After much delay, the final list of what is considered Material Information for the purpose of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) is set to be announced by National Trading Standards Estate and Lettings Agent Team (NTSELAT) imminently.
Under the CPRs, estate and letting agents have a legal obligation not to omit material information from property listings. NTSELAT’s hope is that their definitive list of ‘Material Information’ will put an end to inconsistent disclosure practices of estate agents and ensure more information is made available on property listings so that consumers can make informed decisions.
Turning those hopes into reality, as many of those reading this will know, will take much more than a list. This article will discuss some of those challenges and the potential impact Material Information will have on the market, as well as how conveyancers could turn Material Information into an opportunity to win more work.
What we know about the list of Material Information and how it will be ‘enforced’
The first tranche (Part A) of NTSELAT’s three-part list of Material Information has already been announced and started appearing on portals early in 2022. It focused on information that could have direct financial impact on the buyer, such as tenure and if a leasehold property, the remaining lease term and any costs, such as ground rent and service charges.
The final two tranches, Parts B and C, will be announced in the coming weeks and are likely to include:
For Part B, information that must be established for all properties, including parking availability, utilities, and wifi and mobile coverage, and
For Part C, information that may affect a property and someone’s decision to buy it, such as flood risk, building safety, restrictive covenants and easements.
As has been the case for Part A, there will likely be a period of time that it won’t be mandatory for estate agents to provide this information. Once this transition period is over, the intention is that estate agents won’t be able to list a property on a portal unless this information is completed. We’ll have to wait until the day of the announcement to find out how long a grace period estate agents and portals are given to comply.
So what happens if estate agents don’t comply? Sanctions are available under the CPRs that include unlimited fines and up to two years in prison. However, this relies on NTSELAT identifying non-compliance or a consumer bringing a claim. For this reason, there have been many calls on the Government to legislate or otherwise mandate Material Information as soon as possible, and deliver much needed clarity on the application of sanctions for non-compliance. Unfortunately, from our own intel, the Government has confirmed that new legislation won’t be brought forward during this Parliament. Perhaps it’s something worth keeping an eye on as the country heads towards a general election. At the Labour Party Conference, shadow housing minister, Matthew Pennycook, said that a future Labour government would look to regulate property agents.
Whilst there are still question marks over the enforcement of Material Information, the general direction of travel is an increasing expectation on providing more information upfront to buyers and that compliance matters.
What impact will Material Information have on the market and why might it be an opportunity for conveyancers?
Don’t expect overnight change. The market is waiting for the announcement to understand the breadth of information and the length of the transition window. With minimal policing in place, compliance could be patchy particularly amongst smaller estate agents who lack resourcing. Despite this, there are many agents, particularly the larger agencies, that are taking the incoming requirements very seriously. Many have been reviewing their existing processes and speaking to the conveyancing firms they have strong relationships with.
There is a growing appreciation that Part C information – restrictions, covenants and easements – will need the support of conveyancers to collect. Sellers alone are very unlikely to be able to reliably and accurately provide this information, and estate agents are unlikely and shouldn’t need to spend their time double-checking the information a seller has provided.
This gives rise to an opportunity for law firms to develop a new ‘vendor proposition’ – a diligence ‘light’ report for sellers and estate agents. It has more than just Material Information, it identifies any key issues that might impede the seller’s ability to sell or ultimately result in the transaction falling through. The reason why vendor propositions are being seen by some conveyancers as an opportunity is threefold:
- Win more work
For those conveyancers who have close relationships with estate agents, it undoubtedly should help them win more sell-side instructions. It of course comes down to individual firms’ models and business strategies as to whether this is the type of work they want to win more of. With transactions down nearly a quarter from last year, however, appetite for this may be higher than usual.
- Move away from the no complete, no fee model
An obvious question on the mind of all conveyancers who are developing vendor propositions is “how much can I charge?”. As expected, the conveyancing firms we spoke to are reluctant to use this as an opportunity to charge more, given sellers’ general reluctance to part with money before they’ve accepted an offer or the transaction has gone through.
Whilst this might not be an opportunity to charge more, some firms are hoping this is an opportunity to depart from the unfavourable and risky no completion, no fee model. In consideration for doing the light diligence needed to get the seller on the market, firms are looking at asking sellers to pay some of the overall fee they ordinarily charge, upfront.
- Get paid quicker
The consensus amongst many conveyancers is that Material Information in and of itself is unlikely to have that much impact on transaction timelines. However, many are seeing Material Information as the ‘trigger’ to gather more ‘upfront information’ that could have a significant impact on timelines. In gathering Material Information and engaging conveyancers earlier in the process, sellers will complete forms and source other documentation upfront, shaving weeks off transaction timelines, as demonstrated in a recent pilot carried out by Thomas Legal.
There is no doubt that chains will continue to have the greatest impact on transaction times, but these changes should cumulatively result in a reduction in transaction timelines and more importantly, draw out potential snags early on, reducing the likelihood of late transaction dropouts. This means everyone gets paid quicker!
How technology can be the enabler
There is a lot for conveyancers wanting to develop a ‘vendor proposition’ to consider. Two things are certain, any proposition will need to be cost-effective and fast. Cost effective as sellers are reluctant to pay. Fast, as estate agents want to get that property on the market. For that reason, doing things the old-fashioned way (throwing people at the problem) won’t work, it won’t be profitable. This is where technology comes into play, as it can eliminate timely and costly information checking processes.
Orbital Witness is at the forefront of applying Artificial Intelligence to help conveyancers do faster, more effective title checking and reporting. Orbital Witness’ AI powered system automatically reviews and highlights all aspects of the title that requires attention enabling firms to quickly identify and communicate issues both internally and to clients. The accuracy of the information provided is warranted and voluntarily matched with PI insurance to the same level as CLC requires of firms.
Orbital Witness is already used by some of the biggest names in conveyancing, such as Taylor Emmett, Enact and Ronald Fletcher Baker, all who are reporting huge time savings on their buy-side instructions, improved case allocation and client experience, and peace of mind that nothing has been missed. These same benefits can now be harnessed by conveyancers acting for sellers and will undoubtedly allow those firms to develop a far more competitive, appealing vendor proposition than those who take the traditional route.
If you’d like to understand more how technology, such as Orbital Witness, could help your firms develop a competitive edge, please get in contact here.
This article was submitted to be published by Orbital Witness as part of their advertising agreement with Today’s Conveyancer. The views expressed in this article are those of the submitter and not those of Today’s Conveyancer.
