Monday 29 May 2017

The value to the market of the sole practitioner in good times and in bad

The right moves

The Treasury Building where NAMA is based
The Treasury Building where NAMA is based

Paul McNeive

"Property people lost control of the market to receivers, but are slowly getting it back." This is the view of Conor Ó'Cléirigh, who, after stints with some of the major estate agencies, is now one of the profession's longest-established sole practitioners. I met Ó'Cléirigh at his offices on Lower Baggot Street, Dublin, and he has interesting views on how the market is developing, and on the role of the sole practitioner.

We agreed that the recession saw entities including Nama, receivers, and venture capitalists taking control of large swathes of properties, and that this had seen the larger estate agents increasing their market share. "The REITs and the funds also move with the bigger firms, so the collapse meant they [the bigger estate agents] got most of the market," said Ó'Cléirigh.

"The mid-sized firms have suffered the most but the sole practitioners survived by going back to basics. Survival was success," he added.

Now, improving market conditions are re-igniting the more lucrative types of work in which the sole trader can specialise. And with what Ó'Cléirigh estimates to be "80pc of insolvencies through the system", the return of private ownership is seeing increased demand from clients who prefer the personal service and experience provided by sole practitioners.

Ó'Cléirigh is well-known as an expert in valuation and advisory work, and as we chatted, my eye was drawn to a framed document over the mantelpiece. This turned out to be the top page of a Supreme Court judgment, signed by the protagonists, in a case where Ó'Cléirigh acted for the Underwood Estate. The ruling established that where an investment property is compulsorily acquired by a local authority, the property owner must also be paid his costs of acquiring an alternative property, for example, stamp duty, legal and agent's fees. Ó'Cléirigh still acts for the Underwood Estate - probably the biggest owner of Georgian properties in Dublin.

Ó'Cléirigh is seeing some return of compulsory acquisition work and we both bemoaned the fact that the State invariably buys property at the wrong time. "Governments tend to buy property when the economy is strong and they have the money," he said. Inevitably this means paying premium prices and the problem is compounded when the State moves to build on acquired land, and usually does that when building costs are high," he said.

"Development by the State contributes considerably to rising construction costs, when that is least needed - for example, five hospital developments are due to start this year. While these projects are long-overdue, it's a pity the system cannot get this work done when development costs are low, and the economy needs boosting."

While routine work such as rating advice and the management of commercial and residential properties kept many practices alive through the downturn, the improving market is now seeing the return of rent reviews. During the recession, it was easy for landlords and tenants to agree that there was no increase in the rent. Now, rents are rising and we are seeing the first wave of five-yearly rent reviews, since 'upward only' reviews were abolished at the low point of the market in 2012.

"Reviews are happening, because there is now a downward risk to the landlord," Ó'Cléirigh said. As there weren't many lettings in 2012, he sees a big ratcheting up of review work over the next few years.

The type of 'problem-solving' work he does is also growing. "Disputes over access, rents and ground rents were all left simmering through the recession, but they now have to be solved, so sales can happen," he said.

Ó'Cléirigh believes sole practitioners offer clients a personal service, whereas "with a larger firm, you'll probably get a more junior person doing the work".

Pointing to the increased age profile of Ireland's sole practitioners, his advice to younger surveyors is not to practise alone, but to "go with three others, to spread the load." For the sole practitioner, Ó'Cléirigh concluded that: "The highs are higher, but the lows are lower."

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