A case that The Property Ombudsman was asked to review came from a buyer who stated that the agent misrepresented the property purchased as they failed to make them aware that concerns had been raised as to the type of cladding at the property, following the Grenfell fire. Central to this case was the fact that the same company was both managing the block, via their block management company, and instructed by the sellers of the flat for sale.
In July 2017 the block management company had provided residents and owners with an update on fire safety at the development in light of recent events at Grenfell Tower. It stated that over the last few weeks they had been cooperating with the Department of Communities and Local Government (DCLG, now the Ministry of Housing, Communities and Local Government) the London Fire Brigade, the local Council and various other parties in order to provide them with detailed information about the development. Test samples of the cladding at the block had been submitted for testing and it had been confirmed that the cladding was made of Aluminium Composite Material (ACM). The letter included the information that it was by then known that certain types of ACM cladding had not met expected performance standards in terms of external fire spread. This material appeared to have been widely used across the construction industry and it had been reported that in excess of 190 Blocks in central London alone had some form of this material in place on the external façade. In light of the recent large-scale tests on cladding systems undertaken, the DCLG had advised that the majority of these systems were no longer compliant with current building standards and presented a higher risk in respect of fire safety. However, unlike Grenfell, this block was built with and still had full and proper fire precautions with fire doors, fire stopping, fire alarms, smoke extract systems and no gas in the apartments and a full sprinkler system throughout.
The buyer viewed the property in August 2017, and made an offer which was accepted.
Prior to completion, the block managers advised all residents and owners with an update on interim measures to be implemented at the development. The letter stated that the block managers had been advised to make adjustments to the fire procedures. The fire strategy had been changed from one of a ‘Stay Put Policy’ in the event of a fire to one of ‘Simultaneous Evacuation’ in a number of the blocks including the block in which the property was situated. It was advised that the interim measures must remain in place until such a time as (a) the specialist consultant advised otherwise or (b) certain remedial work was undertaken to the cladding or it was removed.
The buyer alleged that he had been mis-sold the property, there having been evidence that the company knew of the ACM cladding issue in August 2017 but “allowed” the sale to proceed.
Under Paragraph 7i of that TPO Code of Practice and agent must by law comply with the Consumer Protection from Unfair Trading Regulations 2008 which require the disclosure any information of which they are aware or should be aware of in relation to the Property in a clear, intelligible and timely fashion and to take all reasonable steps that all statements made about a property are accurate and are not misleading. All material information must be disclosed and there must be no material omissions which may impact on the average consumer’s transactional decision. Where information is given to potential buyers or their representatives, it must be accurate and not misleading.
The Ombudsman’s view was that the sales agent had a duty to have informed the buyer and/or his solicitor that the property in which the building was situated, and for which the buyer as a leaseholder would have a financial responsibility, was fitted with cladding, samples of which had been submitted for testing as part of a national programme following the Grenfell disaster. In that way the buyer would have had the opportunity to have undertaken his own research and, if he then still chose to proceed with a viewing and offer, to have monitored the situation during the conveyancing process leading up to completion.
The Ombudsman did not accept the proffered justification that the sales department did not know of the situation regarding the cladding. The company should have been aware of the unfolding events; particularly given the publicity surrounding the Grenfell fire of two months previously and the fact that this block, like Grenfell, was fitted with cladding.
The high-profile circumstances surrounding the tragedy at Grenfell should have been forefront throughout the dealings of an estate agency at the time of the buyer’s registration of interest in the property. The company advertised as being the appointed lettings and management agents for the block. Hence, in order to give the commensurate level of information reasonable for the service the company were providing as the associated sales agency, any gaps in the information that the sales agent as a company had should have been addressed by taking reasonable steps to check what may be the implication for the block following the Grenfell tragedy. Ordinarily best practice would be for an agency to ask their seller client or third parties for information. Where the response from their client or third parties 'rings alarm bells', an agent will need to probe further or challenge what they have been told. The agent must then provide any material information they have identified or that has come to their attention.
What was concerning here was the apparent lack of communication and/or forethought by the company as a whole, the consequences of which had not only served to disadvantage the buyer but, from the facts as presented, also failed to properly equip their employees ‘on the ground’ to appropriately and professionally conduct their day to day business. The agent could not avoid liability for misleading by omission.
The consequences for buyer were those of severe worry, stress and significant and avoidable disruption together with inconvenience and aggravation for an unnecessary amount of time.
Accordingly, the Ombudsman made an award of £5,000 in compensation in recognition of the avoidable and undue aggravation, distress and inconvenience caused to the buyer as a result of failures of the agent. This was accepted in full and final settlement of this dispute.