“The more alert parts of the industry have known this was coming for some time. However, it is fair to say that some parts of the industry will struggle to adapt, and we are looking at a significant shift in the home-buying and selling process. This really ought to signal the beginning of the end of ‘Buyer Beware’.”
This is how we described the February announcement by the National Trading Standards Estate and Letting Agency Team that, by the end of May, all property listings will need to contain the property’s council tax band or rate and the property price and tenure information – the first step towards mandating upfront information.
How we got here
Described as “the biggest change to the UK consumer protection framework for almost 40 years” the Consumer Protection Regulations came into force in 2008 in compliance with a European directive. Given the regulations did not arise as a result of pressure from consumers, industry, or any other active special interest group, the fact is they have been largely ignored by conveyancers – until now.
Under the regulations, a trader will be committing an offence if it omits “material information”, which is defined as “the information which the average consumer needs, according to the context, to take an informed transactional decision”. But who is the “average consumer” when it comes to a residential property purchase? Especially when a single property could attract a downsizing couple on their fifth purchase, a first-time buyer or a seasoned developer looking for an investment opportunity. What is material to one, may be of no interest to the other.
It was exactly this problem which led Trading Standards to launch a project to provide agents with a list of “material information” and the level of detail required. The announcement may seem a minor change, requiring that property listings include council tax bands, price, and tenure from May 2022. Yet further phases are being developed and are likely to include details of ongoing costs (including the current cost of fire safety measures in leasehold blocks), physical characteristics (such as parking provisions and whether a property is listed), restrictive covenants and whether the property has a history or risk of flooding.
Trading Standards’ project is a collaboration with a range of stakeholders, including property portals, agents and consumers. The aim is to balance the protection of the consumer alongside realistic expectations of estate agents’ ability to acquire the information and sellers’ desire to have a property on the market without delay. Property portals are already making changes to allow agents to add this information and to inform buyers of why it is important. The Law Society is also currently working on launching a new digital information form (TA6, Part 1) to capture upfront information, and it is this that, alongside the work by Trading Standards, is likely to significantly change the conveyancing process. Together their initiatives should provide clarity to buyers and give sellers clear expectations of what they need to provide to get their property on the market.
Seller beware?
Pressure will be on selling agents to provide this information, some of which may not be readily available, and which the seller themselves may not know. In the current conveyancing process, some of this information is ascertained from the conveyancer or surveyor as part of their investigations of the property. If the conveyancer is instructed before the property is put on the market, they will be able to conduct a “property check-up” to highlight any issues which may arise and, in doing so, provide the information to the agent. This will also allow the seller to take steps to rectify the issues, rather than only dealing with them when discovered by the buyer. However, it remains to be seen whether conveyancers will be able to find time in their diaries to carry out this work, which could be extensive, or indeed whether sellers will be prepared to pay for it before a buyer has been found. The same problem was one of the factors which saw the end of Home Information Packs.
Nonetheless, in the meantime, agents should be cautious not to view this as a tick-box exercise. Once all phases of the project have been introduced, simply completing the form is unlikely to meet the requirements under the regulations, especially when some of the information will require details of a technical legal nature, such as restrictive covenants or lease terms.
A new era
These changes, although they may appear to be simply a question of timing, should alter the conveyancing process and, in turn, the residential property industry quite fundamentally. Will completing an extra form or instructing a conveyancer before marketing a property put sellers off or cause substantial delays in getting property to the market? Will buyers understand the information, and will they acquire value from it? The truth is that, until now, most people making an offer on a house or flat have been woefully uninformed and had to hope that the conveyancing/survey process wouldn’t reveal anything that would cause them to change their minds about whether to proceed – or whether the price they offered was correct. The potential for wasted time, money and emotional cost has been a flaw in the system since inception.
In spite of the uncertainties, we can at least be hopeful that these changes will usher in an era of fewer nasty surprises during the conveyancing process – and that offers on properties will be based on a much better understanding of them.
Jeremy Raj is head of residential property and Hayley Bruce is a practice support lawyer at Irwin Mitchell
