There is much current discussion on Trading Standards decision to remove their guidance in regards the provision of material information by estate agents and letting agents following the replacement of Consumer Protection Regulations 2008 with the Digital Markets, Competition and Consumers Act 2024 (DMCC).
I always found the trading standards ABC approach for agents of concern, as the items they highlighted, whilst covering many of the key elements that an agent should be ascertaining and revealing, certainly did not cover all aspects and had potentially created a feeling that if an agent “ticked a few boxes” they would be OK. This was reinforced by the property portals including a number of basic fields the property listings being displayed.
The “policing” and enforcement has now passed from Trading Standards to the CMA (Competition and Marketing Authority) who have the powers to fine without the need to pursue action through the Courts.
As someone who advises and provides training and mentoring to property businesses, I have been reviewing the DMCC and the guidelines abut consumer protection provided by the CMA
As an overview, the DMCC has not changed the requirements for material information to be provided (and not omitted) and the five types of unfairness highlighted in the CPR remain.
• Misleading actions – providing false or misleading information
• Misleading omissions – particularly in regards an invitation to purchase
• Aggressive practices
• Contraventions of the requirements of professional diligence
• Banned practices including an extensive list of examples such as using false reviews or purporting to be a member of an organisation or body when one isn’t
As before, central is whether the average consumer would have their transactional decision making affected by the aforementioned aspects in regards an “invitation to purchase”.
What is an invitation to purchase?
The UCP (unfair commercial practices) provisions define an invitation to purchase as a commercial practice involving the provision of information to a consumer:
• which indicates the characteristics of a product and its price
• which enables, or purports to enable, the consumer to decide whether to purchase the product or take another transactional decision in relation to the product.
The idea behind this concept is that the consumer should be given the key information they need to make an informed transactional decision.
This clearly would include the price of a property when being marketed for sale or rent.
The CMA guidance on UCP goes onto say the following in regards material pricing information
Material pricing information
Traders must tell consumers in an invitation to purchase the total price of the product which includes any fees, taxes, charges or other payments that the consumer will necessarily incur if the consumer purchases the product.
Failure to give the total price could breach the prohibition of omission of material information from an invitation to purchase.
The diagram below shows what the unfair commercial practices provisions require, including what pricing information must be included in the price stated in the invitation to purchase (the headline price).
This provision makes sure that consumers know up front what they will end up paying, that they have accurate and timely pricing information and that they are not faced with unexpected mandatory charges only later in a purchasing journey. This is important, because businesses compete for consumers on headline prices. This requirement is in addition to compliance with the other UCP provisions, including in relation to misleading actions and omissions.
The CMA guidelines are very clear about the need to show the full costs of products and services that would be incurred by a consumer and specifically where those costs are mandatory and unavoidable.
When are charges mandatory versus optional?
If, in addition to paying the price stated in the invitation to purchase (the headline price), the consumer cannot purchase a product without the payment of any fee, tax, charge or other payment (‘charge’ in short), then that charge is mandatory. Mandatory charges should be included in the headline price.
For estate agents and letting agents this has, for some time, meant the inclusion of VAT when displaying or quoting fees.
An agent must therefore show a 1% fee that is subject to VAT as a 1.2% fee inclusive of VAT.
This now creates a crucial, and potentially new, requirement on agents.
When buying a property there are a couple of mandatory costs that apply in most scenarios:
• Stamp Duty
• Land Registration Fees
Whilst these may vary based on the position of the consumer (stamp duty for a first time buyer or surcharges for a buyer of a second property for example) they are, in my opinion, clearly, material pricing information which means that they should be revealed when an agent is making an invitation to purchase by marketing a property.
All of the major portals already include a stamp duty calculator which is fine, although the display of which could probably be more obvious and prominent. However, there is no reference to land registration fees and, on agents individual websites there are very few that make any reference to either of these two elements.
What will the CMA do and what should agents do?
The CMA have stated that, for the first twelve months, they will be applying a four Ps approach in their consumer protection work
• Pace
• Predictability
• Proportionality
• Process
Agents should, in my opinion, familiarise themselves with the 4 Ps and seek to comply.
The CMA have also said they will be focused initially on ensuring harmful conduct is stopped quickly and that consumers are compensated.
The law does not apply retrospectively and so penalties can only be applied to infringements after the commence date.
Crucially they have also said that they will take into account any proactive and meaningful steps that a business has taken in good faith to correct infringing conduct.
Certainly agents should be reviewing their businesses in regards the collection and provision of material information and, where necessary, building in DMCC compliance to all systems and processes. Software and people will be key factors.
I have created new training sessions which will go live shortly and will be keeping my clients up to speed as things move forward.
Michael S Day is managing director at Integra Property Services
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