ESTATE agents will be allowed to continue acting as mortgage brokers under new legislation proposed by the National Property Services Regulatory Authority, (NPSRA) despite complaints to the authority that some brokers have colluded with agents to inflate property prices.
According to the The Irish Auctioneers Valuers Institute (IAVI) which represents 2,000 estate agents, legislation which is due to go before the Oireachtas in September will not prevent estate agents from arranging finance for the properties that are on their books, either through their own brokerage, or through affiliate mortgage companies.
The statement was issued in response to a report yesteday that some mortage brokers are being investigated by the Financial Regulator over allegations that they have shared information on clients' purchasing power with estate agents who are selling them properties.
Fine Gael's housing spokesman, Terence Flanagan, said yesterday that the NPSRA must be given powers immediately when the Dáil resumes to deal with the problem.
"The financial regulator is currently investigating mortgage brokers as allegedly they have colluded with estate agents to inflate property prices.
"This practice would not have happened if estate agents were regulated," he said.
"This outrageous situation was allowed to escalate as the Government broke its promise to publish the Property Services Regulatory Authority Bill before the end of July.
"Many houseowners are now crippled with mortgage repayments and are experiencing negative equity because of this scandal," he said.
According to the IAVI, the bill to establish the NPSRA will oblige estate agents to "notify clients in writing that they act as mortgage intermediaries".
The bill will also prevent an estate agent from from giving preferential treatment to a prospective buyer if the buyer is willing to place the mortgage business through the selling agent, according to the IAVI's chief executive Alan Cooke.
However, with so many small estate agency firms also selling mortgages, and larger firms running their own broking business, some exchange of information is inevitable, says Cooke.
"In any case, most buyers will inform an agent what they have to spend, using a ballpark figure. However, information about a person's borrowing capacity should not cross barriers," said Cooke, adding that in small, one-man-band firms, that may be "almost impossible".
"The concern would be if brokers and agents have been colluding in information and then misleading the buyer, puffing the bids to make them pay more. That is a serious issue."
Buyers are not obliged to arrange mortgage finance through an estate agent or an affiliate company, Cooke points out.
"Buyers can guarantee that information about their borrowing ability does not reach the selling agent by securing their mortgage through an independent source," he says.
Meanwhile there is no guarantee that the bill will be passed in the new Dail session.
Industry sources say there may be constitutional difficulties with the wording, and so legislation to regulated the estate agency business may be delayed until 2010.
