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Case Study: HS2 derails prospective purchase

25th June 2018

Our latest case study looks at a case involving the purchase of a property near to a major infrastructure project.

Such cases can be very subjective as homebuyers will have different opinions about living near railways, major transport routes, power station, wind farms etc.

An estate agent must make a judgement call about whether such information constitutes material information under the Consumer Protection from Unfair Trading Regulations 2008 (CPRs); CPRs require estate and letting agents to provide up front any information which would affect the decision to buy the property.

Some cases are more clear cut than others and Propertymark’s Primary Authority Advice[1] is a useful resource, as well as previous TPO decisions. [2]

In this case a couple were concerned that their prospective purchase was close to the proposed HS2 train route. They claimed that having asked the question they were advised it was not and proceeded with the transaction until it was revealed in the searches that the property was just under ½ mile from the proposed HS2 route.

They withdrew from the transaction and sought redress for the £1200 they had spent on the survey and legal costs.

The agent claimed it was their policy to direct people to the HS2 website when such queries arose, and disputed that they had told them there was no issue. The agent also cited the signage nearby to the property protesting against HS2 as evidence the buyers must have known there may have been an issue.

TPO found in favour of the purchasers, but did not refund the survey and legal costs, instead awarding £400 for aggravation and breaching CPR.

Critical to this decision are 3 points

  • HS2 was material information. The buyers had made that clear and, as in previous TPO decisions[3], the fact that the buyers withdrew from the transaction immediately after finding out satisfied TPO that had the agent provided more accurate information up front, a different transactional decision would have been made.
  • The agent was unable to provide documented evidence (emails/phone calls/letters) that suggested they had requested the buyers review the HS2 website to verify the route.
  • There was a high likelihood the buyers were aware of some risk given their initial concerns and should have raised their own enquiries.

By establishing better quality information up front, you can comply with your obligations under the CPRs, improve the quality of your viewings and reduce the number of fall throughs

 

Compliance in a Box from Landmark helps agents make sure you ask the right questions of your clients, and document their response. Our simple pay-as-you-go compliance toolkit helps agents fulfil their obligations under CPRs and AML; leaving you to deal with the business of selling houses.

For more information please complete the form below, or contact Compliance in a Box on 01524 220013

Register your interest today

 

Verification

 

 

[1] http://www.propertymark.co.uk/working-in-the-industry/primary-authority-advice.aspx

[2] https://www.tpos.co.uk/news-media-and-press-releases/case-studies

[3] http://etsos.co.uk/clients-will-dictate-what-constitutes-material-information/

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