Estate Agents Legal Obligations to Buyers
Estate agents are instructed by and work on behalf of sellers. Yet, that doesn’t mean they don’t have legal obligations to homebuyers beyond displaying the listing price. Agents must adhere to specific practices to ensure buyers get the best possible service. Here, we look at an estate agents legal obligations to buyers in the property market.
The ‘Unfair Trading Regulations 2008’
The ‘Unfair Trading Regulations 2008’ (UTR) is a piece of UK consumer protection legislation designed to protect buyers in any industry from unfair or misleading commercial practices by businesses. Under these regulations, estate agents, property developers and websites introducing buyers to sellers must comply with the strict sets of rules.
These rules include a ban on aggressive commercial practices, including harassment or coercion to persuade consumers to buy goods or services. The Regulations also requires businesses to provide clear and accurate information about the products or services they sell.
Failure to do so could lead customers to seek redress. And if the business is deemed to be acting unfairly, they can be issued limitless fines. Beyond that, individuals can be imprisoned for up to two years.
Information in marketing material
The property listing is the first piece of information buyers typically see when searching for a home. As of May 2022, Trading Standards and the Competition and Markets Authority introduced the first phase of changes regarding marketing properties through displaying accurate material information. This includes:
- The property’s price
- Council tax band rate
- Tenure information and whether it’s freehold or leasehold
- Any due reservation fees
- Percentage of shares offered for shared ownership properties, along with the amount of rent due on the unsold shares.
As of July 2022, property portals no longer list homes without a price. Therefore, agents can’t advertise properties with ‘Price on Application (POA)’ and ‘offers invited’. And if you don’t see other information listed, such as tenure, you’re within your right to request it from the estate agent.
Plans are also in place for more changes, including the requirement to display information like restrictive covenants, flood risk and other specific factors related to certain properties.
Estate agents legal obligations to buyers for a leasehold home
Buying a leasehold property seems often more complicated than a freehold home. Previously, some leasehold details were unavailable to buyers until they were well into the conveyancing process. Now, however, estate agents need to provide upfront information regarding leasehold properties.
This includes:
- Services charges due
- Ground rent due
- How many years remain on the lease
- Known special conditions
Agents should also advise sellers and buyers about any additional fees that may be incurred during the conveyancing process, such as leasehold packs.
What do estate agents have to tell buyers by law?
So, what are estate agents legal obligations to buyers? Essentially, they need to provide ‘fair’ material information about a property and not deliberately mislead or withhold information from buyers.
Accurate description of the property
Agents must disclose information of which they are aware or should be aware of concerning the property. They are required to provide accurate details of the properties they advertise for sale. For instance, an agent can’t describe a house as recently decorated if only one room has been redecorated. Photos of the home must also be realistic and not misrepresent how the home looks in real life.
Be transparent and not withhold information
All material information about the property must be disclosed, including ‘information of which they are aware or should be aware of about the property in a clear, intelligible and timely fashion’. This includes no omissions that can impact the average buyer’s decision to view, make an offer or purchase a property. Agents must also state why several sales have fallen through, should this be the case for the property in question.
Pass on all offers to the seller
Part of the estate agent’s job is to pass on all offers to the seller as soon as reasonably possible. This applies to every offer received right up until the contract exchange. The only expectation is when the seller formally requests not to be notified about particular offers. For example, this can be an offer below the required amount.
Must not show bias
Agents also have a legal requirement not to show any bias for or against certain buyers. All home buyers must be treated the same without discrimination, like failing to tell the seller of an offer to buy the property; informing the seller of an offer less quickly than others; misrepresenting the nature of the offer; and giving details of properties for sale first to those who have indicated they’re prepared to let the agent provide services to them.
What happens if an agent doesn’t comply with their legal obligations?
Agents who fail to comply with their obligations could receive an unlimited fine or, worse, a prison sentence. For example, an agent putting pressure on you to use their in-house mortgage broker before sending your offer to the vendor is against the rules, and you have the right to complain through official channels.
The Property Ombudsman
Estate agents that are members of The Property Ombudsman must also adhere to its Code of Practice for Residential Estate Agents. One of these bodies reviews your case, investigating fairly and impartially by listening to accounts from all parties involved.
You can also complain directly to Propertymark if the agent is a member of the professional organisation. Propertymark will investigate complaints against a member where there is evidence the agent has breached conduct and membership rules. Consumers are only advised to do this if they have contacted the agent and the Property Ombudsman (or Property Redress Scheme) first.
Estate agent legal obligations
Estate agents must provide a fair and transparent service, which helps buyers decide about purchasing a property. Failure to do so could land agents in hot water. As legislation continues evolving, both vendors and buyers can expect to receive the best possible service.
Using a Propertymark member agent mitigates the chance of issues arising. You can feel more confident about your estate agent, knowing they’re part of a professional body designed to meet high standards and service.
Last Updated: October 30th, 2024
