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Written by Ruban Selvanayagam
Ruban Selvanayagam
Ruban Selvanayagam is a professional cash homebuyer, private rented sector landlord, auction specialist, blogger and media commentator.
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Edited by James Durr
James Durr
James Durr is a passionate property entrepreneur with a strong foundation and background in business.
People love to hate estate agents!
But while they sometimes get a bad rep, more estate agents are taking their legal obligations to buyers more seriously.
These protections are only increasing with time, as industry bodies release new regulations ensuring that consumers receive all the information they need about properties to make an informed decision.
This article – written by direct homebuyers Property Solvers – runs through estate agents’ legal obligations to buyers. We also going into what home sellers can do if they suspect their estate agent isn’t playing by the rules.
What Legal Obligations Do Estate Agents Have to Buyers?
There are certain guidelines that online estate agents, local estate agents, auctioneers, property developers and those who provide related services all need to provide.
Estate Agents Must Be Accurate
Above all, an estate agent must accurately describe the property they’re selling.
They can’t attempt to mislead buyers by providing inaccurate information (or withholding some information completely). This includes photos as well as the written description.
In the past, an estate agent may have gotten away with saying a house was “renovated” in a property listing when only one room had undergone a renovation. This is no longer allowed.
Estate agents should ensure they’re accurately describing the property in the following regards:
- Features
- Size of the property
- Amenities (such as garden spaces and parking)
- If the property is a leasehold – including the amount of years remaining, service charges, ground rent etc. (see below)
- Floor plans
- Dimensions
Estate Agents Must Disclose Information Promptly
It’s also important for estate agents to disclose information in a timely manner and present it to potential buyers in a clear and understandable way. This includes any details that could impact a buyer’s decision to purchase a property, such as multiple sales falling through.
Estate agents are obligated to pass offers to the seller promptly too, up until the exchange of contracts (unless the seller specifies that they don’t want this).
Estate Agents Must Be Impartial
An estate agent must also ensure they’re unbiased – they can’t fail to notify the buyer about certain offers, misrepresent offers, or pass on some offers more quickly than others.
For instance, they can’t show bias toward customers who are willing to use their in-house mortgage broker over those who want to use different brokers.
Or, if two estate agents are trying to sell a property, one estate agent can’t give one prospective buyer any perks or advantages.
An estate agent also can’t discriminate against a buyer based on their ethnicity, gender or any other factors.
Unfair Trading Regulations
In 2008, the UK government introduced the Consumer Protection from Unfair Trading Regulations.
This legislation was dedicated to preventing businesses from taking advantage of buyers. It also included rules for estate agents and other middlemen involved in the house sales process.
These rules were as follows:
- Estate agents can’t harass consumers (sellers) to make a sale
- There must be clear, accurate information about products and services
- Estate agents must carry out due diligence to find accurate information on a property.
If companies break these rules, they could be charged unlimited fines – and even imprisoned in extreme cases. Customers (home sellers) could also be eligible for compensation.
The Property Ombudsman (TPOS)
The Property Ombudsman has best practices its members must follow, which align with those outlined above.
While it’s not a requirement for estate agents to join the Property Ombudsman, it is a sign of professionalism. Not being a member signals to buyers that they may be a bad or disreputable estate agent.
The Code
The Property Ombudsman Code of Practice for Residential Estate Agents requires the following:
- A transparent fee structure that sellers can fully understand
- A redress mechanism (a way for buyers to address concerns)
- No manipulation or pressure in communication
- Transparency over other services estate agents offer (such as mortgages or conveyancing).
National Trading Standards Estate and Letting Agency Changes
In May 2022, estate agents’ legal obligations increased further.
The Trading Standards Estate and Letting Agency introduced further rules to protect buyers, which are being introduced in three phases.
Phase 1
The first phase of the rules focuses on marketing and property descriptions (listings).
They require estate agents (or other related entities) to accurately display:
- Price
- Council tax band rate
- Whether a property is freehold or leasehold
- Tenure information
- Reservation fees
- Percentage of shares (for shared ownership properties).
Since July 2022, all property listings must include the information outlined above. Rented properties will also be included.
Estate agents aren’t allowed to list properties as ” Price on Application” or “Offers Invited” (although they can use “Offers in Excess of” or “Offers in the Region of”). If potential buyers don’t see this information, they can request it from the estate agent.
Phases Two and Three
Further legal obligations estate agents then went on to be introduced (in the form of phases 2 and 3 of The Trading Standards Estate and Letting Agency) in November 2023.
Phase two will require transparency over property details including:
- Property type
- Building materials used
- Number of rooms
- Utility information
- Broadband and mobile coverage
- Parking
Meanwhile, phase three will require agents to provide the following information regarding legal and physical aspects (if it is relevant to the property):
- Restrictive covenants
- Building safety
- Rights of access and easements
- Flood risk
What to do if an Estate Agent Doesn’t Meet Legal Obligations to Buyers
As mentioned, estate agents could be fined if they fail to meet their legal obligations. But if you’re in this situation, what can you do to claim your rights?
Redressal (Communicate with the Estate Agent)
First, a customer should try to discuss the problem directly with the estate agent or the company.
As mentioned, estate agents who are members of the Property Ombudsman are obliged to have mechanisms in place for this kind of dispute resolution.
Property Ombudsman and the Property Redress Scheme
If an estate agent doesn’t meet the Property Ombudsman Code, buyers or sellers can file a complaint and the body will investigate the case, reviewing evidence from all parties involved.
The Property Redress Scheme is another body that acts as a go-between where disputes between consumers and estate agents arise.
NAEA Propertymark
Propertymark is another professional body for the property industry. Estate agents who are members of the group can also receive complaints, which the body will investigate if there is evidence.
However, you should only do this if you have already tried to contact the estate agent directly and complained to either the Property Ombudsman or through the Property Redress Scheme.
Legal Action Against the Estate Agent
In extreme cases, you may want to consider litigation, such as if the estate agent breached their duty of care or caused you financial damage (that you can prove was due to the estate agent’s negligence).
In this case, it’s best to talk to a solicitor to discuss further steps.
What Legal Obligations do Estate Agents Have to Buyers of Leasehold Properties?
Buying a freehold property can be complex enough, but opting for a leasehold can bring a whole new can of worms.
Fortunately, estate agents have legal obligations to buyers in this case, too.
In addition to estate agents having to disclose whether a property is leasehold or freehold, they also need to let potential buyers know about:
- Service changes (to cover maintenance and common areas)
- Ground rent (paid from leaseholder to freeholder)
- Years left on the lease
- Any other special conditions or terms related to the lease
- Additional fees (e.g. leasehold packs).
The Leasehold Information Pack is a series of documents outlining all the information above to potential buyers.
Estate Agents’ Legal Obligations Summarised
The stereotype of the bad estate agent may have run its course.
Estate agents are legally required to inform sellers about information like price and council tax band, to remain neutral throughout the process and to ensure they’re prompt and transparent in their communication. Otherwise, buyers can make a complaint or even pursue legal action.
Nonetheless, if you’d prefer to avoid the hassle of dealing with an estate agent, you may prefer to opt for a quick sale instead.
Property Solvers can give you a quick cash offer on your property, removing the need for middlemen. Contact us 24/7 for a no-obligation quote or to discuss your options.