Gibraltar Code of Conduct

The Office of Fair Trading (OFT) has launched a new estate Agents’ Code of Conduct. This is the first time that all of the estate agents in Gibraltar have had to adhere to any form of industry specific regulation. The objective is that the estate agency market works well for consumers and that all businesses engaged in real estate services are prevented from causing significant harm to consumer interests.

It is something that Chesterton has lobbied for, through the articles in this magazine, for some time. Hence we welcome its introduction with open arms. The industry has, at times, been akin to the Wild West, with the consumer (whether buyer, seller, landlord or tenant) worse off as a result.

The Gibraltar Code of Conduct covers a number of best practices to which agents must adhere. I address some game changers below.

However, a set of rules is only as good as the enforcement process. Under the Code, each agent must have a complaints procedure accessible to consumers. If a consumer is dissatisfied that his or her complaint has not been addressed satisfactorily then the consumer must be advised by the agent that they may take their grievance to the Office of Fair Trading. Upon receipt of the complaint, an investigation may be made by the Office of Fair Trading against the agent. If not resolved by the OFT, the OFT can refer the matter to the Office of Fair Trading Commission which may, in its discretion, issue an enforcement order against the estate agency. This order may, amongst other remedies, award the complainant a sum of money to be paid by the agent to the consumer within a specific period of time. Hence there is now a fining system for bad behaviour.

So what are these ‘game changers’?

Conflicts of Interest

Until now, agents have not had to disclose any form of conflict of interest. However, the rules now state that if an agent is dealing with a property that is owned (or has any interest in) by a director, an employee or any associate then that person must disclose his or her interest to the consumer, in writing, before negotiations begin.

Not only will this impact agents selling their own properties but also those agents who are under common ownership or control as a developer who is seeking to sell their properties off-plan.

Consumers should be safe in the knowledge that the advice that they are receiving from their agent is independent and they advised when they are being sold a property (off-plan or existing) where the sales agent is a connected person to the vendor.

Instructions, Terms of Business, Fees and Charges

Some basic standards are now obligatory. Vendors and landlords must have access to written terms and conditions of the agent which unambiguously set out all fees (to avoid hidden costs) and clearly state how the contract may be terminated by either party. The terms must be in writing and agreed to by the vendor or landlord as applicable.

Client money and deposits

It is now a legal requirement under section 97 of the Fair Trading Act that an agent must hold all deposits (usually from the tenant or the buyer) and indeed any client money in a separate client account. It seems strange that this has never been a requirement in Gibraltar (although the system has been adopted by many of the agents as standard practice, just not all). However, some agents mix client money with their own money which is a dangerous act and not in the consumer’s best interest. Client money must now be properly segregated from the agent’s own money. Worried consumers should ask their agents where their money is held.

In the same vein, these deposits are to be held on a ‘subject to contract’ basis unless the clients expressly agree otherwise in writing. If for any reason, the parties do not proceed to exchange of contracts or enter into a rental or tenancy agreement (as the case may be), the deposit must be returned in full without deduction or set-off.

Advertising

There is a new very simple rule: an agent must not advertise any property without permission from the owner.

It sounds obvious but until now, nothing has presented agents from showcasing properties on their website which quite simply they do not have any instruction from the vendor or landlord. Their intention is simply to attract calls from consumers in the hope that they can sell or rent something else. This most basic of ethical standards has been addressed by the Code. Mystery properties have been outlawed!

To assist the OFT in enforcement of eradicating ‘ghost properties’, there is also a new rule that all advertised properties should be available at the time of advertising and that agency websites must be updated at least weekly. The excuse of “well, it used to be for sale” will no longer work.

Additionally, there is now a rule that all adverts placed by agents should be legal, decent, honest and truthful. There was an article in the Gibraltar Chronicle recently which referred to an agent using photographs of views from a higher floor apartment in a particular block to attract clients only to find that on viewing, the property was on a lower floor with no such views. This practice is now outlawed and the consumer could file a complaint. Quite right too, this is the type of practice that does Gibraltar a real disservice.

Other

The code is accessible in full on the Chesterton website - www.chesterton.gi/code_of_conduct.asp. It is targeting the consumer and hence set out in such a manner to be easily understood and absorbed.