Madonna may seem an unlikely source of wisdom for APC candidates, but her view that “we are living in a material world”, has been vindicated by a recent opinion published by the National Trading Standards Estate & Letting Agency Team and the Competition and Markets Authority.
This will affect RICS APC candidates with purchase & sale as a technical competency, who predominantly work with residential assets. However, it will also be relevant to candidates with leasing/letting as a technical competency and those dealing with agency instructions for a range of other asset types.
Unfair Trading Regulations 2008
The NTSELAT and CMA opinion confirmed that the use of “price on application” on property listings is misleading and contravenes the Consumer Protection from Unfair Trading Regulations 2008. This is supported by the government’s Levelling Up white paper, and may be the subject of future legislation.
The penalties for a breach of the 2008 Regulations by an agent include an unlimited fine and/or imprisonment for up to two years.
Candidates should already be aware that the 2008 Regulations replaced the former Property Misdescriptions Act 1991, providing wider protection for consumers. Full guidance on the application of the Regulations can be found in the NTSELAT Guidance on Property Sales and Lettings (September 2015, reviewed in August 2020).
When considering if an agency practice is unfair and breaches the 2008 Regulations, candidates should consider the following flowchart:
What is material?
Under the 2008 Regulations, agents have a responsibility not to omit material information from property listings. However, until now there has not been a defined list of what counts as material information to provide a standardised position across the industry. Material information is defined as “information which the average consumer needs, according to the context, to take an informed transactional decision”.
Material information can be both positive and negative, so it cannot be omitted simply because it may deter potential purchasers or delay a transaction proceeding. In the long run, disclosing all material information helps to increase transparency and avoid issues arising closer to exchange and completion. In this way, full disclosure helps to avoid abortive costs if a deal falls through and the related frustration and disappointment for all parties.
The use of POA has been deemed unlawful as it masks the asking price from potential purchasers. The asking price is material information that the average consumer needs to make an informed decision to purchase a property, including taking further steps to make enquiries, view and carry out due diligence.
To assist agents in ensuring that adequate material information is given on property listings, NTSELAT published industry guidance in July 2022. This sets out three categories of material information disclosure: Parts A, B and C.
Property listings include marketing particulars, listings on websites and property portals and printed marketing material. If the medium does not allow for all material information to be included, eg due to size, then reference should be made to where the full information can be accessed.
Part A relates to material information that is required for all property listings, including unavoidable costs incurred irrespective of the use of the property. This means that the use of POA is prohibited, as price is material information under Part A.
Compliance with Part A was required from May 2022. At present, listings may be uploaded without full Part A information being disclosed, however, the missing information will be highlighted to the consumer. At a future date, listings without the minimum information under Part A will be prohibited from going to market.
Part B relates to material information that must be established for all properties, such as utilities and non-standard features that might affect a purchaser’s transactional decision.
Part C relates to additional material information that may need to be established, depending on the extent to which it affects use of the property.
Full guidance on what is included in Parts B and C, together with key compliance dates, is yet to be announced.
In conclusion, Madonna provided further sage advice when she sang, in The Look of Love, that “my conscience is clear, I know right from wrong” – know what is right to include on your marketing particulars and you will be well on the way to acing your APC.
The quick quiz
1. What does section 18 of the Estate Agents Act 1979 require agents to do?
- a) Give information to clients before entering into a contract for agency services
- b) Avoid dual agency
- c) Avoid performance based fees
2. What is Lord Bichard’s first name?
- a) George
- b) Michael
- c) Barry
Which of these is not a type of tenure?
- a) Freehold
- b) Commonhold
- c) Shared leasehold
Answers: 1: a 2: b 3: c
Jen Lemen BSc (Hons) FRICS is a partner at Property Elite
