It is currently very early days in the process and before the Authority can engage in the licensing and regulation of PSP’s it will be necessary for new legislation to be introduced to empower it to undertake such functions. On 21st December 2006 the Government approved proposals for legislation to establish the NPSRA. The Bill is expected to be published in final form in 2008 and should become law soon afterwards.
The NPSRA heralds the dawn of a new regulatory environment, one which is currently unmatched anywhere else in the world. Tom Lynch, Chief Executive Designate of the authority, says that it will have significant powers and will change completely the previous regime of unregulated property sale, lease and management in this country.
Lynch says that the Authority is has drafted a code of practice for auctioneers and estate agents and is currently drafting one for management agents to set standards of ethical behaviour and details of how property service providers should deal with each other, their clients and the public. It should be noted that, while the code is voluntary at present, once the Authority is initiated on a statutory basis, which should be later this year, it will have the power to make the code a legally binding instrument.
One of the cornerstones of the powers vested in the Authority will be the requirement for all practitioners in the industry to acquire a licence. This will not, as is currently the case for Irish auctioneers, be a foregone conclusion. It will, according to Lynch, involve a requirement to furnish business, personal and Garda references along with proof of appropriate qualifications and training where applicable. Applicants will also be obliged to carry Professional Indemnity (PI) Insurance to cover issues of incompetence and their licence fee will include a compulsory donation to a compensation fund which is to be set up to cover acts of dishonesty. Those selling overseas property in Ireland, no matter where they are incorporated, will be required to have an Irish client bank account to hold deposits taken from Irish customers.
It is intended that the functions of the Regulatory Authority will, in addition to a licensing function, include an investigative function supported by a range of sanctions, ranging from the issuing of a reprimand or caution to suspension of a PSP’s licence for a period or complete revocation. The Authority will also have extensive investigative and enforcement powers in relation to the standards which will have to be adhered to in the provision of property services.
The main functions of the new Authority will be:
* To operate a comprehensive licensing system covering all providers of property services, i.e. auctioneers, estate agents and property management agents. This extended system will replace the current licensing system for auctioneers and house agents;
* To set and enforce standards for the grant of licences (e.g. educational/training standards; levels of professional indemnity insurance) as well as standards to be observed in the provision of property services by licensees;
* To establish and administer a system of investigation and adjudication of complaints relating to the provision of property services;
* To promote increased consumer protection and public awareness (where appropriate in liaison and co-operation with other statutory bodies and with relevant professional and consumer bodies) of property services in general and the cost to consumers, risks and benefits associated with the provision of those services;
* To establish, maintain and administer a compensation fund to compensate parties who lose money as a direct consequence of the dishonesty of a licensee.
Legislation will extend to those selling overseas property in Ireland. Foreign PSP’s who come to Ireland to sell overseas property, for example via exhibitions or seminars, will also be covered. It should be noted, however, that a PSP resident outside Ireland and selling into Ireland, for example those contacted by Irish buyers via the internet or through adverts in foreign newspapers, cannot be covered because they are not within Irish legal jurisdiction.
Any person who holds a licence from a comparable regulatory authority in another EU Member State and who provides a property service in Ireland will be subject to the Authority's complaints procedure and to sanctions for infringements of the legislation. This would mean that recognition of that particular licence could be withdrawn (the equivalent of revocation of the NPSRA licence) or withdrawn for a period (the equivalent of suspension). Any person from outside the EU who wishes to provide a property service in Ireland will be required to be licensed by the Authority.
The Implementation Group has also established and published, for the first time, a public register of licensed Auctioneers and House Agents on its website. This register will be added to on an ongoing basis and will, once the new legislation is in place, include management agents. Lynch has also intimated that there may well be different licences for disparate operators such as those selling retail property, commercial property, management companies, etc.
Regulation will not only include a licensing requirement, but also scrutiny by the Authority during the course of complaint investigations, audits or general inspections. The Authority will have power to sanction a licensee up to and including the suspension or revocation of a licence. The Authority will be given significant powers, without referral to a court of law, in addition to the ability to prosecute a licensee which may result in fines, imprisonment or both. Lynch says that his officers will be given the authority to enter and inspect premises or exhibitions to ensure that the principals are licensed and acting in accordance with its code of practice. In order to obtain a licence there will also be a requirement to produce financial records and a tax clearance certificate. Where a person suffers loss due to the dishonesty of a licensee the Authority may award compensation from a fund which will be set up from fees compulsorily paid by licensees.
Lynch says that, at the start it is very likely that the authority will enact a ‘grandfather clause’ to allow those who have been in the business for a long period of time, but with no formal qualifications, to be licensed. It is likely that these licensees will, however, be required to undertake continuous professional development courses as a condition of their being granted a licence.
Contacts:
National Property Services Regulatory Authority - www.npsra.ie
Diarmaid Condon is an independent overseas property consultant with significant agency experience. He can be contacted via his website at www.diarmaidcondon.com.
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