Estate Agency Legislation Flashcards
What is the legislation around leasing and letting?
- Estate Agency Act 1979
- Misrepresentation Act 1967
- Consumer Protection from Unfair Trading Regulations 2008
- Business Protection from Misleading Marketing Regulations 2008
- Bribery Act 2010
- Consumer Protection Act 2015
What are the RICS professional statements around leasing and letting?
- RICS Real Estate Agency and Brokerage, 3rd edition (2016)
- RICS Code for Leasing Business Premises, 1st edition, 2020
- RICS Conflict of Interest: UK Commercial Property Market Investment Agency, 1st edition
- RICS UK Commercial Real Estate Agency, 2016
What is the objective of the RICS code of leasing business premises? What are the mandatory requirements?
OBJECTIVE:
- Improve fairness of lease negotiations between LL & T
- Promote a new set of HoTs to make legal drafting of leases more efficient
REQUIREMENTS:
- Negotiations must be approached in collaborative manor
- Unrepresented parties must be advised to seek professional advice
- HoTs must state ‘STC’ for VP lettings
- Lease renewals must comply with VP HoTs except for any terms that are stated to follow the existing lease subject to reasonable modernisation
What should Heads of Terms for VP letting include?
- Property address and identifying the extent to the premises
- Length of term
- Break options
- Amount of rent
- Rent review information
- Rent free
- Alienation clauses
- Repairing obligations
- Security of Tenure
- Alterations / reinstatement obligations
- If VAT is applicable to rent?
- Permitted Use
- Any special rights i.e. car parking spaces
Who is responsible for ensuring the heads of terms comply with the Code for Leasing Business Premises 2020?
Landlord OR Letting Agent
Estate Agency Act 1979 - what are the principles?
- Honesty
- Clarity on Terms of Agency S18
- Open and transparent regarding personal interest S21
- Agreement + Liability for costs
- Absence of discrimination
- Legal obligation to tell the client when offers received
- Keep client money separate
What is S18 of the Estate Agency Act 1979?
Clarity of terms with agent - Requires agents to give clients information before entering into a contract for estate agency work including fees and subject to contract
i.e. Terms of Engagement
What is S21 of the estate agency act 1979?
Disclose any personal conflicts by the agent
What are the penalties for not adhering to Estate Agency Act?
- Act policed by National Trading Standards
- Negative licensing. The right to be an estate agent can be taken away.
- Prohibition to stop an agent practicing or warning order against an agent
- Warning order less punitive as it gives a written warning not to undertake the action again
- Costs can be awarded
What is the Estate Agents (undesirable practices) (No 2) Order 1991?
- Order made under Estate Agents Act 1979
- Agents must inform their clients at the same time as they are informed about their terms of business, as to any services to be offered to prospective purchasers unless offered free of charge.
What is the Estate Agents (Provision of Information) Regulations 1991?
Talks about provision of information which should be supplied to the client.
The information must be in writing.
Talks about services and fees.
Mentions cooling off period (14 days for clients to change their mind)
How does the misrepresentation act relate to agency work?
- False information made during pre-contractual enquiries which induced a party to let a property
- Civil offences which can lead to being sued for financial damages
- Agent has duty of care to check information is reliable
- Disclaimer may be effective in protecting the vendor and their agent if fair and reasonable
- Leading case is ‘Hedley Byrne & Co Ltd v Heller & Partner (1964) - which relates to liability to negligent statements and refers to the test of reasonableness.
What are the 3 tests to decide agents liability for negligent statements?
1) Foreseeability - could they prevent?
2) Proximity - how close to the ‘mistake’ were they’?
3) Fairness - is it fair?
What does the Consumer Rights Act 2015 outline?
1 - Amends existing consumer protection law and gives consumers new rights
2- Consolidates the law relating to unfair terms and contracts between businesses and consumers
3 - Since Oct-2015 letting agents must clearly display a summary of their charges both in their office and on their website for the letting of property.
4 - information must state the calculation of the charges and who is responsible (i.e. 10% of rent plus VAT with a minimum of £2,000)
5 - Policed by local authority and penalty is a fine up to £5,000 for each breach
Tell us about ‘Consumer Protection from Unfair Trading Regulations (2008)’
It controls unfair practices used by traders when dealing with consumers (creating criminal offences for traders that breach the regulations).
Must NOT mislead the customer - brochure must be accurate and must not knowingly give false information
Penalties include unlimited fine. Compensation may also have to be paid to complainant up to £25,000.
Up to 2 years imprisonment
