Consumer protection in the property sector

How can consumers in the property sector benefit from the consumer protection rules? David Smith, partner and head of operations at Anthony Gold Solicitors discusses the implications of the rules, and the forthcoming changes to them, on the private residential sector.

How do the Consumer Protection from Unfair Trading Regulations 2008, SI 2008/1277 (CPRs) affect the property sector?

CPRs are applicable to all parts of the property sector. Since the repeal of the Property Misdescriptions Act 1991 (PMA 1991) in 2013, they are also one of the primary controls on misleading advertising in the property sector.

Who benefits from the CPRs?

Ultimately, landlords, tenants, vendors and purchasers of property. The CPRs specifically benefit consumers so the private residential sector is the primary beneficiary in property terms. As the regulations apply to landlords in their dealings with tenants and to their agents, in dealing with both sides it is likely that tenants and property purchasers will get the most immediate value.

Who is caught by the CPRs?

Any trader selling products or services to a consumer is caught. This includes landlords and letting and estate agents. However, it also includes a range of secondary suppliers that sit around the property industry including surveyors, plumbers, electricians, and lawyers.

 

What sort of transactions are caught?

Almost any transaction that involves making a transactional decision is potentially caught by the CPRs. This is wider than simply entering into a contract for provision of services--it includes a mere decision to ask for more information prior to entry into such a contract.

What is the 'misleading omissions' provision?

Misleading omissions is an area that has caused a lot of concern. It deals with a situation where something should have been disclosed, but is not. It is most commonly talked about in terms of what should be disclosed to purchasers and tenants. There is inevitably a substantial grey area in relation to this issue as there are some matters that really should be discussed and others that are less obvious. The normal advice is that if a reasonable person would take this point into account negatively, when making a decision on a property, then it should be disclosed. There are some uncertainties though. So, for example some agents have worried about whether they should disclose previous suicides or murders in a property. However, while unfortunate they are probably not something that a reasonable person would be concerned by unless those events were ones which might blight the property. So a series of multiple murders may be different. More commonly issues like nearby petrol stations, nightclubs, or public houses are less certain. These are relevant and are obvious from a property inspection. It is hard to be sure whether they would be viewed positively or negatively and different people might reasonably take very different views. Therefore, it is probably acceptable not to disclose this information specifically and let a view be taken on site. At the other end of the scale, plans to build a new runway at the end of the garden would clearly be something that should be disclosed.

What has been the impact of its introduction?

It is hard to be sure. The impact has been fairly quiet in most cases due to lack of enforcement. Enforcement is generally by Trading Standards officers who have limited time and funds to pursue enforcement, especially in respect of matters which are of doubtful value and may not be successful. The main effect has been to widen the effect of the repealed PMA 1991 to the letting sector and also to make agents more conscious of 'puff' advertising that was commonly in use. Therefore, common phrases like 'sought after', 'fashionable' or 'quiet area' which were not really covered by the PMA 1991 are prohibited by the CPRs unless there is evidence that some investigation has been carried out to justify them. Therefore, these sorts of descriptions will slowly drop away.

What changes are being introduced by the Consumer Protection (Amendment) Regulations 2014, SI 2014/870 (Amendment Regulations 2014) on 1 October 2014?

The changes will be a major game changer. The problem with the current CPRs is lack of enforcement due to resources shortages by Trading Standards officers. The amendments remove that barrier, although not in respect of property sales. They do this by allowing for consumers to enforce the Amendment Regulations 2014 directly. This will allow consumers to unwind contracts for up to 90 days, including getting out of tenancies and to seek damages directly for loss and distress. This will be through the civil courts. This will almost certainly lead to far greater use of the CPRs in a wide range of cases. This will both increase awareness and will also lead to some clarity as to how the regulations should be interpreted.

How does the Business Protection from Misleading Marketing Regulations, SI 2008/1276 (BPRs) affect the property sector?

The BPRs essentially do the same thing as the CPRs where services are being marketed to a business. They do not deal with aggressive or sharp practice in the manner that the CPRs do, but do deal with misleading omissions and inaccurate information.

Are there any other similar regulations property lawyers should be aware of?

Inevitably the CPRs are considered alongside the Unfair Terms in Consumer Contracts Regulations 1999, SI1999/2083 (UTCCR) and the two are frequently confused. Many authorities will consider a regular and flagrant programme of abuse of the UTCCR to also be an offence under the CPRs as it would constitute sharp practice. The Competition and Markets Authority has recently published guidance for lettings professionals on the proper use of the CPRs and UTCCR.

Interviewed by Natasha Mellersh. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.

First published on LexisPSL Property. Click here for a free trial.

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