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Changes to the Property Ombudsman Code of Practice

The Property Ombudsman have recently updated their Code of Practice for Residential Estate Agents. Within these changes is an emphasis on the agent providing details relating to the leasehold, which traditionally wouldn’t have come to light until midway through the conveyancing transaction. These changes may alter the conveyancing process, with both agent and clients engaging solicitors earlier in the transaction to obtain the information now required by the Code of Practice.

The Property Ombudsman is a government-approved independent scheme. Its main purpose is to provide an alternative dispute resolution service between consumers and property agents. If fault is found in the behaviour of the agent, the Ombudsman can award compensation to the consumer up to £25,000. However, in the consumer age the real damage is the reputation and loss of client confidence associated with receiving such a complaint.

The new code, which came into force on 1st June 2019, was introduced following a substantial consultation and has been made to reflect industry and legislative changes. In their press release, Ombudsman Katrine Sporle states “As the industry changes at such a rapid rate, it is necessary to release new versions of our code to help agents understand their responsibilities and reduce the potential for consumer detriment to occur”. Undoubtedly, the issues with leasehold property ownership which have populated the headlines over the last year have been influential in the drafting of the new code. 

The new responsibilities include obtaining title information from the Land Registry and confirming the tenure in all literature. In terms of the lease, amongst other information, the agent should also confirm the following:

  • The number of years remaining on the term
  • Ground rent and how it will increase throughout the term of the lease
  • For shared-ownership properties, the rent payable
  • The amount of service charge and when it’s payable
  • Event Fees, for example when notices or consents are needed
  • The reservation fund and details of the contributions required
  • The approximate amount in the reservation fund
  • Other fees relating to the lease
  • Details of unusual restrictions or covenants. 

The code also requires the agent to state if any of this information is missing.

Much of this information can be obtained through analysis of the lease, the title information at the Land Registry and the information provided by the seller. However, some agents may feel more confident if this information is obtained and checked by a solicitor or conveyancer. This may lead to clients engaging solicitors earlier in the transaction and even obtaining the information from the managing agents or landlord ahead of the sale being agreed. This could lead to a reduction in the time taken for a conveyancing transaction.

Estate agents should familiarise themselves with the changes and their new obligations. The changes at their heart have the intention to provide the best available information to the consumer at the earliest point possible in the transaction. Agents should exercise caution to ensure the information is as complete and accurate as possible and consider whether an early instruction of a solicitor will be beneficial to their client and the transaction.

Published: July 2019


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July 2019

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Hayley Bruce