CONSUMER PROTECTION LEGISLATION
Q. What’s all this about new consumer protection legislation for the property market?
A. In common with much of the business world, one of the guiding principles of the property market has always been the concept of caveat emptor, or “let the buyer beware.” All this really means is that it is ultimately the buyer’s responsibility to satisfy themselves as to the character and condition of a property.
Now, however, this time-honoured principle is being turned on its head.
Since 1991, a key element of the legislation governing the workings of the property market has been the Property Misdescriptions Act (PMA). This basically made it illegal for an estate agent to knowingly make false or misleading statements when offering a property for sale. Now, with the incorporation into UK law of European consumer legislation, in the shape of the Consumer Protection from Unfair Trading Regulations (CPRs), the PMA is being repealed. In effect, this means doing away with one purpose-built and industry-specific piece of legislation and replacing it with a catch-all law that was not designed for the regulation of property sales.
The main issue here is disclosure. Under the PMA, anything said or written about a property had to be honest and accurate. However, neither sellers nor their agents were actually obliged to say anything at all - unless asked. In other words, caveat emptor applied: if you didn’t ask the question, you couldn’t complain that you weren’t given the answer!
Now, the CPRs will require sellers and/or their agents to volunteer all material information upfront – good and bad.
On the surface, this sounds like a reasonable idea – for buyers, at least. But what about sellers? After all, how will you feel if and when your estate agent is legally obliged to tell potential buyers that in addition to four bedrooms and two reception rooms, your home also has a chronic damp problem and needs a new roof?
Thankfully, we are in an era of transparency, so it is to be hoped that both sides in a transaction will see this as a benefit. After all, it’s easier to make goods decisions when you have all the information up front, rather than getting “surprises” further down the road and having to re-think your purchase.
So, sellers should not be put off by the “warts and all” approach – it should make the sales process quicker and cleaner.