New rules on property selling
The Office of Fair Trading (OFT) has recently announced that there will be a repeal of the Property Misdescriptions Act.
Instead, new government regulations, called Consumer Protection Regulations (CPRs), aim to develop and extend an estate agent's duty of care to property buyers as well as their clients who are selling houses.
The national property firm Strutt and Parker, which has an office in Exeter covering the South West, is currently looking into what these changes will mean for the industry.
The Property Misdescriptions Act 1991 (PMA) makes it an offence to make false or misleading statements in the course of estate agency business when advertising property for sale. But following a consultation process the Government announced that the PMA will be repealed.
Instead, the CPRs will be relied on to protect both property sellers and buyers.
This decision will replace the custom legislation that deals with the needs of the property market with an all-encompassing law that is not designed specifically for property sales.
The CPRs are potentially more powerful than the PMA. The regulations will now include a ban on misleading omissions in property details, which are not currently controlled by the PMA.
Agents' first reaction to the repeal of the PMA was one of dismay, says James Baker of Strutt and Parker Exeter.
"The Act is not perfect but importantly it is there to regulate property marketing and sales to purchasers on specifically prescribed matters.
"It is also supported by a body of case law which legal professionals can use to advise their clients with precision."
Conversely, the CPR is relatively new legislation and it provides a more general protection which will be extended to property.
It is standardised and covers a much broader area than the PMA.
Baker explains: "This means that estate agents will have to consider not just what they do say about a property, but also what they don't say.
"They must ensure that any important facts are actively made available to potential buyers.
"In the short term it may be difficult for sellers to accept that we are required by law to mention any issues which are likely to affect a potential buyer's decision on making an offer or not.
"The advantage is that this added transparency means that buyers will be fully aware of any shortcomings around a property well in advance of making an offer, which in turn should ensure that fewer deals collapse once in solicitors hands."