After talks with Treasury officials, the Instant Access Properties Group - the UK’s biggest residential property investment specialist – today proposes a Code of Conduct for the sector as the only quick and effective way to introduce better consumer protection.
Earlier this year, the Instant Access Property Group led calls for decisive regulation to be introduced by the Government via the Financial Services Authority (FSA) to address the growing problems of consumer detriment in the virtually unregulated residential property investment sector.
However, discussions with Treasury officials have made it perfectly clear that whilst they share Instant Access’s desire to see standards in the sector raised, the Government currently has no appetite for driving through formal regulation of the sector, whether by the FSA or some other agency.
Instead, they would prefer to see voluntary action taken by the quality providers in the market and their trade bodies to raise standards and drive out sharp practice, to thereby improve consumer protection.
To this end - and at the direct encouragement of the Treasury - Instant Access Properties today launches a draft Code of Conduct for the residential property investment sector (attached).
The Code makes a number of concise, pivotal promises to consumers, crystal clear in language and meaning, which collectively serve to remove the sharp practices that have led to consumer detriment up to now.
In brief, these promises include:
- We disclose and explain all risks fully
- We ensure customers can afford the investment
- We actively discourage short-term speculation
- We do not buy off-plan property to sell on to customers
- We carry out due diligence tests before offering property to customers
- We always use valuations from independent, RICS-authorised surveyors
- We offer and eight day cooling-off period
- We provide full support through to completion of purchase
As discussed with the Treasury, the Instant Access Group has written to the British Property Federation (BPF) and the Royal Institute of Chartered Surveyors (RICS) to seek their active involvement and support in this initiative. This includes agreeing the detailed wording of the Code of Conduct itself. The draft Code of Conduct has also been sent to the Treasury team for their comment.
Once finalised, practitioners throughout the residential property investment sector will be invited to sign up to the Code of Conduct. Copies of the Code will be then be supplied by all participant companies in their communications with customers.
A website to promote and explain the Code of conduct is also under development. It will be launched as a single place where consumers can find out about the Code and what it means, which organisations have signed up, as well as obtain generic information and guidance on residential property investment itself.
Tony McKay, COO of the Instant Access Properties Group said:
“Although we originally preferred the firmer pressure that formal regulation would have applied to raising standards and protecting consumers, our discussions with the Treasury made it perfectly plain that no such measures would be forthcoming from the Government in the foreseeable future. The idea of the Code of Conduct seemed an excellent and effective compromise solution to both of us.”
“If for some reason this voluntary action does not succeed, and consumer detriment continues, then at that stage the need for formal regulation - probably via the FSA - would have to be reconsidered. But the truth is action is needed now. As the biggest organisation in the sector we are more than happy to initiate this voluntary solution.”
