‘Every action has an equal and opposite reaction’ (Newton’s third law of motion)

In our earlier piece ‘So what is Material Information’ we outlined the information (under the Consumer Protection from Unfair Trading Regulations) that must be provided in property particulars ‘to enable buyers to reach a transactional decision’.  This followed publication of Part A of Trading Standards’ guidance, Parts B and C having just been published.

Obviously any attempt to help our clients reach an early and educated decision as to whether to purchase – or even view – a particular property are to be welcomed, however, we have grave concerns as to the potential for compliance to dramatically slow down the time it will take for a selling agent to open the door to buyers (whether on or off market):

• Part B is relatively straight forward – requiring the agent to describe such matters as the method of construction, utilities, etc. However, an agent might be treading dangerously if they rely on Ofcom’s website (or those of providers) for mobile connectivity or internet download speeds (they are notoriously unreliable – for example, Ofcom and O2 say we have good mobile connectivity at our office ;  we don’t!).
• Part C is more complex – amongst other matters it requires disclosure of:
  • Title issues (such as rights of way, restrictive covenants, rights, easements, etc.).  Whilst these might be described in the Title deed (available from the Land Registry), to be reliable such information will probably require the owners’ lawyer to research the conveyances from which Title is devolved.  Whilst we welcome bringing the vendors’ lawyer in early, the likely delay implied by lawyers needing to confirm their clients’ instructions, satisfy AML, etc., obtain a copy of the extract of Title and then report back is of concern.
  • (Section 4) ‘The existence or nature of any known planning permission, proposals for development ….. affecting the property and its immediate locality’ (‘agents are encouraged to take a pragmatic approach to what immediate locality means…’).

While the Guidance suggests that ‘prospective buyers may be directed to the relevant authority website for details on planning applications and larger developments’, it is arguable that, to be totally protected, an agent should commission Local Authority Searches (indeed, the Guidance suggests this on page 8).

If Trading Standards were to enforce this, it would dramatically delay getting a property to market:

• Currently local searches take an average of two weeks
  • They are only requested once a sale has been agreed.
  • Probably one in every four instructions converts to a sale
  • From marketing to agreement can easily exceed three months (conveyancers tend to regard local searches as being out of date in three months).

So, if searches for every house were required pre-marketing, this predicts an increase in search requests by at least 8 times – which potentially implies a delay of 16 weeks from instruction to marketing!

We hope we are not being unduly alarmist – after all, the saving grace with all recent regulations is that meaningful enforcement is rarely adequately resourced (it is nearly two years since Trading Standards defined, under Part A,  that quoting ‘Price on application’ was ‘unlawful’ – yet many agents continue to do so).   It will probably take a disgruntled buyer or two making a formal complaints before Trading Standards bare their teeth (and their sanctions can bite deep –  ranging from fines to a ‘banning order’) for agents to prove truly diligent in their compliance……..

Bizarrely, the regulations don’t define the address of a property as being material!!