Trading Standards remains committed to introducing parts B and C of the material changes rules for property listings this Autumn. While Phase A was launched in May last year, a discussion is ongoing about whether these alterations pose an opportunity or a challenge for conveyancers.
This determination follows James Munro, the head of the National Trading Standards Estate and Letting Agency Team (NTSELAT), mentioning in a September Bold Legal Group podcast, later re-emphasised this week to raise awareness of the material information (MI) rules, that parts B and C were anticipated in October.
Although it appears that this October deadline has been missed, property listings have been mandated to include material information, such as leasehold terms, council tax details, and pricing, since June 2022, as part of Trading Standards’ initial reform (Part A). A Trading Standards spokesperson yesterday told Estate Agent Today:
“We’re working closely with property portals – and the industry more widely – to ensure more material information is made available on property listings so that consumers can make informed decisions and agents can meet their legal requirements at the very beginning of the consumer journey. This will provide greater clarity and consistency across the industry, saving agents time and money on wasted enquires and legal disputes while protecting consumers from nasty surprises.
The guidance has been split into three phases – Part A of this process was launched last year and Parts B and C are expected to be published this autumn. These will include material information such as non-standard construction and developments as well as restrictive covenants, flood risk and other specific factors that may impact certain properties.”
Parts B and C will extend these requirements to oblige agents to incorporate information like restrictive covenants and utility details in their property marketing. Munro also indicated in June that these reforms would be implemented in the Autumn. Munro said on the podcast:
“(Parts B and C) cover things that are either directly relating to the property such as the availably of utilities and then issues that are directly affecting the property such as flood risk and building safety, restrictive covenants and easements.
We anticipated releasing this in the early Autumn, the steering group are considering the final draft of the guidance, as soon as that has been agreed and signed off, an announcement will be made. I would anticipate October time”.
Rob Hailstone, chief executive of the Bold Legal Group said:
“To me it seems that the MI changes offer an opportunity for conveyancers to get instructed by sellers much earlier on in the home selling process and some proactive firms are already creating information sheets and flyers for their agent contacts and clients.”
Hailstone set out the brief explanations of what the changes are and might be:
Phase A
Information that, regardless of outcome, is always considered material for all properties regardless of location. This information generally involves unavoidable costs that will be incurred by the occupier regardless of the use of the property. Includes, Tenure, Council Tax, Price or Rent.
Phase B
Information that must be established for all properties. It applies mainly to utilities (and similar), where non-standard features would affect someone’s decision to look any further at that property. Could include (inter alia), Broadband Coverage, Phone Signal Coverage, Parking Facilities.
Phase C
Additional material information that may or may not need to be established, depending on whether the property is affected or impacted by the information. Applies to properties affected by the issue itself because of, for example, the location of the property. Could include (inter alia), Covenants, Easements, Restrictions.
Here are a few of the suggestions as to why they might pose a threat. Hailstone’s responses are in italics:
MI will undermine well-established checks and balances imposed by the conveyancer. Those well-established checks and balances will still remain in place.
MI /UFI will turn agents into unwilling ‘quasi-lawyers’. Agents do not want to be dealing with phase C and will be looking to conveyancers for assistance and guidance.
The practice of paying referral fees would be exacerbated by MI. Referral fees will not be affected and may even be reduced.
MI/UFI will potentially increase the cost of buying/selling property by forcing the public to pay for legal work that might not be needed/wanted. A few maybe but fall throughs will be reduced and more money will be saved by the public than lost.
MI/UFI will create more work and liability for conveyancers, who would have more information and documents to review as part of due diligence. It will be the same work carried out earlier, and if it is more work, conveyancers can charge more.
Because agents are trained to sell real estate, not to disseminate sensitive information, what if the agents were negligent in undertaking this task? That is the agent’s dilemma.
Agents fearful of liability for misrepresentation or non-disclosure would seek an indemnity from conveyancers. However, the lawyers do not want agents to supply such information in the first place. Conveyancers do not have to indemnify.
