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National Trading Standards Addresses Property Lawyers’ Concerns Over New Material Information Guidance

Table of Contents

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Introduction

The recent correspondence between the Property Lawyers Action Group (PLAG) and National Trading Standards (NTS) has highlighted significant concerns within the legal property sector regarding new Material Information guidance. These changes, intended to enhance transparency and compliance in property transactions, have sparked debate on their practical implications and alignment with existing legislation.
Estate Agent Material Information

Background of Material Information Changes

What is Material Information?

Material Information encompasses any data crucial to a consumer’s decision-making process when considering a property. Despite existing under the Consumer Protection Regulations (CPRs), the absence of a definitive list has left estate agents vulnerable to enforcement actions.

Purpose of the New Guidelines

The NTS introduced these guidelines to streamline compliance with CPRs, aiming to protect agents from potential legal repercussions. By ensuring that all essential information is disclosed at the onset of property transactions, the guidelines are designed to reduce transaction times and minimise the risk of sales falling through.

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The Property Lawyers Action Group’s Concerns

Open Letter to NTS

PLAG’s open letter to James Munro, Chair of NTS, outlines various criticisms of the new MI guidance. They argue that the guidelines misinterpret the source legislation, extending obligations from estate agents to property sellers, thus imposing undue burdens on private individuals.

Key Points of Contention

  1. Distortion of Legislation: PLAG claims that the MI guidance distorts CPRs by extending obligations meant for traders to individual sellers, indirectly increasing sellers’ responsibilities.
  2. Referral Fees and Conditional Selling: PLAG highlights persistent issues like undisclosed referral fees and conditional selling practices in the property sector. They suggest that NTS should prioritise addressing these problems rather than enforcing MI guidelines.
  3. Reinvention of HIPs: PLAG draws parallels between the MI guidelines and the previously scrapped Home Information Packs (HIPs), arguing that the new measures may face similar failures due to their cost and complexity.

Response from National Trading Standards

James Munro’s Statement

In response to PLAG’s letter, James Munro, Senior Manager of the NTS Estate and Letting Agency Team, emphasised the positive reception of the MI guidelines. He cited surveys showing strong support from both consumers and agents for the mandatory disclosure of material information.

“The progress made to improve material information has been widely welcomed and I’ve been encouraged by the overwhelming positive response the new guidance has received. The Property Lawyers Action Group (PLAG) is quite right to point out that efforts to improve the provision of material information have been worked on for some time – and change has been long overdue.

“87% of people who have recently moved or are looking to move soon agree that property portals should include all key information about a home in their property listing. 41% assume that missing information means something must be wrong with the property. This guidance is good news for the industry, which is demonstrated by the evidence we received from agents who expressed support for the mandatory disclosure of material information. Benefits agents cited included a reduction in unnecessary enquiries, swifter sales and fewer transaction fall-throughs. These improvements – for consumers and agents – are why successive governments have continued to back the programme.

“We have worked closely with a wide range of industry groups to develop and refine the guidance – including the legal profession – and we always welcome any new information, evidence and ideas that continue to improve compliance and raise standards in the sector. We received the letter from PLAG on 18 March 2024 and will provide a comprehensive response.”

Supporting Data

  • Consumer Demand: 87% of recent movers or prospective buyers agree that property listings should include all key information.
  • Agent Benefits: Agents reported fewer unnecessary enquiries and a reduction in transaction fall-throughs due to the new guidelines.

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Implications for the Property Sector

Shorter Transaction Times

By engaging conveyancers early in the process, agents can ensure that all necessary information is available from the start, leading to quicker transactions and fewer complications.

Enhanced Transparency

The introduction of new data fields on property portals, with flags for missing information, will help consumers make informed decisions and understand the importance of comprehensive property data.

Future Monitoring and Adjustments

NTSELAT’s Role

The National Trading Standards Estate and Letting Agency Team (NTSELAT) will monitor the uptake of the new guidelines over the next year. Agents can utilise free text to input information until dedicated categories are available, ensuring compliance with CPRs.

Educational Initiatives

Guides and Webinars

NTSELAT has published short guides for various stakeholders, including agents, sellers, landlords, buyers, and tenants. Additionally, a series of webinars will be delivered in partnership with industry members to further support the implementation of the MI guidelines.

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Perspectives from Industry Experts

Lesley Horton, Deputy Ombudsman, The Property Ombudsman

Horton supports the new MI guidelines, highlighting the benefits of early information availability in reducing transaction fall-throughs and enhancing consumer decision-making. She stresses the importance of transparent and relevant information in property transactions.

“Buying or renting a property is one of the most expensive and important decisions a consumer can make. Our data tells us that consumers value transparent and relevant information to support their decisions. Availability of good quality information earlier in the process will benefit consumers and should support the reduction of fall-throughs. Agents will have more certainty about the information they are providing and will see the benefit of a reduced risk of failed transactions. NTSELAT has worked closely with industry members to provide detailed guidance that support agents and consumers alike. We look forward to working with our members and all our consumer and industry stakeholders as NTSELAT’s guidance beds in.”

Potential Challenges and Criticisms

PLAG’s Stance on MI Implementation

PLAG argues that the MI guidelines are counterproductive, potentially deterring sellers due to additional costs and complexity. They suggest that existing issues like referral fees and conditional selling should be prioritised over the new MI measures.

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Conclusion

The introduction of new Material Information guidelines by National Trading Standards marks a significant shift in property transaction processes, aiming to enhance transparency and compliance. While the guidelines have been met with support from many in the industry, concerns from groups like the Property Lawyers Action Group highlight the need for ongoing dialogue and potential adjustments to ensure the guidelines’ success and acceptance.

 

FAQs

What is the primary aim of the new Material Information guidelines?

The guidelines aim to ensure that all essential property information is disclosed early in the transaction process, enhancing transparency and reducing the risk of sales falling through.

How do the new guidelines affect property sellers?

The guidelines indirectly impose additional responsibilities on sellers by requiring them to provide more detailed information to agents upfront.

Why is PLAG critical of the new guidelines?

PLAG believes the guidelines misinterpret existing legislation, extend unnecessary burdens to sellers, and fail to address more pressing issues in the property sector.

What benefits do the new guidelines offer to estate agents?

Agents can expect fewer unnecessary enquiries, quicker transaction times, and a reduction in failed transactions due to the early disclosure of material information.

How will NTSELAT monitor the implementation of the new guidelines?

NTSELAT will track the uptake on property portals over the next 12 months and provide support through educational initiatives like guides and webinars.

What support is available for stakeholders during the transition to the new guidelines?

NTSELAT has published short guides for agents, sellers, landlords, buyers, and tenants. It will deliver webinars in partnership with industry members to aid in the transition.

 

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