The Government is to consider setting up a new body to regulate the activities of auctioneers and estate agents, on foot of a report which has been presented to the Minister for Justice. Furthermore, it will restrict the setting of unrealistic guide prices for houses, writes Mark Brennock, Chief Political Correspondent.
The report of a working group which has spent a year examining the profession recommends the establishment, "as a matter of urgency", of a new statutory Auctioneers and Estate Agents Regulatory Authority. The current regulatory system is "outdated and inadequate" for modern Ireland, the report says.
The Minister for Justice commissioned the report last year in response to years of complaints from consumers about various estate agents' practices. These include the systematic setting of unrealistically low guide prices and "gazumping" - sellers agreeing a price for a property with a buyer only to accept a higher price from another buyer later.
The Irish Times has learned the report, delivered to the Minister in the past fortnight, says there is no system of supervision, discipline or of redress for consumers. While the industry has its own code of conduct and indemnity procedures, these are not enough for the modern property market, the report says.
A spokeswoman for the Minister confirmed yesterday the report of the working group, chaired by former chief executive of Bord Trachtla Alan McCarthy, had been received. She declined to give any details of its contents, saying Mr McDowell had not yet studied it but he hoped to publish it in the autumn.
The working group included industry and consumer representatives, as well as officials from a number of Government departments. Its role is advisory and the Government is not obliged to accept any of its recommendations.
The residential property market currently consists of some 1.5 million properties worth over €400 billion. Therefore, it "should operate, and be seen to operate, in an efficient, transparent and proper manner", the report says.
The new regulatory body recommended by the report would control licensing, regulation and the provision of information to consumers concerning the industry. This nine-member body would be appointed by the Minister for Justice but funded by the auctioneering industry.
It would license and control all auctioneering firms, estate agents, and property letting and management agents. Currently the courts issue auctioneering licences. It would be a criminal offence to operate without a licence.
The authority would investigate written complaints against auctioneers and estate agents. It would have powers to recruit inspectors and to have access to premises, files, practice accounts and all bank accounts. It could also be entitled to question current or former principals or employees, auditors, accountants, or consultants to a practice.
In a reference to gazumping, the report says all builders and developers "should stand over conditionally-agreed sale prices". This principle "should be enforced across the entire home-building sector".
In relation to the long-running controversy over the publication by selling estate agents of unrealistically low guide prices, the report recommends that the only price level that a seller be allowed published in relation to a house for sale by auction, tender or private treaty would be the advised minimum value. "The advised minimum value is the auctioneer's true opinion of value at the commencement of the marketing campaign, as given in writing by the auctioneer to the seller on an obligatory basis."
It is not clear, however, whether there would be any mechanism to ensure this minimum value is a true reflection of the auctioneer's estimate of the property's real worth.
QUESTIONABLE GUIDE PRICES
Sherry FitzGerald was €18million off the mark with Walford, a house on Dublin's Shrewsbury Road, which sold in early July for €58 million with a guide of €30-40 million.
A month before that, 34 Main Street, Chapelizod, sold for €905,000, having been quoted by Douglas Newman Good at €400,000.
Also in June, HOK sold 18 Mount Eden Road, Donnybrook, Dublin 4, for €2.725 million, more than €1 million above its guide price.