Estate Agents fined for delaying disclosure of cladding to flat buyers
Haslams Estate Agents Limited was sentenced at Reading Magistrates’ Court on 25 October 2019. The company was fined £30,000 and ordered to pay costs of £2,646 following an investigation and prosecution by Reading Borough Council’s Trading Standards department.
The company had failed to notify the purchasers of a flat that it was clad with Aluminium Composite Material (“ACM”), similar to that found at Grenfell Tower, until after the buyers had collected the keys. This is despite being aware that the cladding had recently failed combustibility tests.
The flat in Hanover House, Kings Road, was a private residence. It was marketed by Haslams Estate Agents, on instruction by Savills Estate Agents on behalf of the owner.
An offer was accepted on the property in October 2017. An inspection of Hanover House took place on 3 November 2017. This revealed that the building’s cladding contained ACM. There was no immediate danger as measures had been implemented to lower the risk, including closing the building car park.
Haslams, which had also let a number of flats in the same block, was sent the information on ACM on the day of the inspection, prior to the buyers exchanging contracts. The information about the ACM cladding remained with Haslam’s lettings team and was not disclosed to its sales team.
Haslams sales team became aware of the ACM on 16 November and sought instructions from Savills on what should be done. However, the purchasers were not notified of the ACM until they were in receipt of the keys to the property. This was not something that normal conveyancing searches would have identified.
The buyers made it clear that they would have withdrawn from the transaction had they been made aware that it was clad with ACM before completion. At that time there was no Government agreement in place to deal with ACM cladding. This led to a risk of the buyers facing unknown costs which may have been tens of thousands of pounds.
The buyers reported the matter to the trading standards department at Reading Borough Council which commenced an investigation and subsequently prosecuted the case.
Should your business face a trading standards investigation or prosecution you should seek urgent legal advice.
Call our Regulatory Partner, James Lowe, who has considerable experience of dealing with such matters. James can be contacted on his mobile, 07833 240 400.