It’s four years since a report on regulating the property market was given to the Government – but we’re still waiting for legislation, despite the urgent need for reform

IN MARCH, the property market would ordinarily be buzzing. But it’s in a mess with thousands around the country nursing their troubles. Solicitors hear hardship stories daily. Indeed, more than a few have their own.

The country’s favourite commercial pastime of buying properties up to the summer 2006 turned on us and bit hard. It couldn’t happen but it did. There had been warnings, and we’d been promised reform by the Government for years. It is now more than urgent.

A year before the downturn began, the Government was handed a report which advised that the situation in the Irish property market was urgent and that the legislation governing the sale of property in Ireland was “outdated, inappropriate and inadequate”.

It must be asked: what’s the point of reports to Government of expert bodies if they are not acted on? And how can we champion the importance of transparency in the market when now, more than ever, most property sale prices are shrouded in secrecy? We are still waiting for Government action to change the way the property market is organised. Meanwhile, the market has all but disappeared and taken countless jobs with it.

It’s understandable that the Government’s eyes are elsewhere but, given the critical role the property sector played in getting the country into a mess, surely its reform should be a priority?

The auctioneering/estate agency review group report to the then justice minister Michael McDowell, almost four years ago, made 42 recommendations for reform of how property is sold. It noted the importance of the market operating in an efficient and transparent manner. The recommendations included that agents be subject to ongoing controls, monitoring and sanctions for misbehaviour, and that a regulatory authority be established as a matter of urgency.

The Government established a National Property Regulatory Authority (NPRA), based in Navan, Co Meath, to regulate those who provide services relating to property, principally estate agents. Its chief executive designate is Tom Lynch, a former principal officer in the Department of Justice. He hopes that a new bill will be law by the end of 2009 and says it’s scheduled to be published during the current Dáil session. He is emphatic that the NPRA is working towards being in a position to implement the legislation without delay when it is enacted. But, as of now, the NPRA has no powers. It is in a legal limbo. It awaits the legislation to give it existence and powers, so it exists in fact but not in law.

When the law is enacted, it promises to be interesting. For the first time, auctioneers in Ireland will be regulated by the State and vendors will be forbidden to engage in the dubious practice of covertly bidding for their own properties at auctions up to the reserve price, which is hidden from genuine bidders. This can still be done in 2009 after all that the market has been through.

Pending the new law, the authority has invited agents to subscribe to its voluntary code of conduct. Of course, voluntary is voluntary. The NPRA has a website which notes both the future licensing of agents and how they will have to answer for complaints. It also will be charged with increasing consumer information. The promised reforms also include a transfer to the NPRA from the District Court and the Revenue Commissioners of the licensing of auctioneers and monitoring of their activities. Complaints may lead to simple censure of an auctioneer up to withdrawal of a licence to work.

But most observers know that Government monitoring of the property market does not provide fundamental reforms. These reforms would include openness of information between vendors and buyers, like the information packs vendors in England now have to provide to buyers, and much greater flow of information about prices of houses and apartments.

Labour’s former finance minister Ruairi Quinn was told in the Dáil last year that publication of the promised legislation was subject to resolving certain, unspecified, legal issues. These are still unspecified. It is hoped that the delays relate to adding fundamental reforms to the draft legislation which would put the property sector in a position to lead the Irish economy out of the doldrums. The Government’s consultation document on the new law gave no such hints.

The IAVI, which represents many auctioneers, has long called for reform of our law of contract and agency, arguing that agents are now prohibited by law from disclosing flaws in properties to buyers.

The importance of the property market to the economy is self-evident. Now painfully so. Ironically, due to problems in the market, it is hard to get accurate figures. Four years ago, property was valued at over €400bn in the McCarthy Report. We can only guess at it now. But we do know its critical importance to the economy. Fundamental reform is overdue.

Pat Igoe is a solicitor in Blackrock, Co Dublin