Cooling-off periods are being extended from seven days to 14, from June 13, and agents will need to change their contracts by then in order to be operating legally.
While the changes will widely apply to all sales agents, letting agents should note that they are also likely to be caught.
The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 will come into effect, replacing previous legislation on distance contracts. Directives on unfair contract terms will remain in place.
The new cooling-off period means that agents will have to give sellers 14 days in which they can change their mind, without penalty, about instructing them.
This applies, as before, only when the contract is signed at a location away from the agent’s business premises – usually, the selling property. It is estimated that 80–90% of all contracts are signed in the sellers’ homes.
The seller must be given clear notice, in writing, which states their right to cancel within the 14-day period.
Importantly for those agents who give the vendor the option to sign away the right in order for agents to begin work immediately, consumers will nevertheless have the right to cancel a service which has begun within the cooling-off period.
So, for example, a vendor who has, in writing opted out of the cooling-off period might change their mind a week later, and is entitled to withdraw from the contract.
In these circumstances, you would be entitled to be paid for services performed up to the point of cancellation – for example, an advert in the local newspaper.
It is possible that some agents will be caught by two other changes. Pre-ticked boxes will be banned by the new Euro directive. So, for example, if you offer extra services, you must give the seller the opportunity to actively opt in. Pre-ticked boxes will be banned across the EU.
There will also be a ban on hidden fees and charges: the total cost of your service must be fully spelled out. Customers will not have to pay extra charges if they were not properly informed in advance.
There will be three important implications for agents.
First, they will have to amend their contracts.
Secondly,the current seven-day window in which another agent might get a vendor to switch the instruction is being doubled to fourteen days. That means agents who have won instructions are more vulnerable to losing them.
Thirdly, however, the converse is true: agents now have twice as long to go after winning a new instruction off a rival!
Matthew Pryke, of law firm Hamlins LLP, said that letting agents will also be caught by the 14-day cooling-off period if they contract to provide services around the actual lettings agreement – for example, inventories.
Pryke said: “The 14-day change is coming in quite quickly and quite a few industries are being caught out.”
Article originally appeared in Property Industry Eye