Estate Agency blog

There have been numerous reports in the media about HIPs and the way in which estate agents are handling them. Some of the reports are quite disturbing, including the latest Which? Magazine report for April 2008, where mystery shopping techniques were used to check how estate agents are handling HIPs. It is worth considering what is happening and what the legislation actually requires of estate agents.

There have been numerous reports of estate agents refusing to show the HIP to potential buyers. In some instances estate agents have refused to show the HIP to their seller clients!

In some instances estate agents have simply refused to allow the HIP to be seen without any explanation, in other instances a number of excuses have been reported such as

• The HIP is private to the seller or ‘owner’ of the HIP
• It is illegal to mail a copy of the HIP
• The HIP will be shown when an offer has been made
• The HIP will be made available when exchange of contracts has occurred

All the above reasons are untrue. The legislation was passed in order to ensure that the information contained in the HIP was available to potential buyers at the earliest opportunity. This means when they first enquire about a property.

The duty to provide a copy of the HIP is contained in section 156 of the Housing Act 2004. This requires the ‘responsible person’ (usually the estate agent) to make a copy of the HIP available where a request is made. The copy must be made available within the ‘permitted period’. This is usually 14 days from the date of request.

However, the seller may impose conditions on releasing the HIP. In such a case the 14 days starts when the conditions are complied with by the potential buyer. The conditions allowed are

• The payment of a reasonable charge for a copy of the HIP (but not where an electronic copy is made available, or a copy is viewed at the estate agent’s office)
• The acceptance of specific terms regarding the use and onward disclosure of the HIP documents – the estate agent can only impose such conditions where they result from the seller’s instructions

The estate agent can also refuse to make a copy of the HIP available where

• There are reasonable grounds to believe the person making the request for a HIP cannot afford to buy the property
• It is reasonably believed the person making the request for a HIP is not really interested in buying the property
• It is reasonably believed the person making the request for HIP is not someone the seller would want to sell to

It may be that where media reporters have been trying to get information from estate agents the estate agent has recognised that they are reporters and not interested in buying the property on which the request for a HIP has been made. However, there are numerous other reports of this happening to genuine buyers.

At the moment buyers are likely to be unaware of their rights in this new area. However, if they simply made a complaint to the local Trading Standards Department there is the possibility of the estate agent refusing to supply a HIP being served with a penalty charge notice. The penalty charge is currently £200.

David Hughes

Programme Leader

MOL Property Division

Many of you will have seen that the OFT have issued High Court proceedings against Foxtons regarding their letting agreements with landlords. They are taking the action under the Unfair Terms in Consumer Contract Regulations 1999. The case concerns the way that Foxtons are allowed to charge for work done – or in the OFT’s view not done!

This will be an interesting case and likely to hinge on whether or not landlords are consumers as defined in the 1999 Regulations. The 1999 Regulations at regulation 3 interpret the word ‘consumer’ as follows

‘consumer’ means any natural person who, in contracts covered by these Regulations, is acting for purposes which are outside his trade, business or profession

There is debate within the lettings industry on this point. The general view is that most, if not all, landlords are not consumers, so the 1999 Regulations would not apply. All landlords could be said to be letting the property as a business. Certainly it would apply where landlords have more than one property. It would also presumably apply where a landlord bought a property as a buy-to-let and have only the one property.

There might be a grey area where an owner finds they have to move away for a period with their job and want to let the property while they are away but intend to re-occupy on their return. This type of landlord might well be classed as a consumer.

The 1999 Regulations also exempt certain terms within contracts, known as core terms. Usually price is a core term. The fee charged by the agent is the price in the contract with the landlord. Presumably, therefore, the fee charged, or the method of charging the fee is outside the scope of the Regulations as long as the clause covering the fee is written in plain English.

If the OFT win their case it will certainly shake up the lettings industry and the way that agencies charge landlords for their services. It can only be assumed that if the OFT win that agencies will put up their charges at the outset if they cannot charge repeat fees. We will watch with interest the outcome of the case and will make further comment if necessary.