Under the Consumer Protection Regulations (CPRs), estate and lettings agents are already under obligations to disclose certain material information to consumers about residential properties. However, the National Trading Standards Estate and Lettings Agency (NTSELAT) recently issued additional guidance to assist agents further by setting out examples of the types of information that are to be included in listings.
While useful, the requirement to disclose additional information this will inevitably lead to an increase in errors, creating new exposures under agents’ professional indemnity insurance (PII). Failure to comply with CPR requirements – and by extension the new NTSELAT guidance – could result in fines, penalties, or potentially even prosecution and imprisonment.
Agents’ obligations under the CPR
Types of material information and the requirement to disclose it falls under the CPRs in three key categories (Part A, B and C). Part A came into force in 2022, and Parts B and C came into force more recently, in November 2023. Where required information is not available or provided by agents, then this must clearly be stated on a listing along with the reasons why the information is not available.
It’s important to note that new-build and auction properties are also covered by this requirement. Even where the information is negative or could have a detrimental effect to the relevant property, it still must be disclosed. The requirements are not just restricted to purchasing a property or residential transactions, but also to lettings.
What is material information and who is responsible for providing it?
Material information is any information that is likely to affect the decision of the average consumer in relation to a property transaction, to assist them in making an informed decision.
Checklist
Examples* of the types of information that could fall under the relevant categories:
Part A Key details that will impact the consumer financially | Part B Details that will be applicable for every property | Part C Details that may apply depending on the property |
Property Purchase/Rental Price | Utility Information and Costs | Building Safety (e.g., Cladding Use/Remediation Work Detail) |
Deposit Amount and Payment Terms | Parking Information and Relevant Restrictions | Flood or Coastal Erosion Risk and Previous Issue Details |
Service Charge Amount and Payment Terms | Broadband/Network Coverage and Connection Information | Rights and Restrictions – Covenants/Easements |
Rent Review Period Information and Dates | Construction Characteristics or Type (e.g., thatched roof) | Planning Permission Details or Proposal for Development |
Tenure Information (Freehold/Leasehold) | Number and Type of Rooms (floor plans/measurements) | Details of Accessibility Adjustments to the Property |
Council Tax Band and Rate | Building Materials Used | Coalfield or Mining Area Risks |
* This is not an exhaustive list and is to be used for indicative purposes only
Agents must ensure this information is included in listings, but they are not expected to have the expertise to be able to get and/or have all of the relevant information. Instead, agents should encourage the seller to instruct specialists (like a conveyancer) early in the transaction to be able to assist in obtaining the required information.
Listings that don’t have the required space to list all of the information (such as flyers, magazine adverts and social media posts) can contain only Part A information, along with a link or details of where other relevant information from Parts B and C (if applicable) can be found. If there’s a listing in a magazine and there’s been a change, then agents should print an insert with the updates and slip that into the magazine.
The CPRs don’t apply to landlords if they’re not classified as a business. However, it’s still good practice to provide as much information as possible on listings for the reasons set out below.
It’s important to note that the requirements only apply to new listings, and agents don’t need to go back and update old listings. However, where new material information comes to light, then the agent needs to go into that listing (whether it’s a new or old listing) and make the relevant amendment(s).
Positives and potential issues arising out of the requirements:
Positives of NTSELAT requirements | Potential Issues of NTSELAT requirements |
Generally, saves time in not having to request further information or submit further enquiries with the seller/landlord. This can lead to quicker times for a transaction to complete, resulting in agents and service providers (i.e., conveyancers) receiving their fees quicker. | Marketplaces (e.g., Rightmove/Zoopla) might not yet have the boxes or options for all of the material information required. Recommendation: Regardless of these fields being available now in listings through marketplaces, agents are advised to insert the relevant information in free text boxes instead. |
Encourages sellers/landlords to engage specialist third parties (e.g., conveyancers or lawyers) early on in the process. | The initial time spent for listings will be longer due to agents having to collate the required information and potentially having to wait for the information to be received. There will be additional exposure and liability for agents where they receive correct information but make an error in presenting it (i.e., omissions, copy and paste errors, unintentionally ambiguous text etc). |
Availability of key information up-front means that consumers are more likely to pick up an issue that is potentially a deal-breaker early on in the process and therefore avoid time spent pursuing a property that they don’t end up completing. There is less chance of a transaction falling-through at the final stages due to new key information coming to light. | Potential additional liability where material information provided is inaccurate or out of date and is relied-upon by a buyer/renter. Recommendation: It’s important for agents to keep detailed notes and files of the research and investigative work carried out to obtain the information and to also ensure that information is regularly checked and updated where relevant – this could be due to a search only being valid for a certain period of time, changes to the circumstances of the property that need updating or where there is a sensitive issue that the seller/landlord has played-down or not fully disclosed). |
Overall, a smoother transactional process which results in greater client satisfaction. Negative perceptions of the sector are reduced as fewer buyers perceive themselves to have been misled in the sales process with a consequent reduction in negative commentary on the sector. | There may be additional costs involved in having to verify certain information that is provided (desktop searches/conveyancers etc) to ensure that it is accurate. |
Failure to comply with the requirements may lead to:
Initial complaints in accordance with the relevant firms’ internal complaints procedures
Escalation to The Property Ombudsman or Property Redress Scheme (depending on membership) which may result in the issuance of a fine or penalty
Investigations for criminal offences that could lead to the issuance of a warning, requirement for the agent to provide an undertaking, or potentially prosecution and imprisonment
NTSELAT may issue a warning order or prohibition order for a breach of the CPRs
Insurance and reputational considerations:
The CPRs are not new, but the additional guidance is likely to be persuasive to the courts and other bodies in considering whether an agent has acted to an acceptable standard. If the guidance has clarified requirements such that more information is now needed in listings, the frequency of transactions means that the number of errors will inevitably increase.
The ramifications of administrative errors around information provided are serious. The exposure under professional indemnity insurance (PII) correspondingly increases, but while a PII policy may cover a liability claim in the civil courts, fines and penalties are usually excluded under PII. Fundamentally, an insurance policy cannot financially indemnify a custodial sentence.
It’s important to be aware of the guidance and ensure compliance with it to avoid increasing PII costs, let alone any criminal sanctions. Agents are also likely to be exposed to reputational harm where failure to comply contributes to unsatisfied clients and loss of business.
For more information, please visit our Professional Indemnity Insurance (opens a new window) page, or contact:
Tina Kooner Dhillon, Advisory Contracts & Technical Specialist, Vice President
E: tina.dhillon@lockton.com (opens a new window)
Further Guidance:
NTSELAT: Material Information - National Trading Standards (opens a new window)
RICS: Material information – what to know and what happens next (rics.org) (opens a new window)
