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Trading Standards Issues New Guidance On Property Sales For Estate Agents

16th September 2015

The Estate Agency Trading Standards Team at Powys Council has issued new guidance for estate agents on The Consumer Protection Regulations (CPRs). The new guidance replaces the guidance issued by OFT in 2012 and is intended to help agents understand how to comply with the CPRs.

The following is a quick reference guide focusing specifically on how The Consumer Protection Regulations effect the way in which you market properties. Further detail on this and the other aspects that come under CPRs, such as how you attract customers, can be found in the full guidance document here.

The guidance applies to you if, as part of your business, you are:

  • An estate agent
  • A buyer’s agent
  • An internet property retailer
  • An auctioneer
  • A solicitor offering services that count as estate agency work
  • Selling property or land
  • A developer
  • Buying property or land for resale
  • Providing some ancillary services related to any of the above

A key feature is that the guidance is not exhaustive; there may be a different interpretation for different business types and that, regardless of the guidance, a court would decide exactly how the law is applied.

The guidance states firmly that you should consider how the regulations apply to your business, make changes to your business practices if necessary and ensure staff understand and comply with them.

Punishments for breaches:

  • Fines
  • Compensation
  • And in worse case prison

The focus of CPRs is to ensure the consumer is treated fairly. The guidance says unfairness can arise from:

  • Giving false or misleading information
  • Hiding or failing to provide material information
  • Exerting undue pressure
  • Not acting with a professional standard that is in accordance of what is expected
  • Engaging in banned practices

Other than banned practices the other breaches have a threshold which is – were/are they likely to affect the transactional decision of the average consumer. The average consumer is one who is reasonably well informed:

  • The important questions for any court case is whether your act or omission is likely to have an impact on the average consumer, not the consumer in question
  • The Consumer is defined as Clients, Potential Clients and Potential buyers or sellers who are not directly your client

A transactional decision is not just the decision to buy, it also includes the decision to enquire, view and on what terms they proceed if indeed they do.

The specifics of what should be provided as a minimum, if applicable, are:

  • Asking Price
  • Location
  • Number of rooms
  • Room sizes
  • Tenure
  • Length of Lease
  • Issues with title – example restrictive covenants
  • Significant issues or occurrences at the property
  • Major structural defects
  • Status of connection to mains services and utilities
  • Planning permissions for any conversion or extensions
  • Other things that may affect the property such as potential developments, planning issues, highways issues, conversation area etc

This information should be provided to interested parties as early as possible in the ordering process. If you do not know a piece of information it could still be misleading if omitted and you have not taken reasonable steps to check if any material information does not exist. Specific guidance is given on what you should do to satisfy your obligations and protect your business:

  • Take care in gathering information prior marketing a property
  • Have a system and safeguards in place for ensuring the information is collected and is accurate
  • Ensure it is presented at the correct time and in an accurate manner
  • Ensure marketing is updated promptly when any new information becomes available
  • You keep a comprehensive and up to date audit trail of all checks and dealings with customers
  • Where you have done everything reasonably expected; you are also open about things you have not done and why

The guidance applies to commercial agents as well

Practical steps to help you comply:

  • Systems and processes for gathering and presenting information
  • Keeping full audit trails
  • Where you decide not to carry out checks, give reasonable justification for the decision

There is a defence of:

  • Mistake
  • Reliance on information supplied by someone else
  • An accident
  • Other causes outdid your control

For any to be a defence the audit trail of the checks you made should be able prove any of the above and that you took steps to minimise the risk of it, for example:

  • Ensure staff are trained and exercise ongoing control over them
  • Consult relevant sources to check accuracy of information such as Land Registry
  • Include new information that comes to light during the marketing of the property

Compliance in a Box by ETSOS provides a full system for collecting, checking and presenting information is seconds online. Designed with industry stakeholders it ensure consistency across the business and provides a time stamped audit trail of all checks made in the event of investigation. To find out how Compliance in a Box can help you please contact us on 01524 220013 or fill out the contact from below.

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