Agents still waiting for property industry watchdog to be set up

Government plans to control the property industry are taking time to implement. Fiona Tyrrell reports

Last autumn estate agents were warned that they faced tougher scrutiny by a new statutory authority to be established with a licensing function, as well as inspection and monitoring powers to oversee their industry.

While preparations for the appointment of a chief executive officer have begun and an implementation group will start work this month, the industry is waiting for an interim body to be established. It is unlikely that auctioneers will have to apply for the new style licence this year.

Meanwhile, both the Irish Auctioneers and Valuers Institute (IAVI) and the Institute of Professional Auctioneers and Valuers (IPAV) say that guide prices will be replaced from the beginning of this year by a new system of advised minimum valuations (AMVs).

There was much excitement last October when the Minister for Justice Michael McDowell unveiled plans for the establishment of the National Property Services Regulatory Authority. The announcement was on foot of recommendations of the Government's Auctioneering and Estate Agency Review Group, which was tasked with reviewing current practice within the estate agent and auctioneering profession.

It took a year for the group to produce the report and it is taking a while to implement. The review body was set up as a response to growing public disquiet about practices in the sector, including gazumping, guide prices, sealed bids and auctioneers' fees.

The Department of Justice has confirmed that, as an interim measure, the Minister has brought together a high-level implementation group chaired by Tim Dalton, Secretary General of the Department of Justice.

This group, which is due to meet this month, will steer preparations for the full statutory authority to be established under new legislation. Once established the authority will have monitoring and inspection powers and will oversee the transfer of the licensing function from the courts services. It will also be able to enforce fines and other sanctions against rogue auctioneers, including the withdrawal of licences to practice.

Plans for a code of ethics and practice for the sector were also outlined, as well as a consumer complaints and redress system, arrangements for the better protection of clients' funds and provision for sanctions and compensation arrangements.

Last October the Minister said the new authority would be established "as soon as possible" on an interim basis, pending enactment of the necessary statutory framework. Mr McDowell said at the time the authority could do "much good work" in advance of the planned legislation by gathering information and establishing a consumer complaints and redress scheme.

With no sign of an interim body and legislation yet to be drafted, it is likely that auctioneers will again be coming before the district court this July to renew their current licences under the old system.

Chair of the original review group Alan McCarthy, a former chief executive of An Bord Trachtala, says he believes it is the Government's ambition to have legislation for the authority through both houses of the Oireachtas by early 2007.

Until then, an interim body could begin work on what he termed a "very important" part of the role of the authority - informing the public about how to handle the sale and purchase of property and how to deal with estate agents.

"The more people understand, the less likely disputes and complaints will be," he says, comparing the role of the authority to that of the financial regulator.

Meanwhile, the post of chief executive officer will be advertised "early in the new year", according to the department. It will be a full-time job, though terms and conditions (including remuneration) have not been finally determined. The chief executive officer and staff will be based in Navan, Co Meath, under decentralisation plans. The Office of Public Works has been briefed in relation to office requirements in Navan, according to a spokesperson for the Department of Justice.

At the time it reported, the review group recommended that the regulatory authority be funded by the industry through the licensing scheme and said that start-up costs would be in the region of €1 million. An annual budget of €3 to €3.5 million would be needed for the authority to carry out its roles of licensing, regulation and information.

Concern has been expressed by industry sources that the start-up cost of €250,000 announced by the Minister would not be enough for the authority. The review group said that the existing statutory framework (the Auctioneers and Estate Agents Act 1947) which provides for licensing in the sector, was outdated, inappropriate and inadequate for the present day market in Ireland.

It noted that there was no ongoing official supervisory, disciplinary or consumer redress system, although it did point out that the representative bodies operate such systems for their respective members.

Disappointingly, however, for many observers of the problems most frequently complained about, only the guide price issue was tackled by the review group. The group's recommendation that guide prices give way to a new system of advised minimum valuations (AMV) will be implemented by both the IAVI and the IPAV from the start of this year. An estate agent putting a property to auction will issue an AMV to the vendor in writing.

For the industry, new licensing procedures will be the biggest change. Noting the lack of uniformity across different court districts where auctioneers currently apply for licences, and limited sanction possibilities within this system, the review body recommended that the courts-based system should be replaced by a regulatory authority and that applicants should be required to demonstrate competence to hold a licence by way of relevant educational qualifications and/or experience.

Under the new system all applicants, whether they hold a current licence or not, must go forward for a new licence and demonstrate competence in terms of qualifications and/or experience to the board, according to IAVI chief executive Alan Cooke. Applicants will also have to have professional indemnity insurance and prove that staff are undertaking ongoing training.

Auctioneers were pleased with the plans for new licensing regulations which will discourage those with little or no qualifications from setting up business. As the licence requirements are hammered out in the coming year, it is the education requirements for licence applicants that will be the big sticking points. The IAVI and the IPAV are keen that education standards be prioritised.