Regulator protects clients
The agent must now include his advice on market value
I was delighted to be a speaker at the Society of Chartered Surveyors Conference in Athlone last week and I was struck by a forceful presentation by Tom Lynch, the CEO of The Property Services Regulatory Authority. In short, a powerful new regime to protect consumers and regulate standards in the industry is up and running.
Most existing licenses for property service providers, including estate agents in Ireland, expire on July 5 and they should have their new PSRA license six weeks before then – that is, tomorrow.
The PSRA has been set up to provide a licensing system, investigate complaints, audit license holders and establish minimum qualifications.
It has strong powers and can revoke a license and impose fines up to €250,000.
Anyone providing property services without a license can be imprisoned.
An important part of their work is the establishment of a compensation fund.
Tom Lynch said they were on track to reach their target of having €2m available by the 2015/16 licensing year. The license application fee is €1,000 for employers and €100 per employee.
To date 4,899 licenses have been granted and 233 have been refused, typically due to lack of qualifications or lack of statutory requirements such as an accountant's report.
Both the former IAVI and Chartered Surveyors, now merged as the Society of Chartered Surveyors in Ireland (SCSI), strongly lobbied for increased regulation and I was on several deputations to political parties over the years seeking just that.
The SCSI has supported the establishment of the authority and Tom Lynch is encouraging suggestions from the professions on how they can streamline operations.
Where he has no room for manoeuvre is in adhering to the letter of the various statutory instruments under which the authority was established.
Central to this is that every service provider, be they selling, buying or managing property, must have a standard contract with each client and this contract must deal with specifics in the boom years.
It was alleged that agents were issuing low guidelines to maximise enquiries and generate a false market. Whilst there were certainly some rogue cases, prices in the boom became almost impossible to predict.
The agent must now include his advice on market value in the contract and cannot issue a guideline below that.
The PSRA will check agents files for those values.
The biggest complaint I am hearing from agents is that a lot of paperwork is being generated.
Where an agent is instructed on several properties at the same time by one client he can attach a schedule of AMVs to one contract.
However in today's market some agents are handling scores of properties for banks and receivers (e.g. apartments) which come available over time and every unit must have a separate AMV and therefore contract.
One agent said at the conference that her clients were already complaining to her about the amount of contracts she is sending them, which must all be read, signed and returned.
My suggestion to the authority is to look at a web based system for holding contracts and the authority have said that they would consider this provided a contract was created and where an electronic signature would be upheld by the courts.
Another issue is that staff showing properties, unless individually licensed, cannot accept booking deposits and I wouldn't like to be the auctioneer whose developer client saw him refuse a deposit from a buyer.
This new era of regulation is welcome and provides more comfort for property owners and occupiers.
That said, particularly given the level of client accounts and cash deposits, it is remarkable how few instances of fraud have arisen and I can only think of one case in many years. This compares very favourably with the numbers being struck-off in other professions in the fall-out from the boom years.
The PSRA is moving from set-up into a regulatory phase and must be taken very seriously.