Beware the internet-only buyer

If you were an estate agent, what would you do if a buyer wanted to make a purchase of a property without even seeing it?

You might commend yourself on the quality of brochures and website. Maybe the website has flash features that allow your users to see the interior of properties in a panoramic view, which in itself is a good thing because it means it cuts down on the number of initial viewings you have to do, if potential buyers can look at a property beforehand and not have to book an appointment to view it.

Technology has significantly improved our lives and sped up processes, and is an advantage that there is less time spent waiting, communication flows faster, and information is more accessible.

Take for example, the conveyancing process. In the days before the internet the conveyancer went about his business and if you wanted to know at which stage a house purchase was at, you’d have to keep ringing or pay a visit to the office. Now the conveyancer can log the stages that have been complete, and you can view a record of work on your mobile device. You don’t have to waste time or money calling the conveyancer, he or she doesn’t have to be distracted from his work, and it is a win-win situation.

Having technology and using it well is also a time saver. Nowadays it is easy to view the interior of properties, and a schematic of the property dimensions before actually setting foot in the property. It cuts out one layer of viewings both for the interested party and estate agent, and because any information about the property can be put online, such as whether it is a freehold or leasehold property, the ground rent, or any information on the vicinity – the estate agents are able to give as much information to buyers, which not only saves them from repeating the same facts over and over again, but also helps by filtering out uninterested buyers (for example, if the property was leasehold and the buyers wanted one with a share of the freehold) and diverting in potential buyers. In the latter case, for example, if a property is within the vicinity of a good school, putting up the information online would help draw in buyers with families.

In the examples above, we have written about the benefits of technology with reference to property sales, but the benefits are equally applicable to lettings. The use of technology accelerates the initial stages of a sales or letting for both an agent and a consumer and for an agent, the people that get in touch thereafter can be said to be considered serious parties. Nevertheless, no matter whether the property is for sale or for rent, there is no substitute for actual viewing somewhere down the line before signing on a purchase. Even people who buy off plan visit the site to acquire a feel for the actual place, one that cannot be obtained from the glitz and glamour of a website or sales brochure.

So it was slightly surprising, even suspicious, when a TPO member agent received emails from a overseas buyer in China, who wanted to make the full asking price on a property, but without having actually setting foot in it.
The estate agent was sought by emails  times. Each time the overseas “buyer” demonstrated an interest in offering the full asking price offer on a property. The TPO member agent asked for personal documentation and when they arrived by email the documents were found to contain a series of potentially destructive computer viruses. Thankfully the member agent had exercised caution and vigilance, and exercised good judgement in not getting swept away by the opportunity of making a quick sale.

The Property Ombudsman (TPO) has issued a warning to all estate and letting agents to act with caution, as fraudulent ‘buyers’ target agents with the latest computer virus scam. It is not entirely dissimilar to the ransomeware viruses that crippled the NHS a few months ago, and there are no limits to which fraudsters will not go to in order to hijack a computer, even to the point of nurturing a business relationship before going in for the kill.

What would you do if you received an unsolicited email from a stranger? Your first instinct may be to google them to see if they exist. But fraudsters will have already done so, and assumed the identity of someone to appear credible. It may be prudent to exercise caution in these dealings.

It is not known what impact the viruses could have had on the agent’s IT system if it had not been identified.

Gerry Fitzjohn, Board Chairman for TPO commented: “Fortunately in this case, the scam was identified and no company or customer details were compromised.  However, this is a reminder to all agents to be both cautious and vigilant. The importance of antivirus software is a given, but it is not a guarantee against computer viruses, so the best defence is also an educated user. If something seems too good to be true, it usually is. We would urge all agents to circulate this warning amongst staff.”

The UK’s quick house sale sector

On 18 April 2013, the OFT launched a market study looking at the UK’s quick house sale sector.

They wanted to find out whether this sector works well for consumers, whether any practices give cause for concern and, if so, how such practices should be remedied. They had also noted potential similarities with the sale and rent back sector and wanted to establish whether similar concerns arose.

Quick house sales can be beneficial to home sellers who want the certainty of selling their property relatively quickly, without trying to sell on the open market. There was concern, however, that some unfair trading practices may prevent home sellers from making informed choices when selling their home. In addition, there may be a disproportionate impact on vulnerable groups, such as those in financial difficulty who need to clear debts and/or avoid repossession, and older people.

Some trading practices may lead to sellers receiving not just a below market value price for their home, but a sum much lower than the amount the provider had led them to believe they would get.

Practices that gave rise to concern included:

•reducing the price offered at the last minute after the seller is financially committed to the transaction;

•making misleading claims about the value of the property or the level of discount to be applied to the sale;

•falsely claiming to be a cash buyer;

•unclear fee structures, for example, imposing an unexpected fee following an initial valuation, as a condition for progressing the service;

•inducing home sellers to enter into agreements that prevent them from selling to other buyers, with severe penalties for breach of contract.

The launch of the market study included a public request for information, seeking to hear from people with experience of this sector, including home sellers, providers, valuation experts, estate agents and debt advisors. They also carried out a survey of providers and held roundtables with providers and with a number of stakeholders. The information received helped them to build up a picture of the sector.

As part of their research they:

Analysed over 160 websites, for information about providers and to see their claims about the service they provide; and reviewed Companies House data, for company and officer information;

Considered 23 provider survey responses (out of 74 providers approached), and held a provider roundtable (attended by 13 companies), for more detailed information about providers and their practices, processes, business models and customer feedback;

Reviewed 111 public responses to their request for information, including 72 home seller complaints, plus follow-up telephone interviews with 20 complainants and analysis of other complaint data, to understand home sellers’ experiences and identify possible breaches of consumer protection law;

Engaged with stakeholders including government bodies, enforcers, consumer bodies and advice services, charities, professional standards organisations and trade bodies, for information that would inform their study;

Organised a roundtable workshop with consumer stakeholders to examine how the quick house sale process affects particular consumer groups and what good and bad business practice looks like;

and obtained HM Land Registry research, to provide data on properties bought and sold within a six month period, and conducted a survey of RICS surveyors, to help estimate the size of the quick house sale sector.

Quick house sale providers are businesses that offer to buy a property or find a third party buyer very quickly, but usually at a ‘below market value’ price.

The OFT have identified almost 120 such providers operating in the UK. It is hard to count them because some providers operate multiple websites. There are probably many more providers, particularly local ones advertising through the local media and by leaflet drops. Not all providers offer the same service:

•some buy properties direct from home sellers, either for resale or to let(when they do this, they refer to them in this report as ‘buyers’)

•some broker sales, that is they seek to introduce home sellers to third party buyers and may take steps around progressing a sale (when they do this, they refer to them in this report as ‘brokers’). Brokers can be instructed by either sellers or buyers, or both. When a prospective seller gives the go-ahead, a broker looks for a buyer from their list of investors, from quick house sale buyers and other contacts, or by advertising the property on the open market

•some identify home sellers and pass on details (or ‘leads’) to other quick house sale providers (they are sometimes called lead generators). Some providers buy some properties and broker the sale of others. Some lead generators may also sometimes broker.

How do providers profit from quick house sales?

•Most buyers try to resell the property as soon as they can for a higher price than the one they paid the home seller.

•Some buyers let out the property and receive a rental income (and sell later).

•Some brokers are paid a fee by the seller (like a traditional estate agent).

•Some brokers are paid a fee by the buyer.

•Some brokers agree a price with the seller and another price with the buyer, and receive the difference between the two prices.

•Lead generators receive a fee from the buyer or broker: a fee per lead (or batch of leads) and/or a referral fee if a deal goes through

From the upfront claims they make on their websites, most providers appear to be buyers.

However, from close examination of their websites and from what providers told us, they believe this may not be the case. Whether the provider is buying or brokering can have implications for both the speed of the sale and the discount on market value.

Brokers have less control over the purchase than buyers: they have to find a third party buyer, one who will pay at least the offer price, and one who can finance the deal quickly. There seems to be a greater risk that home sellers’ expectations might not be met. Home sellers should therefore seek extra assurances that brokers can deliver deals as promised before doing business with them.

Providers that fail to explain their services adequately to home sellers may be in breach of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) for misleading claims and/or omissions in particular. When providers broker, the OFT considers those activities are likely to involve estate agency work (as defined by the EAA), in which case they must comply with the requirements of the EAA and associated legislation.

The service on offer is one key feature to consider when looking at providers. Another is how the purchase will be paid for.

Quick house sale buyers or, in the case of brokers, third party buyers, may pay with cash funds that:

•are available immediately;
•will be freed up once another property is sold;
•will be raised from investors; or
•will be borrowed from a lender.

This too has possible implications for the speed of the service and the final offer price. A buyer with funds available immediately is likely to be in a better position to finalise a quick sale than one that needs to free up funds or secure finance. Problems with funding may cause both hold-ups and an attempt by the provider to renegotiate the sale price. Home sellers should ask questions to clarify whetherthe buyer can pay for the property and will have funds ready on time. Providers, to minimise the risk of a breach of the CPRs, should disclose how the buyer intends to pay for the property. Similarly, in order to minimise the risk of breaching estate agency legislation,brokers should not misrepresent the status of a prospective buyer, which would include their financial standing.

Lead generators are not really providers at all. They do not make deals with home sellers. They are themselves unlikely to be able to deliver either a speedy sale or a particular sale price because those things depend on buyers or brokers. They include them as ‘providers’ only because, from their upfront claims, they are currently hard to distinguish from buyers or brokers and will look like a provider to the home seller. What they actually do is an ancillary service. They attract interest from sellers and sell on the details to other providers.

Not all quick house sale buyers or brokers use lead generators, but some do. Lead generators must comply with the CPRstoo. Their claims, for example about their service, the speed of the quick sale, the offer price and the financial status of the buyer, must not mislead. Lead generators should also check whether they are engaging in any activities that fall within the definition of ‘estate agency work’ under the EAA. If they are, they will need to comply with the requirements of the EAA (and subordinate legislation) when they carry out those activities. If necessary, they should take independent legal advice on this matter.

Flying freeholds: possible arising disputes

Whether you are an estate agent, or seeing to buy a property, it is always a good idea to understand the terms you may encounter during the conveyancing process, not just so that it expedites the process – which, if you are a property hunter, means you spend less time talking to the solicitor who is charging you by the hour – but also so that there is common ground and understanding that prevents any issues at a later stage. It is more difficult to break away at the later stage of the buying process because you may feel you have already invested too much time and money already, and the pressures of time – if you need to have a property to move in to soon – may mean that you have to go along with the purchase even if you are not entirely with aspects of it. Another situation that may arise is that the mortgage lender may not be willing to lend, grounding the whole process to a halt. So while it may seem like a hassle to have to familiarise yourself with these new terms, it is a worthwhile investment

One term that may cause a fair bit of confusion is the term “flying freehold”. Many people assume this to be a case of the freehold of a building being transferable to another party, or having some sort of fleeting existence, but that is not the case. The term actually has some physical connotations. A flying freehold actually refers to a freehold of a property that overhangs another space. For example, if an apartment is built in an overhanging archway, that freehold does not cover the space below the dwelling. The apartment has a flying freehold. But this does not mean you should start getting your tape measure out and calculating the overhang area of guttering and drain pipes. The flying freehold element only refers to spaces which are habitable and space taken up by chattels are not usually considered.

Nevertheless, if you have any doubts our concerns about the possibilities of a flying freehold you should notify your conveyancer so that this can be checked out fully at the start of proceedings. It is also a good idea to mention this to your mortgage lender. It demonstrates to everyone that you are on the ball and proactive!

As an estate agent, it is a good professional practice to inform the buyer if a flying freehold does exist. Yes, while you may argue that the estate agents have an obligation to the seller more than the buyer, it is professional to mention this to the buyer if they are not aware of it, as they will certainly want to investigate it. It would save you time and money down the line and avoid the situation where a potential buyer withdraws or their mortgage lending falls though. And if you do sell a property with a flying freehold, the buyers may come back to you in future if they decide to sell, simply because they know you are thorough in your approach, and, well, you have sold the property before and know it well!

Solicitors, or more accurately in this case, conveyancers, need to be mindful of the possible scenarios that flying freeholds may entail. If you are purchasing a property with a flying freehold, a conveyancer should advise you both on the difficulties which may arise. For example, some mortgage lenders may not lend on a flying freehold. And you must certainly always find out who should bear the responsibilities of repair or how they are divided, as this is almost always an issue that will arise in time. And even if getting a mortgage is not a problem, for example, if you are a cash buyer, a conveyancer should inform you about the existence of flying freeholds simply because while you may think you are relatively unaffected by it, it may affect a future buyer who may have difficulties getting a mortgage for your property, or have reservations about buying it. Your purchase of a flying freehold property may make it harder for you to sell in the future. Enough said, don’t hide your head in the sand, or leave it to the conveyancer or mortgage lender. Knowledge is power!

For a flying freehold to exist, part of the freehold property that is being bought must overhang part of another person’s freehold property, and the overlapping area must be of a significant size, allowing for habitation. In some properties, such as semi-detached ones, this scenario may be fairly common. For example, part of the bedroom of one house may be sited above the lounge of a neighbouring house. A more common example is seen in properties where a room is built on an arch that allows a road through for parking at the rear of the property. If the area that overhangs is a space merely limited to chattels such as drain pipes or guttering, then the property is not said to have a flying freehold; conveyancers speak of these as having a right of ‘eavesdrop’.

But what if you live in a block of converted flats, where one property entirely sits directly on top of another?

If all the owners in the block collectively own the freehold, then the property is said to be a leasehold property with a share of freehold. The flying freehold principle does not apply, but nevertheless, the mutual obligations of property owners mentioned below may still do.

Flying freehold properties have mutual obligations to each other. The upper property should have a right of support from the lower one, while the lower property should enjoy a right of shelter from the upper one. If you live in a semi-detached house where one bedroom is directly over your neighbour’s lounge, then you have responsibilities to maintain your property so that it does not have any impact on your neighbour’s. Your floor is your neighbour’s ceiling, in the overlapping area, and if you do not maintain your own roof, causing your floor to flood, then your neighbour’s ceiling will be adversely affected too. Any major works that you carry out within your own property, for example, for example, in replacing floorboards must also not adversely affect your neighbour or the value of his property.
If you purchase a property with a flying freehold then you also have responsibility to the area under it, particularly with regards to maintenance.

If you have a property that has an area overhung by your neighbour’s property, then while your neighbour has the flying freehold, you have what is known as the creeping freehold. Your obligations to your neighbour above are the same as your upstairs neighbour’s obligations to you. You should not do anything within the confines of your property that will jeopardise your neighbour’s.

Estate agents and conveyancers should always advise buyers on these obligations at the outset to avoid any misgivings or disputes in the future between affected parties.

Most parties with flying or creeping freeholds usually work things out amicably but sometimes relations may sour and lead to dispute.

If the property you have is overhung by your neighbour, are you entitled to go into your neighbours’ property to carry out works? And if such works are enforced, are you entitled to recover the cost from them?

A landmark case regarding flying freeholders was the case of Abbahall v Smee (2002). The property owner with the flying freehold allowed it to fall into a state of disrepair, thereby affecting the property below. Loose masonry was falling onto the public thoroughfare below, affecting visitors to the ground floor property.

The court ruled that the owner of the property with the flying freehold had responsibilities to the party below, although the costs of the roof repair to the flying freehold property were borne in a 75/25 split by both parties as they would equally benefit from the repair.

If your property overhangs another, the Access to Neighbouring Land Act 1992 allows you legal provisions to go to your neighbour’s land to carry out repairs to your property. Of course, a simple word with your neighbour and mutual understanding is usually enough without having to apply for a court access order. But if you have to go the legal route to carry out repair, you will probably have to indemnify the other owner against any loss, damage or injury.
Perhaps a lesson to learn is that if you are buying a property with a flying freehold, or any property for that matter, make sure you can get along with the neighbours!

And what do mortgage lenders make of flying freeholds? Their view of it varies. Some lenders will avoid lending on such properties, while others will consider it only if the overlapping area falls under a certain percentage of the whole property. Some lenders will lend only if there is flying freehold indemnity insurance. Either you or your conveyancer should inform the mortgage lender of the existence of a flying freehold as soon as possible.

A flying freehold property is perhaps best thought of either as one whose structural integrity is dependent on another property, or where that overhangs another property in a way that has bearing on it. Either way, there are implications that property buyers, conveyancers and mortgage lenders should be aware of!

Would you use a buying agent?

What is a buying agent? To use the full term, a residential property buying agent is an individual or a property company that act on the instructions of the buyer to locate a suitable property and negotiate on their behalf. Who uses a buying agent? It could be someone who is an overseas buyer, and who needs the presence of a local, in-country agent to handle such a purchase. But it may also be an individual who is already in-country, but does not want to deal with the hassle of a property purchase.

But why, if you are purchasing a property, would you not want to be involved in its developments? Two main reasons stand out. The first is time – individuals who use a buying agent are usually too busy to handle the property search themselves. Secondly, it is for anonymity – if a well-known person was looking for a property, and wished it not to be widely known, a buying agent affords a level of third-party anonymity.

If you are considering using a buying agent, there are various regulations that would be useful to be aware of.

Associated Services

You are not obliged to use any associated service which is offered by the agent. In other words, while an agent may suggest to you to use their recommended financial adviser or surveyor, you have no need to do so. You are entitled to use your own financial adviser, legal representative, or surveyor. You may think that in using the buying agent’s recommended personnel, the buying process may be sped up because of established relations between the parties, but this may not necessarily be so. And it is good to consider that buying agents may receive kickbacks from such recommendations, so you may find yourself paying higher costs to their recommended service agents, which eventually flow back to the buying agent themselves.

You are entitled to decline such services – don’t let the agent pressurise you into one, or make you feel bad about it. The refusal of such services should also not prejudice any offers or viewings through the agent.

Duty of Care

It is customary that a buying agent must always work in the best interests of their client, that is to say the person who is paying for the agency services. The estate agent should treat, all those involved in the proposed sale or purchase fairly, and with courtesy. If the buying agent or one of his staff, has any personal or business interest in the property, the buyer or seller, must be told as soon as possible in writing. That is to say, if the buying agent, for example, is advising the client to buy a property that the agent has a stake in, this must be made clear at the outset.

Fees and charges

An agent must inform the buyer in writing, before they agree to use his service, what fee (including VAT) is payable and when the fee is due. It must be stated clearly whether the fee is a fixed price regardless of the achieved buying price or whether it is calculated as a percentage based on that achieved buying price.

Illegal / Criminal Activity

Allegations of illegal and criminal activity (e.g. fraud) should be referred to the relevant authority (such as the police) or regulators (such as Trading Standards) who are empowered to undertake enforcement action. The Ombudsman does not have regulatory powers and cannot consider allegations of illegal or criminal activity.

Marketing

The selling agent must describe the property as accurately as possible and not misrepresent the details.

Agents are legally bound under the Consumer Protection from Unfair Trading Regulations 2008 to describe a property truthfully and provide material information to allow potential buyers to make an informed transactional decision. Sales particulars should give a general description of the property and will highlight, for instance, the type of heating, double glazing installed, or appliances or furnishings that may be included in the sale. The buying or selling agent will not have tested any facilities but if they are of particular importance to you it is wise to question the agent further to allow him to and he can ascertain the relevant information from the seller or the sellers agent on your behalf.

Negligence Claims

Negligence is a term with a legal meaning and only a court can decide if an agent’s actions or inactions were negligent. The Ombudsman cannot decide claims of negligence and cannot speculate on what a court may decide. Consumers should seek legal advice if they wish to pursue a negligence claim.

Offers

The buying agent must record all offers received and not conceal, misrepresent, withhold or delay communicating offers. It is the seller who decides whether to accept an offer; to reject an offer; when to stop marketing the property after an offer has been made, and to whom to sell the property to and at what price.

Terms of Business

All buying agents must give their clients written terms of business. The buying agent must clearly explain all fees and charges and tell you if any fee will be payable if you withdraw your instructions to buy the property.

When dealing with the agent you should ensure that you understand:

The fee that will be charged and whether it is based on a sliding scale according to the eventual sale price is at a set amount.
How long the agreement runs for; how you can terminate it and with what period of notice is required.
Whether you will have any continuing liability to the agent for a fee if you do terminate the agreement.

In particular you should:

Realise that when you sign the agreement you are entering into a legally binding contract under which you may be liable for fees.
Ensure that you have read and understood the terms of the agreement and the commitments you have entered into. Do not feel pressured into simply signing it and be aware that if you sign the document in your home or at your place of work you are entitled to cancel it within 14 days.
Make sure that you receive copies of all relevant documents such as the agent’s terms of business.

The Estate Agent

He is instructed by the seller of the property and whilst he has a responsibility to treat any prospective buyer fairly, his client, (the person paying for his services), is the seller. Both selling and buying agents are required to act in the best interests of their clients. They have no control over the legal process but will generally assist in checking on the progress of the purchase and, if agreed, in handing keys over on completion of the sale. Buying agents can also neogtiate on you the buyers behalf if instructed.

The Legal Representative

A Licensed Conveyancer or Solicitor and will progress the formalities of the sale and determine with the seller and the buyer the potential dates for exchanging contracts and completion.

The Mortgage Provider

If you require a mortgage to buy the property you may be dealing with a bank or building society, either directly or through an adviser. The agent is not allowed by law to give you any financial advice but he might refer you to an adviser with which he has links or which is a separate part of the same company. The agent will not have access to the records of the mortgage provider or adviser and has no control over the progress of any mortgage application.

The Surveyor/Valuer

Instructed by the prospective buyer or their mortgage provider and will offer various surveys from a general valuation report to a structural survey. Unless the mortgage provider specifies otherwise it is the buyers choice as to the type of survey undertaken.

Considering a Quick House Sale?

We often run into temporary signages promising quick house sales. While this is a eye-catching solution to those who need to sell their property fast, wish to avoid dealing with solicitors, or cannot afford to hang around for what seems like prolonged periods waiting for details to be finalised, it is advisable best to be cautious – after all, everything has a catch, a string attached somewhere.

In a quick house sale, a business (provider) offers to buy the property or find a third party buyer very quickly. In return, the seller usually accepts a ‘below market value’ price for their home.You should think carefully before opting for such a sale. These top tips should help you when deciding whether you really need or want a quick house sale. If you decide to go ahead, they will help you to choose a provider, spot the things that could go wrong, and understand how to prevent problems.

1. Consider all your options
There may be more options than you think. They might help you to keep your home if you don’t want to sell or to sell at a better price.

2. Take time to find out about the process
What are the pros and cons? How does it compare to alternatives such as using a normal estate agent or negotiating with your lender? Will a quick house sale provider suit your specific needs?

3. Look for the services that work best for you
Not all providers are the same, so look at what different ones can offer. Don’t accept their claims at face value. For example, if the provider says ‘completion in days’ or ‘we pay close to full market value’, ask how often they do this.

4. Check out providers’ credentials
If providers say they have signed up to a code of practice, redress scheme, or are regulated by an official body, check this for yourself. Also check to see what protection the code of practice, redress scheme, or regulation offers you.

5. At each stage, make sure you have the information you need to make informed choices
If you don’t understand something, ask the provider for answers and don’t proceed unless you are happy with them.

• Who is buying the property?
• How will they pay?
• Is there proof that they have funds available?
• When will the sale happen?
• Who is valuing the property and how?
• What is the offer price? Will this change? If so, why?
• If the survey is given as a reason fora reduced offer, ask to see it.
• What fees and charges will you have to pay? Will you have to pay them even if you don’t go ahead with the sale?

We would advise choosing providers who offer you the information listed above without having to be asked for it.

6. Never accept verbal information or promises
Always get the provider to put them in writing.

7. Don’t be pressured into a decision you are not comfortable with
For example, the provider should not require you to use a particular solicitor.

8. Before you sign any agreement, read it carefully and obtain independent legal advice if you are at all unsure

Do you understand what you’re being asked to sign and its implications? Don’t sign an agreement unless you know what you are agreeing to. Also, never be shy about negotiating on price.

9. Watch out for long tie-ins

Be wary about signing any agreement that ties you to the provider for a longer time than you are happy with. If you want a speedy sale, question why a quick house sale provider would need an agreement for more than four weeks.

10. Be honest and accurate when answering questions
Giving incorrect information or leaving important things out is likely to be uncovered later and may cause hold-ups and even reductions in the offer price. In some cases the sale may even fall through.

11. Don’t commit to the sale until surveys and legal checks have been carried out, you have a final offer in writing and you have independent legal advice

Be cautious of making major financial commitments, or other decisions you might regret if the sale did not go through as expected.10. Be honest and accurate when answering questionsGiving incorrect information or leaving important things out is likely to be uncovered later and may cause hold-ups and even reductions in the offer price.

If you are still unhappy, you can:

• Talk to Citizens Advice. They providefree, confidential and impartial advice.Visit www.adviceguide.org.uk or call the consumer helpline on 08454 04050612.

12. What if things go wrong? If you are not satisfied with the provider’s service, tell them and give them a chance to investigate and resolve your complaint.

• If the complaint is about the provider’s advertisements, report the matter to the Advertising Standards Authority. Visit www.asa.org.uk or call 020 7492 2222
• Report the matter to your local Trading Standards Service
• Consider whether to take your own court action if you feel the provider may have: breached the contract, used an unfair term or misrepresented something that was important to your decision to sell to, or through, them. You should obtain legal advice first.

Commercial – Guidance and Information

If you’re one of the many that have ever considered running your own business and working for yourself, you may – depending on the nature of your business – need commercial premises. A commercial premise is a place from where you run your business, and is the opposite of a residential property, although if you work from home (such as some tutors) then the lines can be blurred!

Commercial premises are usually leased initially, although if your business becomes big enough you may wish to buy the freehold or a permanent location. But the assumption is you move from considering leasehold to considering freehold. For many businesses the latter step is one they never make because the outlay to buying a permanent property is too large. But whether you are leasing or buying a commercial property, there is enough jargon to befuddle you at the outset. Fortunately, here is a guide to help you get to grips with the terms.

 

What is “Alienation”?

Alienation is the legal transfer of title of ownership to another party.

 

What happens with “Assignment” of a lease?

Assignment of a lease is where the tenant transfers/sells its interest in the property for the unexpired term of the lease to an assignee.

 

What is an “Authorised Guarantee”?

An agreement an outgoing tenant enters into with the landlord when it assigns its lease to a new tenant. Under the agreement, the outgoing tenant guarantees the performance of the covenants by the new tenant. The outgoing tenant therefore becomes the guarantor for the new tenant.

 

What are Business Rates and who collects them?

Business rates are a business tax for occupiers of non-domestic property, collected and managed by the local council.

 

What is a “Break Clause”? (If you are a football fan, chances are you’ll already know this!)

A break clause (or a ‘break option’ or ‘option to determine’) is a clause in a lease which provides the landlord or tenant with a right to terminate the lease before its contractual expiry date, if certain criteria are met.

 

What is the “Break Notice”?

A break notice is the formal notification that one party wishes to exercise its right to terminate the lease in accordance with a break clause. Notices must be drafted with care, taking into account compliance with any pre-conditions, to ensure the right is successfully exercised.

 

What does it mean to “Contract Out” and why does it happen?

The parties to a lease may, by agreement, contract out of the Landlord & Tenant Act 1954 with the main consequence being to remove the tenant’s rights of renewal, and eligibility for compensation in certain circumstances (e.g. landlord’s redevelopment ).

 

What are “Covenants”?

Covenants in a lease refer to the obligations imposed on each party by the various clauses.

 

What are “Dilapidations”?

Dilapidations are the potential breaches of a tenant’s lease covenants in respect of repair, reinstatement of alterations, and redecoration. These can be raised by a landlord during the term of the lease or at lease expiry.

 

What is an “Estate Charge” and who levies it?

Part of the tenant’s service charge liability relating to the maintenance of the estate on which a commercial property is situated. The landlord normally imposes it on the tenant – think of it as a service charge for commercial properties.

 

What is meant by “Exceptions and Reservations”?

These are areas that would otherwise form part of the property but are not included in the lease.

 

What is “Forfeiture” and who has the right to it?

When a business tenant is in rent arrears or in serious breach of the lease terms, then the commercial landlord will in most cases have the right to forfeit – the right to summarily end the tenancy. The landlord must, however, comply with relevant legislation when exercising this right.

 

Full Repairing and Insuring (FRI) – who is responsible?

FRI is a term used to describe a lease where the tenant is responsible for all repairs and for insuring. The term also applies to the liability for payment of these costs. FRI leases can therefore include terms where the landlord pays for external repairs and insurance and recovers the cost from the tenant usually via a service charge.

 

What is meant by “Gross Income”?

This is one of the terms any business must acquaint themselves with. This is the total current income receivable from a property investment before allowing for any deductions.

 

What is “Gross Internal Area”?

Gross internal area refers to the total area within the perimeter walls of a property and makes no allowance for the space occupied by staircases, walls, etc. This measurement is the standard measurement given for industrial property. It gives you a rough idea of the space available for the running of your business, but if there are prominent features like large walls or spiral staircases, then these will eat into the area.

 

What does “Guarantee” mean?

An agreement whereby a third party is liable to pay the tenant’s debts, or carry out their duties, if the tenant fails to do so. The person that gives the guarantee is the tenant’s guarantor.

 

Who is the Head or Superior Landlord?

The person who is landlord to the tenant’s landlord (see freehold).

 

What are Heads of Terms and why are they necessary?

Heads of terms agreements record the requirements of both the transacting parties in the property transaction. It is designed for both parties to fully understand what they are subject to, and reduce any misunderstandings. The heads of terms form the basis of the eventual contract and will be passed to the parties’ solicitors tasked with drafting the contract or lease.

 

What is Indexation?

The practice of linking tenant payments under the lease to a published index, such as the Retail Price Index (RPI) or the Consumer Price Index (CPI). Mainly associated with service charge payments and rent reviews. This is to ensure that the payments rise in accordance with other societal rates. While fixed payment rates are sometimes used, landlords will more commonly use indexation.

 

What is an Internal Repairing Lease (IRL) and how is it different from an FRI?

Unlike a FRI lease, the landlord retains responsibility and financial liability for the cost of external repairs.

 

Who is the Landlord?

The person who grants the lease or who now has the right to enforce the terms of the lease. Be sure you are aware of how this is different from the head or superior landlord!

 

Why is a Lease necessary?

A legally binding contract between a landlord and a tenant which sets out the basis on which the tenant is permitted to occupy a property.

 

What is “Lease Surrender”?

An agreement whereby the parties bring a lease to an end other than by contractual expiry or use of a break option. This can often involve negotiation of a premium or rely on a mutually beneficial surrender. Lease surrender can occur at the early renewal of a lease, when one lease is surrendered and another one is drawn up.

 

What is a “Lessee”?

The legal term for ‘tenant’.

 

Who is the “Lessor”?

The lessor is the legal term for ‘landlord’.

 

What is the role of a Managing Agent?

A managing agent is the party instructed to oversee the property by the property owner or landlord. Managing agents have varying responsibilities, from maintenance and repair management to rent and service charge collection.

 

What are “Market Rent” and “Market Value”?

Market rent is the estimated amount for which a property could be leased. The market value is the estimated amount for which a property could be sold.

 

What is “Net Income”?

The income from a property investment after deductions for ground rent and non-recoverable expenditure.

 

What does “Net Internal Area” mean?

The ‘useable’ measured internal floor area of a building. It is the gross internal area minus unusable floor areas such as stairwells and walls.

 

How is “Net Yield” calculated?

Takes the assumed or actual costs associated with purchasing the property into account to produce a figure in respect of the relationship between the rental income and the total capital investment.

 

Open Market Rent

The most common basis of valuation at rent review (also known as open market rental value – OMRV). Defined as the rent at which the premises might reasonably be expected to let, in the open market, at the review date, on the terms of the hypothetical lease.

 

Overage – definitely not what you might think!

Overage (also known as ‘clawback’) concerns the right to receive future payments triggered by future events. Achieving planning permission for change of use or development, practical completion of a development, or the sale or lease of the completed development are potential events that could trigger an overage clause in a lease.

 

What is a “Premium”?

The price paid for a lease, in the open market, where one tenant assigns its interest to another, replacement tenant.

 

What does “Quiet Enjoyment” mean?

This is a term entitling the tenant to operate the premises without interference from the landlord.

 

Rateable Value

The assessment required of non-domestic property to represent the rental value at a prescribed valuation date, subject to assumptions about repair on a full repairing and insuring basis.

 

What does “Reinstatement” refer to?

Refers to the tenant’s liability to remove its alterations at lease expiry, reinstating the property back to its condition at lease commencement.

 

Rent

The amount the tenant pays regularly to use the Property.

 

What is “Rent Review” and when does it occur?

A periodic review of rent during the term of a lease. Rent review clauses often require an assessment of market rent at the review date, but some incorporate other factors, such as the movement in the Retail Price Index.

 

What is the Rent Review Memorandum?

Records the outcome of the rent review process, whether the review is settled by agreement or arbitration / independent expert determination. It identifies the lease, the review provisions and both the original and current parties, recording the amount and effective date of any revised rent. It may either be annexed to the lease or retained with each party’s deed packet as a separate document.

 

What is the purpose of the Repair Notice?

Usually taking the form of an interim schedule of dilapidations, the intention of the notice is to highlight breaches of the lease to both the landlord and the tenant.

 

What is the “Schedule of Condition” for?

This is a record of the condition of property at the commencement of a lease. This is so that any damage arising later can be properly assessed.

 

Schedule of Dilapidations

This is a list of outstanding repair and maintenance items that have accrued under the terms of a tenant’s repair and maintenance obligations.

 

Security of Tenure

Unless the parties have ‘contracted out of the Landlord and Tenant Act 1954, tenants of commercial premises have the right to remain in occupation, and to a new tenancy on terms prescribed under the L&TA legislation. Also known as ‘lease security’.

 

Service Charge

Payable by a tenant for services provided in relation to the repair and maintenance of common parts.

 

Who imposes Stamp Duty Land Tax and who pays it?

A government fixed tax, chargeable on the execution of documents, relating to transactions such as leases, agreements for leases and conveyances. The duty is payable by the purchaser or lessee.

 

Sub-letting

Where a tenant grants a new lease for the property, or part thereof, to an alternative occupier, for a period less than the residue of the tenant’s lease.

 

Tenant

The tenant is the person who rents the property from the Landlord. Also referred to as ‘Lessee’ or even ‘leaseholder’.

 

What is the “Term”?

Also known as “Lease Period”, this is how long the property is to be rented for.

 

Transfer of a Going Concern

A mechanism used on the sale of a property investment where VAT is chargeable but not actually payable. It is only applicable where the asset is and remains income producing after the transaction.

 

What is “Vacant Possession”?

A term denoting the empty state of a property.

 

Without Prejudice

A legal term used in negotiations and correspondence meaning that anything said, or offers made cannot be subject to forced disclosure in the event of litigation or arbitration.

Guidance and Information for Residential Leasehold Block Management

Who is responsible for Buildings Insurance?
The responsibility for insurance for the building and common parts will normally fall on the freeholder, but this expense is normally recouped through the implementation of service charges.

What are Common Parts?
Common parts are parts of the building not owned solely by one leasehold occupant. Put simply, they are the common areas such as stairwells, main entrance doors, communal gardens or lifts. The maintenance of these are the responsibility of the freeholder and the cost is shared through service charges.

What is Ground Rent and who pays it?
If you are a leaseholder, it is likely you will have to pay ground rent to the freeholder. Your leasehold covers the cost of your own flat or dwelling; your share of the ground rent is normally divided by the number of flats in the building.

Who is the Freeholder?
The freeholder is also sometimes called the superior landlord. The freeholder owns the building – this includes the individual flats and communal areas. The freeholder leases the individual flats to the leaseholders. If you have bought your flat as a leasehold flat, you will need to renew the lease before it runs out, through agreement with the freeholder.

The freeholder is usually responsible for the maintenance and repairs of the building; however costs for maintenance and repair are usually recovered through service charges. It is not uncommon for freeholders to invoice leaseholders for additional repairs to the building.

Illegal / Criminal Activity
Allegations of illegal and criminal activity (e.g. fraud) should be referred to the relevant authority (such as the police) or regulators (such as Trading Standards) who are empowered to undertake enforcement action. The Ombudsman does not have regulatory powers and cannot consider allegations of illegal or criminal activity.

What is the Lease?
The lease is the official document that sets out the contractual obligations between the freeholder and the leaseholder. If you purchase a property, you are buying the terms of the lease. When a leasehold property is sold and changes hands, the rights and responsibilities of the lease are transferred by the seller to the purchaser.

Who is the Leaseholder?
The leaseholder is the party that is leasing the property subject to the terms of the lease. If you are buying a property on leasehold, unfortunately it is as if you are still renting from the freeholder. You might not be paying rent, but you still have a limited time on your property before you need to renew the lease. Leaseholders should be aware of all conditions set out in the lease. Sometimes the freeholder may grant you a new lease on purchase but it is usually unlikely, because it is easier to manage the leases of all flats if they are concurrent. Leases are usually granted on a 99 or 999 year basis, and it is advisable to renew them before they run down to 20 years, because then the advantage lies with the freeholder. If you are a leaseholder, it is best to negotiate a new lease with your freeholder before that stage.

What does the Letting Agent do?
A letting agent is an estate agent that the leaseholder may instruct to find a suitable tenant. The responsibility of the letting agent may also extend to the management of the property in the absence of the leaseholder. In other words, a leaseholder who has bought a property may not necessarily reside in the property, preferring to rent it out. The leaseholder may ask a letting agent to look for a tenant. The responsibility for dealing with the freeholder nevertheless still lies with the leaseholder. The letting agent is merely the intermediary between the tenant and the leaseholder, and neither the letting agent nor tenant should ever have to deal with the freeholder.

What is a Resident Management Company and what does it do?
If a group of leaseholders intend to amend the management of their property, either through themselves, or through the formation of a new company, they have a legal right to buy the share of their freehold. The Commonhold and Leasehold Reform Act 2002 makes provisions for the governance of a freehold to a company set up by the leaseholders, or to the leaseholders themselves. This allows leaseholders as a group to decide the management arrangements for the building. This is particularly useful if the current leaseholders feel that the management of their property is not to their satisfaction – e.g. if the maintenance of common areas is not frequent, or if freeholders are not seen as being pro-active – and would prefer to have more control over how the property is managed.

How is a Residential Leasehold Management Agent different from a Residential Management Company?
A residential leasehold management agent manages the company and is normally appointed by the freeholder or the resident management company. The fees for day-to-day management are footed by the leaseholders as part of the service charges. If there is an occasion where major works are anticipated, an additional fee may be levied by the agent, and each leaseholder may have to account for a percentage of the total cost of such works.

What is a Residents’ Association?
In the case that leaseholders do not own a share of the freeholder, they may consider forming a Residents’ Association to liaise with the freeholder on such matters. Residents associations are made up of members from the different properties, and have responsibilities and rights, such as the entitlement to be consulted on certain matters such as the appointment of managing agents.

What are Service Charges and who pays them?
Service charges are paid by the leaseholder to the freeholder and usually cover the maintenance of communal areas. The lease normally sets out details of what can and cannot be charged by the freeholder. The proportion of the charge may be divided either equally among the number of flats, or by ground area.

The costs of services should be reasonable and in the event that leaseholders feel they are being unreasonably charged, there is the avenue for them to challenge perceived unreasonable service charges at the First-tier Tribunal (Property Chamber).

Why have Reserve Funds?
A reserve fund, also known as a sinking fund, is a fund from previous accumulated service charges for the payment of emergency repairs or other major works. Many leases allow the freeholder to collect sums in advance for such emergency repairs, or to alleviate the higher cost of future works. The sinking fund or reserve fund is usually capped at a certain amount – that is to say, once it has reached a certain figure – so once that has been attained the service charges for future years may be reduced.

Who has the Right to Manage?
Under the Commonhold and Leasehold Reform Act 2002, leaseholders can have the option of deciding who the management of their building should lie with. If at least half the leaseholders agree about the future managements of their building, then the freeholder cannot legally obstruct the process. That is to say, if leaseholders decide to take on the management of their building, or decide to instruct a managing agent in place of the freeholder instead they are legally entitled to do so if more than half of them agree.

What rights do Tenants of Leaseholders have?
While the block management agent will act in the best interest of their client – usually the freeholder or the leaseholders – they must treat any tenant of a leaseholder fairly and with courtesy. If in doubt, the block management agent should refer to the lease as a reference.

Buying a property? Some information for buyers

Buying a property can be like navigating a minefield. Here is some information you should know when considering a purchase.

Access
If the agent holds the keys, agency staff should accompany those who are viewing and anyone else requiring access, unless the seller gives authorisation to the contrary.

Advice
An agent will offer appropriate advice, explanations and assistance to all regardless of age, race, religious belief, gender, sexuality, ethnicity, or disability.

However, bear in mind an agent’s duty of care is to his client.

Agency Agreement
Types of agreement the agent may offer:

Sole agency which means that if contracts are exchanged with someone who your agent has introduced to the purchase, the agent will be entitled to the fee.

Sole selling rights which means that if contracts are exchanged with someone who your agent has introduced or was introduced by another agent or with someone you yourself introduced during the agency period the agent will be entitled to a fee.

Multi agency which means that you have instructed a number of agents and agreed that the agent who introduces the buyer to the purchase will be the one who is entitled to the fee. Note that multi agency fees are generally higher than for a sole agency.

Ready, willing and able which means that if someone is demonstrably ready, willing and able to purchase your property (even if an exchange of contracts does not occur) then the agent will be entitled to a fee.

Ensure that you understand:

The fee that will be charged and whether it is based on a sliding scale or a fixed amount.

How long the agreement runs for; how you can terminate it and with what period of notice is required.

Whether you will have any continuing liability to the agent for a fee if you do terminate the agreement.

The options open to you regarding the preparation of the Energy Performance Certificate (who will supply it and the cost).

The arrangements for boards and whether the agent will accompany all viewings or is expecting you to conduct some or all of them.

In particular you should:

Understand that you when you sign the agreement you are entering into a legally binding contract under which you may be liable for fees.

Ensure that you have read and understood the terms of the agreement and the commitments you have entered into. Do not feel pressured into simply signing it and be aware that if you sign the document in your home or at your place of work you are entitled to cancel it within 14 days.

Make sure that you receive copies of all relevant documents such as the agreement, terms of business and the final sales particulars after you have approved them in draft form.

Associated Services
You are not required to use any associated service which is offered by the agent. You are entitled to use your own financial adviser, legal representative and surveyor. Refusal of additional services should not prejudice any offers or viewings made through the agent.

If the buyer accepts services offered though the agent, the agent must inform the seller in writing of those services.

Buying a Flat
When buying a flat the estate agent should provide you with information such as the level of services charges. Further information can be found in the TPO Code of Practice for Residential Estate Agents and here.

Duty of Care
An agent will always work in the best interests of their client, that is to say the person who is paying for the estate agency services (usually the seller). An agent should treat all those involved in the proposed sale or purchase fairly and with courtesy. If the agent or one of his staff has any personal or business interest in the property, this must be divulged as soon as possible in writing.

Energy Performance Certificate
The agent should advise the seller about his obligations to obtain an energy performance certificate, prior to marketing begining.

Buyers can ask to see the energy performance certificate for the property.

Fees and Charges
An agent must inform you in writing, before you agree to use his service, what fees (including VAT) are payable and when they are due. Fees must be clear and transparent.

Financial Checks
An agent will ask sellers to provide proof of identity, as required by the Money Laundering Regulations 2007. Buyers will be asked for similar information, along with details of their funding for the proposed purchase at the point an offer is made.

Illegal / Criminal Activity
Allegations of illegal and criminal activity (e.g. fraud) should be referred to the relevant authority (such as the police) or regulators (such as Trading Standards) who are empowered to undertake enforcement action. The Ombudsman does not have regulatory powers and cannot consider allegations of illegal or criminal activity.

The Legal Representation
A licensed conveyancer or solicitor and will progress the formalities of the sale and determine with you the potential dates for exchanging contracts and completion.

The Mortgage Provider
If you require a mortgage to buy the property you may be dealing with a bank or building society, either directly or through an adviser. The agent is not allowed by law to give you any financial advice but he might refer you to an adviser with which he has links or which is a separate part of the same company. The agent will not have access to the records of the mortgage provider or adviser and has no control over the progress of any mortgage application.

Marketing
The agent must describe the property as accurately as possible and not misrepresent the details.

Agents are legally bound under the Consumer Protection from Unfair Trading Regulations 2008 to describe a property truthfully and provide material information to allow potential buyers to make an informed transactional decision. Sales particulars should give a general description of the property and will highlight, for instance, the type of heating, double glazing installed, or appliances or furnishings that may be included in the sale. The agent will not have tested any facilities but if they are of particular importance to you it is wise to question the agent further and he can ascertain the relevant information from the seller on your behalf.

Negligence Claims
Negligence is a term with a legal meaning and only a court can decide if an agent’s actions or inactions were negligent. The Ombudsman cannot decide claims of negligence and cannot speculate on what a court may decide. Consumers should seek legal advice if they wish to pursue a negligence claim.

Offers
The agent must record all offers received and pass a written copy of the offer promptly to the seller. The agent must not conceal, misrepresent, withhold or delay communicating offers.

The agent should confirm your formal offer in writing to you and whether the seller has accepted that offer.

It is the seller who decides whether to accept an offer; to reject an offer; when to stop marketing the property after an offer has been made, and to whom to sell the property to and at what price. The agent can only guide the seller in this regard, it is not his decision. The agent is working for his client, the person selling the property.

Pre-Contract Deposits
As a general rule, estate agents should not take pre-contract deposits. However, in the case of new home sales, agents may take into account specific instructions from sellers. If a deposit is taken, then a written receipt must be given, and the circumstances under which the deposit is held and any interest accrued are refundable, must be clearly stated in writing. Unless the agent’s client has provided written authority, agents should not deduct any costs and charges from any client’s money. In Scotland, agents are not allowed to accept pre-contract deposits.

Role of the Estate Agent
He is instructed by the seller of the property but has a responsibility to treat any prospective buyer fairly.

The agent is required to act in the best interests of his client. The agent will ususally conduct a market appraisal, draft sales particulars, ensure an energy perfomance certificate is in place, agree a marketing strategy and undertake viewings, whilst receiving and passing on offers. The agent has no control over the legal process but will generally assist in checking on the progress of the purchase and, if agreed, in handing keys over on completion of the sale.

‘For Sale’ Boards
The agent must ask if the seller wants a ‘For Sale’ board to be displayed and ensure that only one board of the correct size is displayed for each property.

Boards must not be displayed in areas where they are not permitted.

Sale by Tender / Buyer Pays Fee
Sale by tender/buyer pays fee is an alternative commercial practice that has developed across the industry with a number of agencies employing it as a way of attracting business by offering sellers their agency services for reduced or zero cost fees. Under this approach the agent enters into an agreement with a seller to market a property whereby offers are submitted through a sealed bid/tender process.

Prospective buyers submit their offers to the agent having entered into an agreement to meet the agent’s fee liability which is over and above the agreed price for the property.

Sealed Bids
The process whereby the agent asks all potential buyers to make a ‘sealed’ offer to be received by a certain date and time. The agent will ‘open’ the offers at the designated time and advise the seller accordingly. The seller will then choose which offer to accept. The seller and the buyer retain the right to withdraw from the purchase thereafter.

Survey and Valuation
The surveyor or valuer will be engaged by the prospective buyer or their mortgage provider and will offer various types of surveys from a general valuation report to a structural survey. Unless the mortgage provider specifies otherwise it is the buyers choice as to the type of survey undertaken.

Terms of Business
All agents must give their clients written Terms of Business. The agent must clearly explain all fees and charges and tell you if any fee will be payable if you withdraw your instructions to sell the property.

Viewings
The agent must seek and act on the seller’s instructions about how viewings should be conducted.

Reasonable notice should be provided to the occupants of the property, prior to the viewing taking place.

If you can think of anything else we may have left out, leave a comment and let us know!

The Dispute Resolution Process

What is the purpose of The Property Ombudsman service?

It is a dispute resolution service between consumers and property agents. The advice offered by the property Ombudsman is free, impartial and independent.

Property agents are encouraged to sign up with the property Ombudsman for various reasons. A membership with it shows an agents’ professionalism in the sense that they are committed to the professional standards, thereby increasing the customer’s confidence in them.

In the event of a dispute, the ombudsman service saves both property agents and customers time and money through the cost of legal fees and legal procedure. The advice is free. And the fact that the infrequent aspects of disputes are taken up by the Ombudsman means that agents are free to concentrate on the real aspects of their business, in marketing, maintaining, renting and selling property.

Complaints Procedure
As one of the terms of membership, property agents have to have some formal complaints procedure in place for customers who may be dissatisfied with their work for some reason. This procedure must of course be in writing and should not only explain how customers can file a complaint, but also that if they are dissatisfied with how it has been investigated, they can take their complaint on to the Ombudsman. It goes without saying that this procedure must be made available to the complainant upon request.

The Code of Practice detailed by the terms of membership has specific timescales for complaints resolution that estate agents must adhere to. In the event of a dispute the Ombudsman will use these established timescales for reviewing if complaints have been dealt satisfactorily by the agent.

When a complaint is received by an agent, the person receiving it should make some form of acknowledgement so there is a record that the complaint has been noted at the property agent’s. It gives a “start date” from which resolution can begin.

If a complainant has been made either by telephone or in person, a record including important details such as the date and time must be noted. At this point the complainant should be provided with a copy of the in-house complaints procedure.

If the complaint has been made over the phone, this copy of the complaints procedure should be sent to them.

If the complainant has visited to make the complaint in person, a copy should be given to them immediately.

At this stage the emphasis is on recording issues formally, so that at a later stage there is no ambiguity over the nature of the complaint, or what was said by whom.

In both cases property agents should request that the complaint be put formally in writing, giving the name of the individual to whom the complaint should be addressed, so that the matter can be promptly investigated. An acknowledgement of the written complaint should be despatched within three days, while the timescale for an investigation and for providing a full response should be within fifteen working days.

If the latter timescale is unable to be met, then the complainant should be provided an estimate of how long it would take for the investigation to be complete.

It is a good practice that complainants have to file their complaints in writing. Not only does this provide a record of the specific issues they are seeking redress over, so that the property agents and – if necessary – the Ombudsman can investigate, it also is a way of ensuring that the complainants are clear themselves over the particular issues that have led them to complain in the first place. In addition, the work of having to formally file a complaint is a way of ensuring that the matter is one of signifcance.

What can count as a complaint?

A complaint could both be over a belief of inaction or malpractice. This means a consumer can make a complaint over something they believed a property agent should have done but didn’t, or one in which the action was wrong. For example, a tenant could make a complaint over property repairs that were promised but have yet to happen. Or the same tenant could make a complaint if repairs to a property were not up to standard.

Any complaint received should be treated seriously even if the property agent’s general feeling is that is has no weight. The complaint must be dealt with in accordance to the above procedures, and the agents must remember to follow procedure.

Property agents must remember to request that verbal complaints are put to them in writing.

A complaint should be dealt with by a senior member of staff who was not directly involved in the transaction. This ensures that there is no bias in the investigation. If the matter remains unresolved after fifteen days, another review should be sent up the chain to the Managing Director or Senior Partner or Principal. Similarly, this person should have had no previous involvement to ensure impartiality in the process.

But what about the case of practitioner firms, where one person runs the whole show? The sole practitioner must clearly state to the complainant and later the ombudsman (if the matter is subsequently referred) the level of their involvement in the matter to ensure that the level of impartiality is set out from the onset.

 

In some cases, property agents may wish to make some financial recompense towards the complainant to make restitution in the matter. The goodwill offer should always be appropriate to the matter, as an offer that is desultory only serves to inflame tensions.

The Ombudsman always encourages quick resolutions of disputes, because it is a positive process from which both parties can move forward. This does not mean, however, that the Ombudsman always encourages financial recompense. But in cases where complainants file a dispute because of work not done, or not up to standard, a goodwill offer to make good the matter may be a more healthy way forward for both parties, rather than be dragged into legal matters where the time and energy spent trying to apportion blame and responsibilty may outweigh the size of the claim.

If the complainant accepts the goodwill offer in full and final settlement of all complaints, the Ombudsman will consider the matter closed and settled.

However, if a complainant does not acceptable the goodwill offer, either because it is not appropriate to the size of the matter in dispute, because he or she feels that the property agent has not addressed the complaint fully, the matter can be referred to TPO. It some cases where both parties indicate a willingness to settle, but are finding difficulty in reaching a settlement, the Ombudsman may be able to mediate, subject to the approval of both parties. Neither party has to accept this, and in this instance the complaint will proceed to a formal review.

 

If – in the initial instance – TPO is contacted before complainant gives the property agent a chance to resolve their problem in accordance with their complaint procedures, TPO will refer them back to the agent to give them a chance to resolve the matter first.

After fifteen working days, the investigation should be complete and a final viewpoint letter should be issued to the complainant. The purpose of this final viewpoint letter is to provide a written statement which clearly expresses the property agent’s final view on all the complaints raised, and should include mention of any goodwill offers made.

Additionally, it should make the complainant aware that they may refer the matter to TPO if they feel the matter has not been resolved. The final viewpoint letter from the agent should also advise complainants of the timescale for bringing a complaint to TPO.

The final viewpoint letter is a first summative stage of the complaints process. And while it is a summary of the interactions between property agent and complainant, it can be said to form the starting point of TPO’s investigation, if the matter is passed up the chain. It would be easier for TPO, hence, to see that a final viewpoint letter has the date when the complainant has completed the in-house complaints procedure, and what the agent tried to do to clarify the issues considered under that procedure. It should also advise the complainant of subsequent options.

The final viewpoint letter should be headed as such, so it is clear to the complainant that they have completed the procedure, and if they wish to pursue the matter further, they have to go to TPO.

If fifteen days are not enough for the property agent to investigate the complaint, and if progress in the investigation has not been forthcoming, the Ombudsman can take up the complaint even without a final viewpoint letter.

 

The assumption so far in the above is that the complainant is a tenant and the dispute is against the property agent for work not done or work not done to an acceptable standard. But the fault may not necessarily always be entirely of the property agent. Sometimes a complainant, the tenant, may file a complaint but a dispute may have arisen directly or indirectly of certain actions, such as when the tenant has not paid fees such as rent. In cases where there are outstanding fees, the Ombudsman will make the complainant aware that legal action for recovery is possible and within the legal rights of the property agent, and the Ombudsman will suggest that the fee, or any uncontested part of it, is setlled on a “without prejudice” basis.

If property agents are considering legal action to recover fees under a contract, the Ombudsman may either escalate the case for review before the court date, or suspend the review pending the court decision. In the latter case, any subsequent review will only deal with aspects of the complaint not determined by the court, as the Ombudsman does not override and cannot override any matters dealt with by the court.

Property agents need to submit a copy of their company file, which contains certain documentation commonly used to review complaints is listed here. These are confidential and are not released to the complainants, unless the Ombudsman feels copies of relevant documents not previously seen by the complainants may be necessary for them to understand the reasons for his decision – in which case, it is legal for the complainant to see the relevant information.

Upon review, if the Ombudsman supports the complaint, property agents have 14 days to either accept, or appeal the decision. During this time property agents may appeal if they consider that there is a significant error in fact or new evidence that will have a material effect on the decision can be produced.

Both agents and complainants will be informed of the result of any further consideration.

The complainant is given 28 days in which to accept, not accept or make their own representation.

If the Ombudsman does not support the complaint, the complainant will first be contacted in writing about the proposed decision, and given 28 days to produce significant new evidence with bearing on the case or show there is a significant error in fact in the judgement.

The Ombudsman will consider any further representation and if the complainant accepts the proposed decision it becomes legally binding. But if the complainant does not respond to the proposed decision any award will then lapse and the case will be closed Nevertheless, complainants will be free to pursue their complaint elsewhere, but, the Ombudsman’s decision will no longer valid and cannot be used to support any further action.

For those who are new to the property ombudsman service, it is akin to a small  claims tribunal for matters around property.

The property ombudsman aims to mediate between smaller disputes outside of the court, thereby resolving them more quickly and freeing up court time.

Even though the property Ombudsman may make recommendations for awards up to twenty-five thousand pounds, the  average compensation figures were around three to six hundred pounds.