Consumer Protection for Estate Agents and Property Developers Pushed

Jack Humphrey, Regulatory journalist
September 19, 2011 /

The Office of Fair Trading (OFT) has launched a consultation on draft guidance promoting consumer protection for estate agents and property developers by helping businesses handle sales of property and land in the UK and comply with the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).

The Consumer Protection from Unfair Trading Regulations 2008 (CPRs) specifically prohibits traders in all sectors from using unfair commercial practices in their dealings with (non-business) consumers. In other words, the CPRs prohibits estate agents from engaging in commercial practices that are unfair to sellers, buyers, potential sellers and potential buyers of residential property.

On the other hand, the Business Protection from Misleading Marketing Regulations 2008 (BPRs) prohibits traders in all sectors from using misleading practices in their business-to-business advertisements. It prohibit estate agents from using misleading marketing when they advertise services to potential business clients or market commercial property for sale.

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 clarification of the regulations applying 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, and deal with complaints.

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.

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.”

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. It may also elicit 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).

 

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