The Property Ombudsman has ordered an estate agent to compensate buyers £790 after failing to disclose the existence of a competing purchaser during a property transaction, highlighting transparency obligations under industry codes of practice.
The case details
Margaret and Alan had their offer accepted on a property in December 2024 and received a Memorandum of Sale, leading them to believe the property would be withdrawn from the market. They subsequently instructed solicitors and commissioned a mortgage valuation survey costing £790.
On 7 January 2025, the agent informed them the seller had decided not to proceed with the sale without providing an explanation. Three days later, the buyers learned through a third party that another purchaser, Ashid, had been progressing a transaction on the same property simultaneously.
The agent stated that Ashid had originally agreed to a sale in October 2024, though the transaction stalled after a price renegotiation attempt. The seller subsequently chose to continue discussions with both parties, intending to proceed with whichever buyer could complete most quickly.
Code of practice breach
The Property Ombudsman’s adjudication examined the Code of Practice for Residential Estate Agents, which requires agents to keep buyers informed of other offers and promptly notify them if they become involved in a contract race.
The investigation found no evidence that the agent had informed Margaret and Alan about Ashid’s continuing interest when their offer was accepted or afterwards. The seller’s decision to allow a contract race had been made before the buyers incurred survey costs.
The ruling emphasised that buyers should be made aware of competing offers so they can make informed decisions about whether to continue with a transaction and incur further costs. This transparency is particularly relevant as buyers delay purchase decisions in the current market environment.
While recognising that either party can withdraw from a property transaction before exchange of contracts, the Ombudsman concluded the agent had failed to meet its Code obligations by not disclosing the existence of another purchaser and the contract race.
Compensation awarded
The complaint was upheld, with the Ombudsman awarding £790 in compensation, equivalent to the mortgage valuation survey cost. The decision concluded that had the buyers been aware of the competing purchaser and the contract race, including the fact the competing buyer was in a more advanced position, they would have been able to make an informed decision on the risk involved with any further expense.
The Property Ombudsman indicated it would also consider whether additional compensation should be awarded to recognise the aggravation and inconvenience to the complainants arising from the agent’s shortcomings.
The case serves as a reminder to estate agents of their disclosure obligations during property transactions, particularly where multiple buyers are involved. The requirement for transparency applies across all property sectors, including build-to-rent transactions and traditional sales.
