A buyer purchasing a property next door to a pub withdrew after discovering that it had applied for an extension to its licensing hours.
The agent had made the buyer aware of the pub, but not the pub’s application to extend its opening hours to midnight on Friday and Saturday nights. The application was unsuccessful.
The buyer withdrew because of the prospect of future applications to extend opening hours.
The agent said they were not aware of the failed application.
The case went to arbitration at the Property Redress Scheme, which held that the agent had failed to provide the buyer with the information he needed to make a fully informed decision.
The ruling said that the agent should have undertaken reasonable checks, and that there had been a lack of due diligence.
However, the buyer had provided no evidence to show material loss, and a small compensation of £100 was awarded to the buyer.
The case is highlighted in the PRS annual report for last year and emphasises the importance of Consumer Protection Regulations.
The report shows a 33% increase in membership over the year before and a 40% rise in formal complaint notifications.
At the end of 2016, a total of 5,259 agent offices (31% sales, 79% lettings) had joined the PRS, with a further 227 property professionals such as inventory clerks choosing to join the scheme to promote best practice within their organisation.
Total membership of the scheme currently stands at more than 7,000 members, with almost 700 UKALA (UK Association of Letting Agents) members now having access to PRS membership following the announcement of a formal partnership in October 2016.
Sean Hooker, head of redress for the PRS, says in the report that the rise in complaints can partly be attributed to overall growth of the scheme, but he believes it also indicates an upward trend in consumer awareness of the complaint process.
The most common causes for complaints were property management (29%) followed by deposits (27%) and problems with rent (15%). Service and fees both resulted in 6% of complaints. Tenants made up the majority of complaints at 51%, followed by landlords at 35%, leaseholders at 8%, buyers at 3% and sellers at just 1%.
The PRS awarded a total of £152,819 in compensation with the average amount awarded being £375.27.
Hooker said: “Although formal complaints have risen, so too has the number of complaints resolved at the early stages of our process.
“Around 40% of our cases are resolved at recommendation stage and 99% are dealt with in less than 90 days from receiving the initial complaint through to a decision.
“We continuously look at improvement and initiatives to increase the effectiveness and delivery of our service. We hope that the most recent introduction of our online complaint system will further reduce the average time to complaint resolution.”
The PRS is operated by insurance firm Hamilton Fraser, which also runs MyDeposits. The PRS is the newest of the redress schemes, starting in 2014.
This is ridiculous, when does the blame about any due diligence fall on someone else bar the estate agent. I forsee a future where a buyer blames us for not knowing that his new next door neighbour was going to buy a dog 2 years down the line, and that its barking would annoy them
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Absolutely nuts. The information that the buyer needed would have been in the public domain and probably also posted to a lamppost outside the pub. Anyone buying a property next to a pub (or any commercial property) should use their common sense. Very bad decision by the PRS.
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I don’t understand the PRS verdict. Surely if you consider buying a property next to a pub you can expect the licencee to apply for an extension at some future date? Opportunist compo claim methinks.
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So are we now expected to check the planning history of all the neighboring properties, and to check that register daily in case something new has come up?
Or does it just apply to houses next to pubs?
I’m all for due diligence but what an odd decision.
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Surely checking planning applications is the job of a solicitor? SEARCHES.
It’s not like the agent covered up information.
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Ummmm … Sadly the local search won’t reveal planning applications that don’t affect the specific property.
We used to do plansearches before the courts decided that they needed such close scrutiny and the rise of permitted development meant that determining whether a neighbour was going to extend became a case of crystal ball gazing.
The lawyer can’t be blamed here (although no doubt the client tried to do that first!!)
That said – very harsh decision on the agent – welcome to our litigious world! We had someone try to sue us because they weren’t happy with the carpet cleaning in their new property …
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The TPO’s Code of Practice, Sect 7i states quite clearly ‘All material information must be disclosed and there must be no material omissions which may impact on the average consumer’s transactional decision’.
The TPOs own definitions of an Average Consumer is set out in the same COP at Sect 18c says: ‘the average consumer is someone reasonable well informed and reasonably observant and circumspect……An average consumer would check out publicly available facts for themselves where this is straightforward to do etc.
I would respectfully suggest that the TPO has got it totally wrong in this instance. The pub was next to the house – fact, pubs can be noisy places – fact, pubs do from time to time request extensions for late closing events – fact. If this point was so important to the buyer he should/could have checked this out for himself. The licensing registers are open for inspection. Would he have gone to the TPO if this had happened 6 months after he moved in, not at the time he was buying? I suspect this was a pure change of heart and a buyer trying to recoup some of his expenditure.
Very poor decision with huge ramifications for the industry.
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Erm…
I’m all for kicking The Property Ombudsman at every opportunity BUT
Small though relatively significant matter here being that the redress scheme involved wasn’t TPO…
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I think this is typical of how redress schemes now work. Instead of actually denying some complaints as groundless it now seems to be a case of “ask and you shall receive something”
My firm was the subject of a similar award for, get this; failing to inform a seller that the original instruction taker, had left the company to join a competitor even though at that point he was already dealing with two others in the branch!
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Seriously? – They upheld that complaint?
You had to pay £100?
what is the world coming to.
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Perfectly seriously. Ive had 4 or 5 complaints that have gone to the Ombudsman and we were found to not be at fault for any of the main arguments, but they always found something to make a nominal award, like the above, which in my opinion was simply to appease the complainant.
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Is this also the PRS or one of the other two if you do not mind sharing?
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No we are with TPO. It honestly winds me up that the complainant can send through half completed forms and we still have to spend a day or two producing an argument, all correspondence and the file. Its completely disproportionate.
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What has the fact s/he left the company go to do with the price of eggs?
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Well apparently according to the Ombudsman it was bad practice that we didn’t inform the seller that the representative they had met was no longer with us.
To be fair when someone leaves we normally do contact all of the sellers they’ve dealt with especially if they are going to another agent to protect the business, but in this case we didn’t bother as the house was at SSTC. …..that decision cost us £100.
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Utterly ridiculous decision, on the facts as reported. So agents now have to assess the level of naive stupidity inherent in a purchaser?
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Agents need to be careful of what they say. In real terms people splashing out large funds were to live next to a pub with longer opening hours.
But it also raises the question in different instances of how budget agents can invest enough time to fully investigate what they are selling.
Good honest property representation takes time. Time equals money.
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Agree that this decision is harsh as.according to this article, the agent had apparently made the potential buyer aware of both the pub and an unsuccessful plan to extend its hours.I cannot see how, if both of these points are correct how the PRS could find in favour of the complainant.
I do wonder how well documented that “disclosure” was though as agents often leave themselves open to problems by not having sufficient notes on file and it becomes a “he said” “she said” type argument.
Consumer Protection Regulations failures are, in my estimation (based on knowledge of over 400 firms and extrapolating the data) costing agents in excess of £10million per annum in ex gratia payments and redress scheme awards.
I note that this case was not with The Property Ombudsman but with the Property Redress Scheme – choose your redress provider carefully.
Of course, good training and systems can significantly mitigate the risks of non compliance for agents. Oh have I mentioned that my next CPR and AML course is in London on 27th September! – Blatant plug – sorry.
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Mike
I read it as you did but I think it is a bit ambiguous (dare I say it!). Perhaps it should read:
The agent had made the buyer aware of the pub BUT NOT THE APPLICATION and IN ADDITION the pub’s application to extend its opening hours to midnight on Friday and Saturday nights was unsuccessful.
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Been referred to the ombudsman three times and won em all, all sellers, my main annoyance was the time taken to arrive at a decision, months and months and months, no fee in the meantime so effectively we have loaned the vendor the money for the period, all very purple brixish
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