Office of Fair Trading
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OFT consults on draft guidance for estate agents and property developers
The OFT has today launched a consultation on draft guidance to estate agents and property developers which aims to help businesses handling sales of property and land in the UK comply with the law.
The new guidance focuses on two pieces of law: the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and the Business Protection from Misleading Marketing Regulations 2008 (BPRs).
It follows the OFT's Home Buying and Selling study which found that many estate agents said the industry needed more guidance on the law.
The guidance seeks to clarify how the regulations apply to estate agency work. It identifies examples of trading practices that could breach the regulations as well as practical steps that businesses can take to comply with the law when they:
advertise for new business, including through flyers and newspaper adverts
provide advice to new clients and take new instructions
market properties, including when property details are put on internet portals
negotiate and make sales
deal with complaints.
Cavendish Elithorn, Senior Director of the OFT's Goods and Consumer Group, said:
'Buying a property is one of the biggest purchases people make and can also be one of the most stressful. Unfair business practices can cause substantial consumer harm and this guidance has been designed to help estate agents and property developers understand what they need to do to comply with the law.'
The consultation closes on 9 December 2011. A copy of the draft guidance can be downloaded from the consultation page.
The Consumer Protection from Unfair Trading Regulations 2008 (CPRs) specifically prohibit traders in all sectors from using unfair commercial practices in their dealings with (non-business) consumers. The CPRs therefore prohibit estate agents from engaging in commercial practices that are unfair to sellers, buyers, potential sellers and potential buyers of residential property.
The Business Protection from Misleading Marketing Regulations 2008 (BPRs) specifically prohibit traders in all sectors from using misleading practices in their business-to-business advertisements. The BPRs therefore prohibit estate agents from using misleading marketing when they advertise services to potential business clients or market commercial property for sale.
See the Home Buying and Selling study 2010.
Currently, the Property Misdescriptions Act (PMA) 1991 is often used to address misconduct in this sector although the CPRs and BPRs also apply. The Department for Business Innovation and Skills (BIS) recently consulted on the repeal of this Act and is currently considering its response. Further information is available on the BIS website.
Non-compliance with the CPRs and BPRs may lead to:
- enforcement action under the Enterprise Act 2002 which could result in the estate agent having to give undertakings, or being subject to civil court orders to stop breaching the regulations, or
- criminal enforcement action which could lead to a fine of up to £5,000 for a conviction in a lower court or an unlimited fine and up to two years imprisonment for a conviction in the Crown Court (or Sheriff Court in Scotland).
The OFT, Local Authority Trading Standards Services, and the Department of Enterprise, Trade and Investment in Northern Ireland have a duty to enforce these regulations.