance for agents to clarify what should be considered as material information. To inform this guidance, the team is encouraging estate and letting agents to share their thoughts about what constitutes material information in this new survey. The deadline for responses is Monday 17 May.
Comments (10)
You don’t need a Conveyancer to get a client better prepared for their sale. Why not give a vendor something to do and ask them to complete their protocol forms in readiness for instructing a conveyancer. By filling in the forms, clients will see all of the supporting documentation that they needs to put their hands on. All this can happen during marketing time.
Because so many clients are not asked to do this, all of the data finding and form filling tends to happen after a sale has been agreed, which delays delays a contract going out, slows down the process and so adds to the stress.
We provide all protocol forms free for agents to point their clients towards. We even help with outsourced ID/AML services, financial reporting (Proof of funds / source of funds) to help legitimise offers and, of course, direct access to Search and environmental report ordering by the buyer or ideally vendor if people really want to move fast.
All of which can be stored digitally (supplier of your choice) ready to be shared with a legal supplier when ready.
I fail to understand why more Agents do not adopt this approach given that it is free to adopt, does not distract a conveyancer from live files and saves a significant amount of time in the conveyance. You don’t need to be an expert, you just need to point home movers at expert solutions.
I’m not trying to flog product but I am going to claim credit for bringing CPR material information to the top of the agenda for the portals, redress schemes, crm suppliers and agents. 15 months ago the portals dismissed requests by National Leasehold Campaign to have material information on leasehold properties included on property listings. I have made it a thing and take huge satisfaction at seeing this article explaining a change in legislation that happened 13 years ago but had not been communicated to the industry in a way that every agent knew they had new rules to comply with.
Even when James promised to police CPR and BPR in September 2015 (see Eye story) there was no explanation of what he was going to police. This is a long overdue explanation that probably raises questions that should have been addressed when the legislation came in. that has to be welcomed but with just 1100 story reads so far it has only been seen by about 2% of those involved in selling or letting property.
There ought to be specific guidance from the redress schemes that CPR is a thing and material information is a must .
What is and isn’t material information has to be defined, something NTSELAT were requested to discuss in November, arranged for December but then cancelled and not yet re-arranged.
UPRN has made it possible for companies like SPRIFT and Homesearch to provide a lot of the information that could be considered material information very cost effectively so there is no excuse for non -compliance.
For my part I’ve driven hard to make this happen and yesterday managed to get CPR MI integrated into Boomin. All of the practical issue have been overcome so the only thing holding this back is Agent awareness of CPR itself- That is a job for the trade associations and redress schemes
If sales agents could convince vendors to instruct lawyers or conveyancers at the outset, so much more could be done at an earlier stage, which would ultimately save time and money for all concerned.
Oh yea, remember HIP’s what an absolute fiasco that turned out to be and was eventually dropped by government. Yes there was arguments for some information and some information not even read by everyone? Only for the buyer still to pull out, change their mind and ask for it to be done again or legally required to be done again. The latter is an issue which Government needs to address, otherwise the consumer on both side of the boundary will complain. Seeing as the only thing that is really stable is the “Title” and instantly available on-line, the consumer can look it up themselves. Add caveats to why it may not be accurate, out of date or not answer the question …. how do you expect the agent then to know and certainly beyond their remit to advise! Oh, now I hear insurer’s/PI liabilities!!!!!!
The only thing wrong with our system, is not in the main the buying process, its the conveyancing time in an age of IT. That has been proven by the small amount of abandoned sales over decades which are often related to loans and survey and people dumping. You can only walk as fast as the path you need to follow, everyone is a different path.
What exactly is ‘material information’
How long is a piece of string! Will common sense prevail in a politically motivated leftist consumer protection society that is out of control with Utopia? The enthuses to move from a buyer having any responsibility, to all on the seller and agent is nonsense. A material fact will apply different to every property and every need of a buyer. You cannot possibly cover eventuality, yet we have a system now that will punish you for not having a crystal ball. ‘Caveat emptor’ has its place but was effectively removed by CPR and accelerated by a new breed of lawyers waiting to pounce.
There is nothing wrong with the conveyancing system we have (not speed!) that will address every single buyers particular needs. Trying to do it all up front is nonsense and for many the information may not even be necessary?
NTS would do a far better job using their time to chase those that can’t or don’t want to get the basics right, which we see very little of.
‘ Politically motivated leftist consumer protection society’ Woodentop? With Caveat Emptor it was a case of keep your gob shut and hope the buyer doesn’t find out until after exchange!
It’s absolutely right that buyers should be informed of issues that might concern them before they are financially committed to the biggest purchase of their lives.
But if you’d rather support the former (by your own yard stick) ‘right wing’ way of doing things that speaks volumes about whether you should be trusted as an agent.
Find out what after exchange? That is why the buyer has a look, their survey checks condition and their conveyancer to check on the legalities etc. Worked fine for decades and the buyer had the confidence in knowing the reports were theirs and should be accurate, up to date and relevant to their needs and concerns.
The guidance issued for CPR states by Government to agents:
At the outset of the marketing process, you are not expected to research issues that are outside your line of business, for example, where your business is marketing property and the issues are ones that a surveyor or conveyancer would investigate.
The Act made it a criminal offence to make false or misleading statements about properties. The legislation didn’t however require the specific information to be given, merely that if information was given it had to be accurate. Some say this contributed to the lack of information we see today because agents and developers were failing to disclose details for fear of falling foul of the law, and this culture has continued to this day.
Who’s fault is that!
“Agents are not surveyors, nor are they lawyers or conveyancers”.
Exactly, I rest my case.
An informative piece from James Munro. I remember the PMA and I hadn’t really considered how much it had contributed to the “less is more” approach to descriptions in recent years, even though it was repealed 8 years ago.
All credit to James for proactively engaging with the sector, which he absolutely does do. I have heard him speak at several seminars and he is a knowledgeable guy who tries his best to help agents stay on the right side of the law.
Yes at long last he has reached out to agents
However let’s look a little closer to home at their lack of enforcement
“The CPRs apply to all businesses, not just property agents, and impose a general statutory duty to behave HONESTLY AND IN GOOD FAITH with consumers.”
Yet for reasons best known to himself despite the industry drawing his attention to the fact constantly for many years that properties are being listed on the portals as FIRST LISTED when they are patently not has taken no notice despite this being a clear breach
They have had plenty of times since 2008 to adjust to the rules