What Are an Estate Agent’s Legal Obligations to Buyers in South East London?

Can you trust the information you receive from estate agents as a buyer? While estate agents work for the sellers, they also have clear legal obligations to potential buyers – and these rules cover everything from property listings to offers.

Buying a property in Canary Wharf, Canada Water or Rotherhithe represents a significant financial outlay, and it’s not the time to wonder what’s going on behind the scenes. In this article, we explain exactly what an estate agent’s legal obligations to buyers are, and clear up some common queries.

What does an estate agent do for a buyer?

As a buyer, the estate agent will help you to make an informed decision about whether or not to buy the property. They will set out information in the listing, arrange (and usually lead) your viewing and if all goes well, pass your offer to the seller.

Do estate agents make money from buyers?

Yes and no. Estate agents’ commission is paid for by the sellers, but they may get a referral fee from mortgage brokers or surveyors they recommend. You don’t have to use these services, and the estate agency must be upfront about the fact that they can earn from these.

Estate agent duties & obligations to buyers

1. Duty to Act Honestly and Not Mislead (Consumer Protection Laws)

Under the Consumer Protection from Unfair Trading Regulations 2008 (CPRs), estate agents are legally bound to provide full, honest information. The new Digital Markets, Competition and Consumers Act 2004 toughens up the rules further, putting more emphasis on offering the information in property listings from the outset. If they publish an advert for the property, it must also meet the British Codes of Advertising and Sales Promotion and Direct Marketing.

2. Duty to Disclose Known Material Information

Estate agents have to give an accurate description of the property – even if that includes a low energy performance certificate (EPC) score, extra costs, or recent flooding event. Hidden problems could easily lead to complaints of legal action in future if the reality doesn’t match up to the description. For this reason, any facts could influence a buyer’s decision to view or purchase a home must be made available. Key information they should disclose includes:

• Room size
• Number of rooms
• Freehold or leasehold status
• Council tax band
• Length of lease
• Planning permission and planned developments
• Structural information like subsidence
• Flood risks
• Neighbour disputes

However, there’s no substitute for commissioning a survey and finding out the full facts from your solicitor’s searches. Remember, the buyer may have held back details, or they may simply be unaware.

3. Anti-Money Laundering (AML) Compliance

Where large sums of money are involved, money laundering are usually tight and the property market is no exception. Estate agents have to comply with the Money Laundering Regulations 2007, for example, by seeking proof of identification.

4. Fair Treatment (Professional Standards)

All prospective buyers must be treated fairly in line with the Property Ombudsman Code of Practice. These industry rules set out estate agents’ legal obligations to buyers and sellers, every step of the way. Estate agents who ignore them can face serious consequences.

5. No Discrimination

They can’t discriminate against anyone because of their race, gender or financial position. Estate agents are obligated to pass on offers to the seller equally, so they can’t delay or misrepresent any offer from a potential buyer.

6. Obligation to Belong to a Redress Scheme

You may not realise that all estate agents have to belong to a property redress scheme. This allows buyers to pursue impartial dispute resolution or make a complaint if the estate agents acted contrary to the rules.

What estate agents are NOT legally allowed to do for buyers?

A good estate agent is not allowed to show bias towards a favoured buyer. That includes buyers who choose the estate agent’s own provider for mortgage or legal services.

Can an estate agent act for buyer and seller?

Estate agents can offer surveying, conveyancing and mortgage services to buyers, but when it comes down to the property sale itself, the estate agent works for the seller. On the other hand, someone who is buying and selling a property at the same time may sell through the agent, and buy a property marketed by them too.

Do estate agents have to tell buyers about other offers?

Estate agents must tell buyers if the seller has already accepted another offer before you view the property. With the seller’s permission, they can also mention previous offers that the seller has rejected. They certainly can’t lie about offers to buyers, or paint a misleading picture.

Estate agents are all governed by the same legal obligations, but not every agency is the same. If you are looking to buy a property in Southwark, Bermondsey or Lewisham, our experienced team at Oliver Jaques will be glad to help. Contact us today to start your search.