House-hunting can be fraught with time-consuming pitfalls and costly dead ends. Properties that on first viewing appear to be idyllic can sometimes reveal insoluble problems that scupper even the most well-intentioned of deals. For buyers, sellers, tenants and agents alike, that means a great deal of wasted time and money.
To nip the problem in the bud, the NTS Estate and Lettings Agency Team (NTSELAT) has spearheaded a project that encourages property agents to publish material information upfront on online portals so consumers can make more informed choices.
James Munro, Head of NTSELAT, explains: “We’ve had an issue for many years with the lack of information on property listings. Those with long memories will remember the Property Misdescriptions Act (PMA) of 1991. That contained a list of things that it would be an offence to give any false or misleading information about. Of course, the key thing was that it only said, ‘if you disclose this information, and it’s then wrong or false or misleading, you could be prosecuted’. So the property industry thought, ‘well, if we don’t say anything, we can’t be had up for it’. Which was essentially true, but ludicrous.”
Following the introduction of the wide-ranging Consumer Protection from Unfair Trading Regulations (CPRs) in 2008, the PMA was repealed on the basis that the CPRs provided more comprehensive protection for renters and homebuyers. However, the problem of material information disclosure had not gone away. “The CPRs don’t require material information to be disclosed – it’s really quite tricky to get your head around this – what they do is they punish non-disclosure,” says Munro. “It’s a very nuanced thing, but it’s a very important distinction.”
That blind spot in the regulations can hit consumers hard. After all, renting a property is a huge financial commitment, buying a property even more so. “A lot of people are very vulnerable, whether they feel like it or not, when they buy or rent a property,” says Munro. “Much of the language used in property transactions is still quite archaic and people don’t really understand much about the process. When people buy houses, very few do it themselves. In almost all instances, they use the services of a lawyer or conveyancer. That’s quite unusual for consumer transactions.”
According to Which?, the average cost of buying a home in the UK – including survey and conveyancing fees – can amount to more than £6,000. “This is one of those areas where consumers can lose thousands of pounds, almost legitimately,” says Munro. “And often they don’t have the means to complain about it.
“Frankly, there is very poor disclosure of material information, for both sales and lettings, across the whole country,” he adds. “A substantial number of failed transactions are due to something being found out along the line, that if the consumer had been aware of before they viewed the property or commissioned a survey, they wouldn’t have wasted their time or the seller’s time.”
Steering the sector
It became clear that collaboration between enforcers and the industry was not only necessary, but mutually beneficial. Munro explains: “Rather than just waiting for agents not to disclose material information, and then punishing them for it, we want to work with and encourage them by working out what exactly constitutes material information, and to help them source and display it on property listings.”
That, however, is easier said than done – not least because the term ‘material information’ can encapsulate so many things. “Property is a really challenging thing to market because every property is unique,” says Munro. “There could be all sorts of construction issues with the property itself; it could be affected by something nearby; there could be an issue with what it was used for in the past. It might have HS2 running very close to the back garden; it might have Japanese knotweed… all sorts of things that will affect people’s decisions.”
NTSELAT formed a steering group and approached the major property portals, including Rightmove, Zoopla and On The Market, and asked them to get involved. “That was quite a challenge, because naturally they’re fierce competitors – getting them in the same virtual room was a testament to the effectiveness of the project,” says Munro. “We also engaged with PropertyPal (in Northern Ireland) to give a truly UK-wide perspective.”
In addition to the portals themselves, the steering group brought on board software suppliers, industry representatives and redress schemes to establish what ‘material information’ should include. The Competition and Markets Authority was also invited to sit on the steering group because of its extensive work on the mis-selling of leasehold properties.
The steering group came up with three distinct types of material information to be included on property listings.
Part A applies to non-optional financial commitments such as the price of the property or its monthly rent, and council tax. “There are all sorts of issues around mis-advertising of rent, or the tenure of the property,” says Munro. “With leasehold properties come financial commitments such as ground rent, service charges and maintenance of shared ownership.”
Part B information relates to a property’s construction, and highlights any issues around insurance and fire protection requirements or cladding. Also included in Part B are utilities; agents must point out non-standard amenities such as septic tanks, private water supplies, or issues such as lack of access to mains electricity or broadband.
Munro points out that for tenants, Part B information relating to a property’s energy efficiency provisions is particularly important. “If you’re renting, you may not be so interested in the fabric of the property, but you have no control over things like the heating system or insulation. So it’s important that you know, for example, if a property is not insulated, because if you’re renting it, there’s nothing you can do about it.”
Part C information applies to the area around the property, and takes in factors such as flood risk, coastal erosion and proximity to flight paths. It also includes things like subsidence around former coal mines and restrictions on building within conservation areas.
One aspect of the project which has yet to be finalised is the inclusion of restrictive covenants in material information. As well as things like public rights of way across a garden, these can include restrictions around using a property for business purposes, or the prohibition of parking of trade vehicles on the driveway. “We are working with the conveyancing associations and the Law Society to try to bring together agents and conveyancers at a much earlier stage and explore any covenants on a property,” says Munro.
The project has already won support from the Government, which is funding its roll-out. It was also highlighted in the recent Department for Levelling Up, Housing and Communities White Paper.
Part A information began to appear on the property portals in February, and by the end of May it will be required as standard on all property listings. Parts B and C will then be rolled out in due course.
Emma Cooke, NTSELAT Policy & Information Manager and CTSI Joint Lead Officer for Property, was part of the team that set up the project. “This work is a game changer for the industry and consumers and my passion and dedication to achieving this has never faltered, despite some early setbacks,” she says. “Making a difference is why we all get out of bed in the morning, and this project has been and will continue to be, one of my many motivations.”
“We see this as a win-win for all parties concerned,” says Munro. “It’s a win for consumers and it’s a win for agents. It brings benefits for everybody, but it’s going to require a culture change
in the industry.”