Consumer information on real estate properties

• Author: Consumers, Health, Agriculture and Food Executive Agency (European Commission), Deloitte consortium, IPSOS, London Economics
• Pages: 106-135

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4. Consumer information on real estate properties

This chapter c onsiders information delivered to consumers on th e characteristi cs of a

property, as well as on prices and fees related to the transaction. It addresses the minimum

standards of information, whether information is clear and comparable, and the consumer

understanding of real estate advertisements.

Box 2: Summary of findings  Consumer information on real estate properties

• The minimum standard of information varies in buying and renting

scenarios. In the former, the type and detail of minimum information to be provided,

which might vary, is legally specified in some countries, albeit not all . In this regard,

if there is a mortgage, the ESIS is a useful standardising tool providing consumers

with all relevant financial information on the loan to make an informed choice. In the

latter, minimum standard of i nformation is significantly less well defined, and

provided details tend to focus on payment and costs, rather than about property

details.

• More precisely, consumers (of both buying and renting scenarios) seem to experience

the greatest difficul ties obtaining informati on on real estate agency fees, energy

performance of the property and charges for utilities.

• Transparency of information , including clarity and comparability of information

towards consumers, remains a challenge in the real estate market. On ly a minority

of survey respondents considered the information very clear and comparable. This

was consistent with answers from focus groups where information was regarded both

difficult to find and difficult to understand. It was furth er va lidated in the mystery

shopping results, where buyers and renters consid ered the overview information to

be insufficient, particularly as it relates to amenities and energy performance. These

challenges were heightened in the case of cross-border transactions.

• The consumer understanding of the real state advertisement was tested in

relation to the size, energy performance and key features of the property. The most

successful means of presenti ng that information are detailed in this section. Thi s

understanding was also conditional to information-framing practices. Interestingly,

real estate consumers do not seem to reach a peak of i nformation overload and

appear to have a preference for ever-more information.

• A standardised list of pieces of information would be benefici al for consumers

since it woul d improve consum ers' understanding of the i nformation they shoul d be

aware of, and deliver a defi ned and comprehensive set of pieces of information on

the property of interest.

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4.1 Minimum standard for information on properties

This section presents the minimum standards for information provision, namely the pieces

of information that need to be delivered to consumers as established by the law. A

distinction is made between the minimum stand ards for information regarding the

conveyancing process and the renting/letting process. In both cases, e xamples are

provided for the countries in scope of the study. The current study shows that there various

differences across countries as regards the mandatory pieces of information to be conveyed

to consumers.

While the current section focuses on minimum standards of information, findings on

possible ways to improve information provision about properties on the market are

provided in Section 9.3.

4.1.1 Conveyancing process

The question related to the pieces of information that need to be mand atorily delivered to

consumers (to buyers, in particular) during the conveyancing process is addressed in the

following paragraphs, and the main scenarios identified through the country fiches are

described.

Firstly, in some countries, a defined list of mandatory pieces of information that shall

be delivered to consumers is incl uded in the legislation. To provi de an example based

on the data collected through the country fiches, in Romania, Art. 94 of th e Government

Ordinance no. 21/1992 on consumer protection establishes that information must be

provided in writing before concluding a contract with the real estate agent. In specific,

information about the following items shall be provided to consumers:

• Prices on the market for properties of the type which is of interest for the consumer;

• Deficiencies and inconveniences of a property of interest for the consumer that are

known by the real estate agency;

• Fees applied by the real estate agency;

• The legal situation of the immovable property, and

• An estimated level of costs to be borne by the consumer in order to obtain and draft

the documents related to the transaction.

In Sweden, accordin g to Art. 18 § EAA, the real estate agent must provide a prospective

buyer with a description of the property by specifying:

• The taxable value and operating costs of the property;

• The area in which the property is located;

• The presence of any mortgages, easements, or other encumbrances;

• The presence of any joint facilities, and

• The year of construction, the size and the type of the property.

Secondly, in some countries, the national legislation does not establish a specific

list of minimum standards of information that needs to be conveyed to consumers. This

seems to be the case for Croatia, E stonia, Hungary, Latvia, the N etherlands, Poland,

Slovakia (no minimum standards of information to be delivered at the outset of the

transaction), an d the UK (England and Wales). In some cases, there is no obligation to

inform parties about circumstances of which parties could not reasonably expect to be

informed.

In other countries, despite the fact that a clear list of mandatory pieces of information is

not defined by law, the national legislation establ ishes that professionals need to provide

consumers with comprehensi ve advice and with all information that they know or

should know. In this case, rather than covering a detailed list of elements (related to the

conveyancing process or to the property itself) that shall be disclosed to consumers, the

national legislation indicates on a general note that all circumstances that are necessary

to carry out the transaction need to be disclosed. In Austria, for example, all circumstances