A pressure group that says it represents the interests of property lawyers has described the Parts A, B, and C guidance introduced last week by the National Trading Standards Estate and Letting Agency Team as “re-engineering conveyancing by the back door” and warned “non-regulated companies” seeking to take advantage of “HIPs 2.0.”
The recently launched “Property Lawyers Action Group” (PLAG) has suggested that the intended benefits of the Material Information Guidance (MI) are overstated and that the statistics around current fall through rates and average transaction times (24% and 210 days respectively – Source: The Home Buying and Selling Group (HBSG)) do not reflect the experience of “most lawyers.”
The National Trading Standards Estate and Letting Agency Team (NTSELAT) has introduced guidance for the UK property market to enable better compliance with the Consumer Protection from Unfair Trading Regulations 2008 (CPRs); regulations which require estate agents to provide “material information” that would impact an “average consumer’s” decision to buy. The guidance, which is now out in full and constitutes three elements, Parts A, B, and C, is designed to provide further clarity on what constitutes “material information.”
PLAG has raised its concerns around the position of Caveat Venditor, which it says has been altered by the imposition of CPRs and extended to consumers (via the estate agent) by National Trading Standards, despite the origins of the legislation applying only to “traders.”
A spokesperson explained:
“Usually, the seller’s disclosure is dealt with by the Protocol forms, after the conveyancer is instructed. This is beneficial because the seller has access to legal advice throughout that disclosure process. MI deviates from this by shifting disclosure to before the property is marketed, potentially depriving seller the opportunity of legal advice, and creating problems that may otherwise have not existed. Indeed, MI widens a seller’s disclosure far beyond the extent of those established Protocol forms.
“MI shares many similar features to those contained in the failed experiment of Home Information Packs (HIPs) and we are concerned that MI will suffer the same fate. We are yet to hear a convincing argument why MI would succeed where HIPs failed.
“The property market is often short of supply. Adding an extra layer of complexity and expense will inevitably deter some sellers from placing their properties on the market, exacerbating the problem. In practice, many sellers list their properties for sale just to ‘test’ the market, and MI will deter some sellers from doing so.
They go on to raise concerns about the creation of “non-regulated firms which specialise in sale packs” which may open up sellers to potential liability and highlight the need for average buyers to get specialist advice particularly around complex issues like covenants and building safety, which are covered by Part C of the MI, adding:
“The buyer would ultimately still rely on their conveyancer to advise on the contents of the information before committing to an exchange of contracts in the usual way, reducing any benefit of the information being provided up front.”
Back Door Changes
The changes has been described by the group as an imposition on the property market, disagreeing with the proposed benefits and suggesting they are unlikely to address the underlying problems which often cause delays and fall-throughs:
“Agents historically sold properties. Now they must become ‘quasi-lawyers.’ These proposals represent re-engineering of conveyancing by the back door. MI is being pushed on unwilling agents based on a confected narrative.”
Property Lawyers Action Group says it has been launched to encourage all conveyancers to adopt and maintain high standards of legal practice and professionalism, despite the tremendous pressures being placed upon us from various sources. It has already taken aim at the SRA, CLC, the Law Society, referral fees and price transparency.
4 Responses
The Guidance is here, to try to fight it now is futile. That should have happened a year or two ago. Conveyancers need to embrace it and see it for the opportunity that it could be. I received this email from a BLG member late last week:
“I had a couple of interesting conversations with agents last night about the new Material Information Guidance. One in particular hadn’t yet even heard of the latest changes.
It is clearly a way into agents. I explained them to him about the title and covenant information that would be required, and he asked how they were supposed to find that out – guess who I suggested! I will be meeting with them after Christmas to set up a process so the client can be referred to us prior to marketing to collate the information.
I can see there is an opportunity to gain more referrals from our local independents.
Thanks again for keeping us informed – I wouldn’t have known about it were it not for the BLG bulletins!” BLG Member
I also had a demo yesterday of a system that would allow conveyancers to collate all of the Material Information within about an hour. The developer is an ex-conveyancer and someone I trust.
If you want to take a pro active approach to the Material Information changes, please email me: rh@boldgroup.co.uk
Why are these clowns being given a forum? They don’t represent any more than a handful of property lawyers, most of whom are notable for their refusal to even consider adopting any new technology or new processes.
Who are you calling a clown? Shouldn’t it be the UFI/MI guys that have re-purposed HIPS that failed? Insanity is doing the same thing again expecting a different result!
Hi ‘Anonymous’. UFI and MI are two different things. HIPs are also different to UFI and MI, so your repackaged Einstein quote about insanity doesn’t work. Here’s one for you: “Conveyancers who constantly whine and moan about modernisation and progress, regardless of the context, are the ones who end up being left behind.”