The increased focus on upfront material information could push up estate agency professional indemnity (PI) requirements, an industry trainer has warned.
Michael Day of Integra Property Services said that while the Consumer Protection Against Unfair Trading Regulations 2008 have been around for years, the latest parts A, B and C guidance from Trading Standards is creating a “different landscape.”
Requirements include disclosing lease restrictions and flood risk information.
Day said: “Agents should deal and quote facts, not provide ‘interpretations’ of the information disclosed. This may be easier to suggest than comply with when being asked by consumers about the property.
“Parts A, B and C are there to try and be helpful to agents in focusing on basic material information. There have, however, been many prosecutions and redress scheme awards relating to other elements that were considered as material information and either disclosed incorrectly or not disclosed at all.”
He suggests obtaining material information to display on listings will “undoubtedly also expose agents to a greater risks.”
It is currently compulsory for agents to be member of a redress scheme but Day said only The Property Ombudsman has a mandatory requirement on members to hold at least £100,000 of PI cover.
The Property Redress Scheme does not have this requirement, just a recommendation to have cover in place.
Day said: “With the portals likely to include a descriptor of ‘Ask the agent’ whenever an item of material information is omitted from property details, there is the strong possibility of agents receiving larger numbers of queries and questions about aspects of a property and the likelihood that the agent may stray into providing advice or comments accordingly.
“This will increase the risk of erroneous information or an interpretation of that information being passed to a consumer with the subsequent risk of complaints and/or prosecutions increasing.
“Without PI cover in place, an agent could be facing the entire costs of handling the complaint and making whatever compensatory award or fine etc that may result, themselves. Appropriate PI cover will, at least, mitigate this position.”
Day added that he believed it should be mandatory for all agents to have PI cover and said it would be good business practice for an agent to ensure that their cover is adequate and appropriate.
His advice to agents is:
Mike Day is one of the most experienced and best-connected estate agent industry figures and although his career is far from over, he recently won the Lifetime Achievement Award at The Negotiator Awards.
His CV alone justifies the accolade. Starting work as a sales negotiator in 1975, he worked at several independents before ending up at Prudential Property Services and then later holding several senior management positions at Connells.
In 2003 he set up consultancy Integra Property Services through which he provides both business advice and training, but more recently has also busy at OnTheMarket, Propertymark, Agents Together while also chairing the RICS’ Residential Faculty.
But he’s now, perhaps sensibly (given a triple heart bypass operation in 2021) decided to slow down and his New Year’s resolution was to go on holiday more, although it sounds like he’ll be still working from the beach or cruise deck.
“What Covid changed in many sectors including ours is that many of us can now do our jobs from anywhere in the world, although nothing replaces face-to-face meetings,” he says.
“I think the days of doing everything via Zoom is beginning to fade a little and more people are asking to do things in rooms rather than on video.
“A good example of that is at OnTheMarket where I gather, following the CoStar acquisition, its staff are being asked to return to the office.”
Young people both inside and outside the industry are fast losing the ability to communicate other than via text or email.”
“But what concerns me most is that young people both inside and outside the industry are fast losing the ability to communicate other than via text or email – no one picks up the phone and talks to people direct any longer.”
Day says that you can argue that this is what the consumer wants as tenants, landlords, buyers and sellers are all busy people too.
But it means that agents “don’t get under their skin” and understand their customers’ motivations and needs, and that the industry is becoming too transactional – the Rightmove factor if you like.
“If agents lose that questioning and communication skillset, they will be missing a trick – technology should be used to underpin these core face-to-face skills, not replace them,” he adds.
When Day joined the industry nearly 50 years ago, such ways of doing business were all agents had, along with their branch window, card index system and ads in the local paper.
“I began looking for a job after finishing my ‘O’ Levels at at Harrow County Grammar School for Boys, where Michael Portillo was the Head Boy incidentally, after deciding that ‘A’ Levels and a degree were not for me,” he says.
“I wasn’t sure which sector to go into but didn’t want to be stuck behind a desk and fortuitously a local firm was advertising for a trainee-cum-apprentice estate agent – and the rest is history.”
Day, who thinks Labour’s assertion that all estate agents should have at least an A-level is ‘nonsense’, says that although his starting salary was ‘a pittance’ he soon overtook friends working in other sectors as he qualified and then began moving up the career ladder.
What he says hasn’t changed is that, largely, estate agency remains an industry that pays intelligent and hard-working people good salaries once their initial training is completed.
Recruiter Andrew Deverell-Smith recently revealed that a successful sales negotiator working at a big-name urban estate agency can usually earn from £40,000 to £75,000, not a bad salary for someone only a few years out of school or college.
Day says he was paid £11.50p a week at his first job, more than half that of a similar job at a retailer as a trainee – but the difference was by the time he got his second job, his income had become performance related.
Another change that Day has noticed is that, when he was starting out, he got to work in all the different departments on the firm.
“Now, entrants to the industry often have to decide there and then which sector – commercial, lettings, sales, property management – they want to go into at the outset,” he says.
“I think that’s a disadvantage – I was helped by having a broad view of the industry and not being immediately pigeon-holed.”
Asked what achievement he would pick out from his long career to date, Day says it’s the large number of people that he hopes have appreciated the help he’s given whether it be mentored colleagues, home movers, people he’s trained or those seeking help via Agents Together.
Despite his promise to take it easier, it’s going to be some time before he stops doing that.
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