Buying a house is supposed to be a happy if stressful event, but many people live to regret their purchase due to being poorly advised or misled during the sales process. The good news for anybody in this position is that there are a number of regulations and standards that estate agents, house builders and conveyancing solicitors must meet. So what are your rights if you have lost out as a consequence of any of these rules being broken?
One high-profile example involves people who bought new-build leasehold houses and later discovered that their leases contain onerous ground rent clauses (rent paid to the owner of the land on which the house sits). Often, the buyers used solicitors that were recommended by sales staff, but who failed to alert them to the long-term financial implications of the lease. Some buyers have found their homes are impossible to sell and are seeking to sue their solicitors. Law firms are often culpable in this instance, says Ray Boulger of mortgage broker John Charcol. "This problem would not have arisen if the conveyancing solicitor had done their job competently, because had they done so they would have advised the buyer of the exceptionally onerous nature of the lease."
Buyers of new-build properties may also have complaints against housebuilders who they believe misled them, or lied by omission, during the sales process. The Consumer Code for Home Builders gives some protection to purchasers of new homes, ensuring all buyers are treated fairly. Homebuyers can make a complaint to the code's independent dispute resolution scheme, but the maximum compensation the scheme can award is £15,000. New-build buyers might also be able to rely upon the Consumer Rights Act 2015. This introduced a new "fairness test" that requires sellers to use plain and intelligible language in its written terms and ensure these terms are brought to the buyers' attention.
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The legal principle of "caveat emptor" (let the buyer beware) puts the onus on buyers to find out everything they want to know about a property before buying it, says Lisa Ginesi of law firm Carter Lemon Camerons. But there are exceptions which are covered by the Misrepresentation Act. "If a seller mentions something at the pre-contract stage which proves to be false, and on which the buyer relies, the buyer may be able to abort the transaction, recover damages or unwind the completed transaction," she says. "The buyer can usually make a claim for misrepresentation or negligent mis-statement by the seller."
However, proving misrepresentation can be tricky, warns James Gordon of Keystone Law. "It is important for any buyer of a new-build property to make a note of any representations made by the developer and to get confirmation that those representations are accurate in all respects," he explains.
When it comes to second-hand properties, there is no obligation onthe seller to disclose any defects. Their only duty is to answer all enquiries in relation to the property honestly and accurately. This is normally done by a property information form (TA6), which includes questions about the property's boundaries and alterations, any disputes with neighbours, and notices of development or planning permission for nearby properties.
"In order to bring a claim the buyer would firstly have to show that the seller has answered an enquiry inaccurately or incorrectly and that the seller was aware of the issue before the buyer bought the property," says Nick Welch of Backhouse Solicitors. "The buyer may then have a claim against the seller to rescind the contract, return the property and recover the money. If, however, the issue is considered to be minor or capable of rectification it is usually more proportionate for the claim to be one for damages to reflect the cost of any repair works or the reduction in the value."
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Emma Lunn is a multi-award-winning journalist who specialises in personal finance and consumer issues. With more than 18 years’ experience in personal finance, Emma has covered topics including mortgages, first-time buyers, leasehold, banking, debt, budgeting, broadband, energy, pensions and investments. Emma’s one of the most prolific freelance personal finance journalists with a back catalogue of work in newspapers such as The Guardian, The Independent, The Daily Telegraph, the Mail on Sunday and the Mirror. As a freelancer she has also completed various in-house contracts at The Guardian, The Independent, Mortgage Solutions, Orange and Moneywise.
She also writes regularly for specialist magazines and websites such as Property Hub, Mortgage Strategy and YourMoney.com. She’s particularly proud of her work writing about the leasehold sector and a Guardian front-page story about a dodgy landlord. She has a real passion for helping people learn about money – especially when many people are struggling to get by in today’s challenging economic climate – and prides herself on simplifying complex subjects.
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