The Office of Fair Trading (OFT) has issued new guidance that seeks to help estate agents and others involved in property sales understand their responsibilities under consumer and business protection regulations. It is aimed at all property sales businesses, from estate agents and property developers to intermediate websites that facilitate contact between buyers and sellers.
The guidance specifically covers two pieces of existing legislation, the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and the Business Protection from Misleading Marketing Regulations 2008 (BPRs). The CPRs prohibit traders in all sectors from using unfair commercial practices in their dealings with consumers. They therefore prohibit property sales businesses from engaging in commercial practices that are unfair to sellers, buyers, potential sellers or potential buyers of residential property on a non-business basis.
The BPRs prohibit traders from using misleading practices in their business-to-business advertisements. They therefore prohibit property sales businesses from using misleading marketing when they advertise services to potential business clients or market commercial property for sale. Most of the offences are strict liability, with the usual due diligence defence.
The guidance identifies examples of trading practices that could breach the regulations, and then goes on to provide practical steps that can be taken to aid compliance 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 a 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 upon, for example in relation to viewing a property, making an offer or instructing conveyancers or surveyors;
- Keeping consumers well informed during negotiations and the sales process;
- Not putting undue pressure on consumers to act quickly and, for example, 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.
In light of this guidance, property service businesses should consider the systems and safeguards that they currently have in place and whether they work in practice. They may find it useful to ask themselves the following questions. Is a sufficient amount of information initially collected in order to market a property professionally and appropriately? Is this information verified? Are the appropriate enquiries and checks carried out at various stages during a property transaction? When relying on others for information, is it possible to show that it was justifiable to do this? Businesses should consider for each property who the ‘average consumer’ is likely to be and whether additional care needs to be taken to demonstrate due diligence. Conduct, processes and training should be regularly reviewed and all necessary changes, arising from such reviews, implemented.
If a business fails to comply with the CPRs and BPRs it may be required to give undertakings, or be subject to civil court proceedings, to stop breaching the regulations. Criminal enforcement action may be taken, with fines of up to £5000 if dealt with summarily, or an unlimited fine and up to two years’ imprisonment if convicted in the Crown Court.
The guidance has been developed with help from the property sales industry and Trading Standards Services. It will be of particular use to traders and others (including enforcers and consumer advisers) in light of the Department for Business Innovation and Skill's recent announcement that the government intends to repeal the Property Misdescriptions Act 1991, which has largely been superseded by the CPRs and BPRs.