Estate agents have a bad reputation, sometimes justified, often not.
But recent guidelines published by the Office of Fair Trading mean that there should no longer be any grey areas when it comes to what an agent needs to tell a buyer. You have the right to know the facts about a property you are interested in – warts and all.
It's long been the case that estate agents are obliged to tell you the truth if you ask them a direct question, but the difference is that they should now be forthcoming with information that they suspect will affect your opinion of a property – even before you come to view it.
Agents have been told by the OFT that they need to comply with the Consumer Protection from Unfair Trading Regulations 2008 (known as CPR) and the Business Protection from Misleading Marketing Regulations 2008 (BPR). And these are more powerful in terms of the protection afforded to the buyer than the current Property Misdescriptions Act, which will be repealed in October.
So the CPR and BPR legislation isn't new, but the way it will now cover estate agents and letting agents is, and it effectively means tougher rules to protect buyers.
Of course, it's the seller that ultimately pays the estate agent, and it's the agent's job to get the best price for their property.
However, operating under CPR and BPR means that the estate agent has to understand the buyer is also a consumer in the process, so there is a duty of care and a responsibility to tell the truth. The new regulations state that it is the 'consumer' who must be treated fairly.
Stuart White, managing director of estate agent Century 21, said: "This is a fundamental change to the Property Misdescriptions Act 1991, under which an agent was only obliged to disclose something if asked. It has never been the case that an agent has had the ability to hide information, however the new rules change this status by ensuring that the consumer is treated fairly, which in essence means potentially adverse information should be disclosed."
So what does it mean to you as a buyeror seller?
The new rules could mean that as well as describing everything accurately, which has always been the case, agents need to be upfront about problems. So if there is a sewerage plant at the end of the garden, it could potentially break the rules if the agent deliberately crops this from a photo.
To complicate matters, the new regulations don't specify precisely how the legislation applies in individual scenarios. Instead, it is left open to interpretation by the agent, and according to the Property Ombudsman Christopher Hamer, they should err on the side of caution by openly describing all aspects of the property.
Why a previous buyer has dropped out
Buyers should be told if a previous buyer has pulled out of the purchase of the property because of a problem that has arisen. This would typically be something that has come up during the survey, but it could also be a problem that has been highlighted during the conveyancing process – i.e. something the solicitor has found.
If the survey highlighted a structural defect, the Ombudsman says this is something that the agent should make clear to all interested parties, not only if they are asked.
White says this is already standard practice at Century 21 and many other agents. "In the particular instance of a bad survey, an agent would disclose this to a potential buyer as a viewing was being made, good estate agency practice has always been that adverse survey information should be disclosed as it will be generally picked up on all surveys and it is much better to fully inform a buyer if this was the case."
Agents should no longer hide material facts that might put off someone viewing or offering on a property. For example, according to the Ombudsman, if a motorway is 200 yards from the door, this should be clear on the picture and description – it shouldn't be assumed that the buyer will notice this from the map alone.
He even reckons that it should be mentioned if a property is next door to a primary school, because some buyers would not want to travel a distance to view a property with potential noise.
However Hamer does give an example where the agent would not be required to disclose a potential issue. He said that if a neighbour kept a large number of pets (in this case seven dogs and 14 cats), this wouldn't need to be disclosed upfront, although should be mentioned if a potential buyer asks about the neighbours.
But he offers the following examples of things that agents should disclose: A previous murder having taken place in the property, woodworm infestation, loud church bell ringing nearby, lack of planning permission or building regulations on an extension, or previous flooding.
On the QT
One thing that does still remain between the buyer, the agent and the seller is the exact amount of any offer that has been made. The agent shouldn't need to tell other interested parties what a buyer has offered, although of course they will let another interested party know if they make an offer that is below yours.
White says: "Our understanding is that the value of any offers received would not be disclosed as clearly this isn't adverse information that needs to be presented to a consumer. A good estate agent would always ask a buyer to put in their best offer and then take this offer to their vendor client to determine if it was acceptable."
The move to bring agents under the CPR and BPR rules potentially affords buyers a lot more protection. But while agents are now meant to disclose problems upfront, it could still be wise to specifically ask them if they are aware of any problems that might affect your opinion of the property. It might also be a good idea to do this via email so you can prove exactly what questions you asked.
Of course, sellers may well find the new rules too onerous, as the principle of 'buyer beware' seems to have gone out of the window. But as White points out "many sellers will in turn become buyers so it certainly will make the process consistent".
And remember, if a buyer is fully aware of any nasties before they make an offer, there is far more chance of the sale making it through to completion, which is better for everyone.