Office of Fair Trading
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OFT publishes new guidance on property sales
The OFT has yesterday published guidance 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 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 yesterday that the government intends to repeal the Property Misdescriptions Act 1991, which has largely been superseded by the CPRs and BPRs.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.'
Consumers concerned about the practices of an estate agent or other property sales business can contact Citizens Advice's consumer helpline on 0845 040506 or visit www.advice.org.uk. Alternatively, complaints which consumers have not been able to resolve with the estate agent can be taken to an OFT-approved redress scheme. All estate agents must be registered with either the Property Ombudsman (visit www.tpos.co.uk or call 01722 333306) or Ombudsman Services: Property (visit www.ombudsman-services.org/property or call 01925 530270).
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 property sales businesses from engaging in commercial practices that are unfair to sellers, buyers, potential sellers or 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 property sales businesses from using misleading marketing when they advertise services to potential business clients or market commercial property for sale. This includes unfair comparative advertising.
Currently, the Property Misdescriptions Act (PMA) 1991 is often used to address problems arising in this sector although the Department for Business Innovation and Skills (BIS) considers it has largely been superseded by the CPRs and BPRs. BIS consulted on the PMA and has today announced the government's intention to repeal the Act. Further information is available from www.bis.gov.uk/Consultations/repeal-property-misdescriptions-act-1991.
The guidance was developed following the OFT's Home Buying and Selling market study, which found that many estate agents said the industry needed more guidance on the law.
See the Home Buying and Selling study 2010.
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.