Major changes affecting estate agents
Major changes affecting estate agents
Thursday, 13th September 2012
The Government has announced major changes affecting Estate Agents. All members connected with both Estate Agency and Lettings are advised to make themselves aware of the changes.
New Guidance from the Office of Fair Trading on the interpretation of the Consumer Protection from Unfair Trading Regulations 2008 and the Business Protection from Misleading Marketing Regulations 2008 is available online.
RICS has produced an advice note to help members to put these regulations into context and the steps you can take to mitigate any risk to your business.
The Department of Business Innovation and Skills has announced that it intends to repeal the Property Misdescriptions Act 1991. BIS considers the OFT guidance above has negated the need for the PMA. For the RICS view, please read Peter Bolton-King's comments below.
The Estate Agents Act 1979 is being amended to clarify the situation regarding ‘passive intermediaries’. The RICS considered it was clear in the 1979 Act that businesses only publishing advertisements or disseminating information about property were already outside the scope of the act and there is concern that these changes will cause confusion and possible consumer detriment.
RICS responds to OFT and BIS announcements on regulatory reform of the residential sector
RICS’ response warns of potential consumer detriment following the Department for Business Innovation and Skills’ (BIS) announcement of amendments to the Estate Agent Act 1979.
RICS calls for BIS to coordinate its approach with the OFT who have today also published guidance on compliance with consumer protection legislation.
Peter Bolton King, RICS Global Residential Director, said:
“Following feedback from RICS members and other industry stakeholders, the updated OFT guidance now more accurately reflects the realities of the UK residential property market. It provides greater clarity for estate agents on how to comply with consumer and business protection legislation, and will help consumers understand their rights and responsibilities when buying and selling property.
“However, any consumer benefit is overshadowed by BIS’ announcement today of amendments to the Estate Agent Act 1979. These amendments have the potential to place homebuyers and sellers at significant risk, an unintended consequence that RICS, and other stakeholders, highlighted during BIS’ consultation on the proposals this summer.
“Businesses that do not sell property but merely publish adverts or information, know as ‘passive intermediaries’, are now specifically outside the scope of the Act. This means that prospective homebuyers and sellers will find it harder to distinguish between these intermediaries and traditional estate agents.
"Consumers could, perhaps unknowingly, be left responsible for undertaking their own detailed sale negotiations without the advice and guidance of a property professional. This could lead to delays, increased costs and even sales falling through, causing frustration and stress for all involved.
"Furthermore, whilst estate agents are required to have redress arrangements in place if something goes wrong, ‘passive intermediaries’ are not, leaving the consumer vulnerable to rogue operators.
“The amendment to the 1979 Act also throws OFT’s guidance into doubt. RICS recommended a coordinated approach between the two announcements during the consultation to ensure guidance was issued for the entire sector. The removal of ‘passive intermediaries’ from the Act now means no specific guidance is available to them to ensure compliance with consumer protection legislation.
“RICS is, therefore, calling for further specific guidance to be published and enforced by Trading Standards. This will help to ensure the interests of the consumer are better taken into account under the amended legislation and a clear message is issued to the industry on government regulatory reform of the residential sector.”
BIS also announced the repealing of the Property Misdescriptions Act 1991 today.
Peter Bolton King continued:
"RICS accepts the reasons for repealing the Property Misdescriptions Act 1991 as the issues it sought to address are now covered by the consumer protection regulations. We have consistently said to the OFT, and others, that the Act should be the starting point for compliance with the consumer protection regulations in that market.”