Material Information and Property Listings

19th July 2022 Commercial Litigation

The (unwieldly named) National Trading Standards Estate and Letting Agency Team (NTSELAT) has now published the first phase of its guidance for what should be on a property listing. This work stream also now has its own dedicated webpage reflecting the fact that NTSELAT sees this as an ongoing project.

NTSELAT takes the view that the items in its guidance are material information within the meaning of the Consumer Protection From Unfair Trading Regulations 2008 (CPRs) and must therefore be disclosed to a potential tenant or purchaser under regulation 6. Failure to disclose material information is a misleading omission which can lead to prosecution or a civil claim for damages or to unwind the contract.

However, the CPRs define material information as information which an “average consumer needs, according to context, to take an informed transactional decision”. Therefore the views of NTSELAT are only their views and do not represent the law. What is material in each case is for the courts to decide. In addition, some of the information that NTSELAT deems material may in fact not be material in certain contexts. NTSELAT has suggested that they will seek changes to the CPRs to bring their provisions into law but the government has already intimated that it has little appetite for this so it is likely to remain a matter for the courts for now. Given the very low level of enforcement of the CPRs either by local authorities or by way of civil claims it is unlikely to see much clarity even from that quarter for some time.

At the current time the NTSELAT is only focused on what it calls its Part A material information. They have leaned on the major property advertising portals to nag for this information and make clear when it is not there. The part A information is:

1.    Tenure for sales only. Leasehold, freehold, commonhold, shared ownership;

a.    Leasehold properties will also need ground rent, service charge and lease length information;

b.    Shared ownership properties will need information about the share being sold and any obligations;

2.    Council tax band or property rate (for Northern Ireland);

3.    Purchase price or monthly rent

a.    For rentals that includes the deposit

The problem with this list is that it is all about context. For example, if I was letting a space in a shared flat and was to include council tax in the rent then the council tax is not really material information as it is largely irrelevant to prospective tenants. While these are small issues now the more that NTSELAT tries to add to these obligations then the more that context will become an issue for them.

There is also ultimately a balance to be struck with information provision, especially in leasehold properties. Currently leasehold packs are prepared by management companies during the conveyancing process. They usually charge a fee for this. If NTSELAT takes its current proposals to their full extent then it would be likely that agents would need to seek management packs before marketing properties, considerably increasing the costs and delays in marketing new properties. Clearer information in relation to leasehold property is badly needed but it is likely to be an issue that should be dealt with by more comprehensive review of leasehold management and operation rather than by interventions like this.

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David Smith is a Partner located in Londonin our Commercial Litigation department

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