Tenure make-up must be handled with care, says Ruth Armstrong of HBJ Gateley Wareing
The Property Misdescriptions Act 1991 is presenting problems for housing associations and residential developers in already tough economic times. Disaffected homebuyers have been using the act to complain to Trading Standards, accusing house builders of misrepresentation about the social make-up of their estate.
This issue affects both residential developers selling properties in bulk to social landlords, and housing associations faced with decisions about changing from market sale and part-ownership to full rental schemes.
The act casts a shadow over commercial decision making because of the potential for prosecution by Trading Standards, based on representations made about the tenure make-up on any development in the past.
Before the mortgage crisis, there was a supply of buyers for full and part-ownership schemes. As this has diminished month by month, private developers and developing associations have been left with a headache. The social renting and private renting markets are still very active, so there is a need to marry up commercial needs with the act’s requirements.
If an association or developer ensures that it records its decision-making process properly, with an evidence trail of checks, balances and communications to affected parties, commercial risk can be managed and Trading Standards kept at bay.