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Buying a House and Consumer Protection

With the appointment of a Property Ombudsman, the laying down in statute of the duties of estate agents and the passing of the Consumers, Estate Agents and Redress Act 2007 (CEARA), a property purchaser might reasonably conclude that their interests are strongly protected under the law. This view is likely to be bolstered by an awareness of the existence of the National Association of Estate Agents’ (NAEA) own disciplinary and redress scheme. However, the assumption that a buyer’s interests are well protected is not as well founded as you might think.

The estate agent’s main duty is to the vendor of the property, so the regulations under which they operate relate mainly to their relationship with the vendor. They are bound not to discriminate against purchasers who do not wish to buy other services they offer and to declare a personal interest to any buyer. It is important to note that even when the sales particulars of a property are inaccurate, the right of redress may be limited. Recently, the court ruled that an agent was not liable for providing false information to the effect that a property included a substantial area of land which was not in fact registered in the vendor’s name. The estate agent had simply accepted without enquiry that the area of land was part of the property and included it in the sale particulars. The court considered that any purchaser would have made sure that a proper search of the title was done and in any event the offer for sale was ‘subject to contract’ – placing the onus on the purchaser to make sure their enquiries were carried out carefully!

The Ombudsman service deals with claims against estate agents, but its powers are limited and the maximum award that can be made is £25,000. In practice, most awards are a small fraction of that amount.

In 2010, protection was given to buyers who buy 'off plan', with the launch of the Consumer Code for Home Builders.

In 2013, the Government repealed the Property Misdescription Act 1991, which made it a criminal offence to make a misleading or false statement regarding properties offered for sale. However, consumers continue to benefit form general consumer protection legislation in the Consumer Protection from Unfair Trading Regulations 2008.

Worryingly for home buyers, a 2014 decision of the court found a surveyor who had carried out a survey for the purposes of valuing the property for a mortgage, and who noticed cracks in a wall, was not negligent in failing to advise the buyer to have a full structural survey. The house was affected by subsidence, leading to expensive repairs being necessary.