OFT publishes new guidance on property sales

Robyn Hall

September 13, 2012

The guidance 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, raise their price, skip the survey or exchange contracts.

• Having an effective customer complaints procedure that is understood and followed by all staff who come into contact with the public.

The guidance specifically covers two pieces of existing legislation: Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and the Business Protection from Misleading Marketing Regulations 2008 (BPRs).

Non-compliance with the CPRs and BPRs may lead to enforcement action under the Enterprise Act 2002. This could see a trader give undertakings, or be subject to civil court proceedings, to stop breaching the regulations. It may also lead to criminal enforcement action, an unlimited fine and up to two years’ imprisonment for a conviction in the Crown Court (or Sheriff Court in Scotland).

The guidance will assist traders and others (including enforcers and consumer advisers), especially in light of the Department for Business Innovation and Skill’s announcement today that the government intends to repeal the Property Misdescriptions Act 1991, which has largely been superseded by the CPRs and BPRs.

Cavendish Elithorn, senior director of the OFT’s goods and consumer group, said: “Buying and selling a property is usually one of the biggest purchases we make and can also be one of the most stressful. 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.”

But Mark Hayward, president of the National Association of Estate Agents, said: “We are concerned and disappointed that the Government has pushed forth with its plan to repeal the Property Misdescriptions Act; it is a decision we feel will lead to reduced levels of consumer protection for homebuyers as they make what may be one of the biggest transactions of their life.

“This legislation is key in the unregulated world of estate agency, and there is little to be gained from its repeal. Instead, Government is effectively giving rogue, unprofessional agents an opportunity to mislead consumers. Many potential home buyers are already struggling to buy a home, and it would be remiss for them to be further penalised due to lack of protection.

“We welcome the Guidance document on compliance with Consumer Protection Regulation, unveiled today, but we believe that the unique and important nature of property purchase means consumers deserve further, stronger protection; we have long advised that both pieces of legislation could exist concurrently to the benefit of the consumer.”

Trevor Kent, former president of The National Association of Estate Agents and property broadcaster, added: “I am delighted that others in the property transfer field have been reminded they fall under this legislative control.

“Respectable estate agents have for some time experienced builders, internet property retailers, some auctioneers and even solicitors who have successfully found ‘wriggle-room’ to avoid much of the legislative control we agents alone have been subject to.

“I just hope that Trading Standard Services around the country will get these new rules out to the more obscure, sometimes ‘bedroom-based’ untrained operators, rather than concentrate on the ‘easy-to-find’ high street firms who know the rules and, by and large, keep to them”.

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