Lotus Investment Group’s Chairman, David Grin, said the suggested amendments will be positive for Ireland’s property sector.
Since 2013, Lotus Investment Group has been a leading property investment firm in Ireland. The company’s refusal to claim any equity in the projects they fund is what makes them unique; clients retain full ownership throughout, resulting in long-term and successful partnerships. To date, Lotus Group has invested €318 million in the Irish property market and completed 2,842 projects.While Lotus Group has always adhered to statutory standards, the proposed new amendments will afford the company, and others like them, greater protection from unscrupulous agents.
The Property Services Regulatory Authority (PSRA) held their inaugural conference on 6 March 2019 withIrish Minister for Justice and Equality,Charlie Flanagan, among those who attended. The conference focused on key topics for agents and licensees, such as ethical conduct, consumer protection, mediation, and professional development. Brexit was also addressed by guest speaker Mark Hayward, CEO of the National Association of Estate Agents for the UK.
PSRA was established by the Irish government in 2011 to address, among others, the rapid changes in the property sector following the 2009 recession. The Property Services (Regulation) Act was signed into law on 20 December 2011 and took effect on 6 July 2012. Since then, it has been the operational standard for the Irish property market, but with the threat of Brexit and other national changes, PSRA now sees the need to amendtheir standards.During her speech at the conference, PSRA chief executive Maeve Hogan acknowledged and addressed thegaps in the current standards. PSRA is considering a range of new and expanded standards for the property market which will apply to real-estate agents, letting agents, auctioneers, and management agents.
Telling potential homebuyers that a higher offer has been received, or that others are competing for the same property, has been standard practice, but Ireland’s new professional standards will now make it unethical and prohibited.
Real-estate agents are required to log every offer they receive for a sale property. The updated minimum standards will now make it a breach of professional conduct to create a false or misleading bid, or to tell potential buyers that a competing offer exists when it, in fact, does not. Other proposed changes include: prohibiting agents from imposing a viewing fee on sale or rental properties, prohibiting charging tenants a fee for the renewal of a lease, and forbidding agents from accepting any inducement from prospective buyers or tenants to secure a property. The new revisions also establish minimum standards of ethical conduct and confidentiality when dealing with clients and a maximum period of 10 working days in which to return security deposits to tenants following the end of a lease.
Securitydeposits have been a major source of complaints received by the PSRA, but because it falls outside the regulations, little could be done to address the issue. PSRA said security deposits needed to be regulated,as tenants were often subjected to long waiting periods to receive refunds and were hit with unjustified deductions made by landlords. Other conduct to be deemed improper under the new standards will include property agents overstating their experience orfailing to declare any potential conflict of interest.
Regulation of any sorttends to focus on the interests of the consumer or public, but there is also a need to protect business. Lotus Group Chairman, David Grin, appreciates this, adding that certain conduct still damaging the profession will now be actionable under the proposed new standards, and this will be a positive move forward for the Irish market.The new standards are in the early stages of drafting and due to undergo review by representative groups in the industry later this year.
Any agent offering property for sale must be licensed and have a signed letter of agreement from the client. The agent must provide the seller with the Advised Market Value (AMV) of the property that outlines what the property should fetch when put on the market. There was a time during the boom years when sale prices far exceeded guideline prices and an attempt was made to bring both into line, giving rise to the term Advised Minimum Value (AMV). This was subsequently changed to Advised Market Value (AMV) which is now defined by statute and advertised properties must state this.The AMV is not the same as the reserve price, which is the minimum price a seller is prepared to accept, and neither will necessarily be the same as the final selling price.
The Property Services Act sought to ensure that the quoted price would be as close to the final selling price as possible, and that interested parties would not be unduly or deliberately misled, as well as to ensure that agents could not manipulate market and sale prices to affect their percentage cut. As agents work on commission—a percentage of the final sale price of a property—this had also become a growing point of discontent.
From 2014, the PSRA has received record numbers of complaints about unlicensed agents, fake bids, harassment, and even bad manners. In March 2019, the PSRA successfully prosecuted Roger O’Sullivan for advertising himself as a provider of property services while he was in fact unlicensed. The PSRA has authority to revoke licenses and fine Property Service Providers (PSPs) up to €250,000. PSRAcurrently managesover 6,000 licensees, a complaints system, and consumer protectionvia a compensation fund. Justice and Equality Minister Charlie Flanagan says the property market has responded and adapted well to regulation and the changes being drafted in should be of further benefit to all concerned.
The PSRA’s work is not limited to licensing and regulation; they also support the development of the sector and individuals and businesses working in it. In the last 18 months, the mandatory Continuous Professional Development (CPD) programme was introduced to further improve standards and instill a culture of lifelong learning in the profession. All licensees must complete a minimum of 5 hours of formal education offered through CPD each calendar year.
In his speech, Minister Flanagan commended the PSRA on their continuing vision of uniformity, transparency and high ethical standards “vital to ensuring a bright and sustainable future for the sector”. The inaugural conference’s turnout of over 300 was a testament to the industry’s support of regulatory standards. The proposed expanded regulations for areas such as ethical conduct, confidentiality, conflicts of interest and general obligations will be a welcome enhancement of the existing legislation.