The Property Misdescriptions Act 1991 is slated for repeal in October. The government considers the act duplicative of the provisions contained in the Consumer Protection from Unfair Trading Regulations (CPR) (implemented May 2008).

Both sets of laws apply to estate agents and prohibit ‘misleading’ actions, but the Consumer Protection Regulations add an additional burden: it prohibits misleading omissions as well. This has a profound impact on an estate agent’s responsibilities when marketing a property.

The OFT has issued guidance on what constitutes ‘unfair’ practices. Among them is giving false or misleading information, hiding or failing to provide material information, exerting undue pressure, failing to act with the standard of care and skill due under honest market practice and good faith, and engaging in one of the 31 banned practices (Schedule 1 of the Regulations). The threshold test is whether the action or inaction is ‘likely to affect the transactional decision making of the average consumer’.

For an estate agent, this often means going beyond blind acceptance of the information provided by the seller. While the seller is responsible for filling out the seller’s property information form (SPIF), if the agent knows or should know the information is inaccurate, misleading or fails to provide important information that might affect a buyer’s decision, the agent could run afoul of the CPRs. In a recent case under the PMA, the High Court ruled that an estate agent’s description of a garden as ‘approximately 0.75 acres (sts)’ was materially inaccurate when the garden was actually 0.45 acres. Here the Court ruled the inaccuracy was significant. While the case is not binding under the CPR, it is illustrative of the standard estate agents will be held to.

The point is that estate agents must take particular care when marketing properties. The offense is criminal and punishable by both a fine of up to £5,000 per offense and two years in prison. A hefty penalty indeed.

John Bishop
Tel. 020 3301 7815
johnbishop@colinbibra.com
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