OFT Targets Sharp Selling Practices

The Office of Fair Trading (OFT) has this week launched a consultation on draft guidance to estate agents and property developers, which aims to help businesses handling sales of property and land in the UK comply with the law on misleading marketing and unfair business practices.

Although mostly aimed at estate agents dealing with the sale of residential properties to private consumers, the guidance also applies to property developers and house builders who market and sell their own property.

Specifically, the draft guidance focuses on two pieces of law: the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and the Business Protection from Misleading Marketing Regulations 2008 (BPRs).

CPRs prohibit traders from using unfair commercial practices in their dealings with non-business consumers, so they prohibit estate agents from engaging in commercial practices that are unfair to sellers and buyers of residential property.

BPRs prohibit traders from using misleading practices in their business-to-business advertisements, so they prohibit estate agents from using misleading marketing when they advertise services to potential business clients or market commercial property for sale.

The guidance provides an overview of the regulations and examples of the types of trading practices or conduct that are likely to breach the regulations.  It also suggests some practical steps which estate agents or developers may wish to take to ensure compliance with the law when they:

·         advertise for new business, including through flyers and newspaper adverts

·         provide advice to new clients and take new instructions

·         market properties, including when property details are put on internet portals

·         negotiate and make sales

·         deal with complaints.

Examples of non-compliance include:

·         Wrongly describing the main characteristics of the property for sale, for example its location or size of the rooms

·         Using out of date photographs that no longer provide a true picture of the property 

·         Giving mis-leading information about service charges

·         Failing to provide relevant information that you are aware of about the fitness of the property for sale (for example there are serious hidden defects)

·         Engaging in high pressure sale techniques (for example persistent or aggressive telephone calls).

Currently, the Property Misdescriptions Act 1991 (PMA) is often used to address misconduct in this sector although the CPRs and BPRs also apply. The Department for Business Innovation and Skills (BIS) recently consulted on the repeal of PMA and is currently considering its response. Further information is available on the BIS website.

The OFT consultation ends on 9 December 2011.