Paul McNeive: 'Property regulator has been good for the sector'
The right moves
The creation of The Property Services Regulatory Authority (PSRA) in 2012, has been a very positive development for the commercial and residential property markets.
Agents were seeking increased regulation for decades, and are very supportive of the new regime. Regulation is proving a strong protection for consumers, but, I believe, is also encouraging estate agents into practices which will benefit their businesses.
I spoke with Maeve Hogan, Chief Executive of the PSRA, about some interesting trends that developed in 2018:
The mission of the PSRA is to protect the interests of the public by ensuring that high standards are maintained in the delivery of property services. This includes services such as selling and leasing properties, management, and rent collection.
The PSRA also maintains the Property Price Register, The Commercial Lease Register, and the Register of Licensees.
All service providers in Ireland must be licensed by the PSRA, and Maeve Hogan stresses that consumers should make sure their provider is licensed. The key benefit is that the Authority operates a complaints investigation and redress system, and also a compensation fund.
The Authority received 274 complaints in 2018. Most related to the standard of service provided by sales, letting, and management agents. Complaints about the retention of security deposits and booking deposits are common, but, as Maeve Hogan says, there are two sides to an argument, as they sometimes see when the landlord produces photographs of the damage done to a property.
The most serious problem last year was the misappropriation of client's funds, by one agent, totalling approximately €200,000. All of the missing money has been repaid by the compensation fund.
A number of smaller cases arose, (typically €1,000-€2,000 each) where rent had not been paid over to landlords by agents.
There are also cases of landlords moving abroad, but not keeping a close eye on rental properties here, and returning to discover that rent is missing.
The PSRA took three cases against service providers for trading without a licence last year, and two cases are being prosecuted in the courts this year.
Ms Hogan told me that complaints arise where there are disputes about liability for fees, marketing costs and VAT. There is a legal obligation on service providers to provide a letter of engagement, setting out the terms of the contract. This is best practice from the agents' point of view too, as, in my experience, where an agent is not paid their fees or costs, inevitably it is because they do not have a signed contract with their client.
An interesting trend, which Ms Hogan says will be a focus for her this year, is "a big misconception" on behalf of purchasers that the agent is working for them. An example of this is where a potential purchaser makes an offer through the agent, but it is refused. The disappointed party later sees on the Property Price Register that the premises was sold for the same amount as their offer, or less, and they complain about the agent to the Regulator.
However, what they did not understand is that the vendor is entitled to take a lower cash offer, than to accept their offer, which may have been subject to finance, or a chain of other sales.
Similar problems occur in apartment complexes where, for example, owners complain to the Regulator about agents over issues like service charges or clamping. The owner believes the agent is acting for them whereas, in fact, they are employed by, and carrying out instructions for, the Owner Management Company.
Problems can arise over "conflicts of interest" where, for example, an agent must declare that he is selling to a party connected to him/her, or to a staff member. The Regulator is drafting new minimum standards and will have new power to examine "conflicts of interest".
The strong advice is to ensure that your agent is licensed. Visit psr.ie for full information.