I move: "That the Bill be now read a Second Time."
I am pleased to have the opportunity to introduce the Property Services (Regulation) Bill 2009 and look forward to today's discussion. The Bill received broad support from all sides on its passage through the Seanad and I look forward to a continuation of that broad support in this House. The Bill provides for a comprehensive and streamlined statutory framework for the regulation of auctioneers, letting agents and property management agents. It will replace the current court-based system for regulating auctioneers and house agents with an updated system for regulation of the categories of property services providers I have mentioned.
Under current legislation, the Auctioneers and House Agents Acts 1947 to 1973, licences are issued to auctioneers and house agents by the Revenue Commissioners on presentation of the required District Court certificate. The system is confined to auctioneers and house agents and does not extend to property management agents. The latter comprise a new segment of the property services sector. In so far as it extends the licensing system to property management agents and extends statutory safeguards to the clients of such agents, mainly property management companies, the Bill constitutes an important element of the Government's strategy to address problems arising in relation to the management and governance of multi-unit developments and complements the Multi-Unit Developments Bill 2009, which completed Committee Stage in the select committee last month.
The Bill before Members seeks to give effect to the principal recommendations of the auctioneering-estate agency review group. At its heart is a proposal to establish a new statutory body, the property services regulatory authority, to control and supervise providers of property services and to improve standards in the provision of those services. The Bill also provides for improved standards of consumer protection by establishing a system for investigating and adjudicating on complaints relating to the provision of property services, as well as a property services compensation fund to compensate those who suffer financial loss as a result of dishonesty by property services providers.
Before describing the main provisions of the Bill, I inform Deputies that work has begun on a number of amendments that I hope to table on Committee Stage. In the renewed programme for Government agreed last year, the Government recognises that the lack of transparency in the property market, including the lack of sales prices, is an impediment to consumer protection and must be tackled. I intend to bring forward an amendment to the Bill to give the property services regulatory authority the statutory function of publishing details of residential property sales prices. The working group on transparency in commercial rent reviews recommended the establishment of a public database that would include relevant details of commercial letting agreements and rent reviews. I also intend to amend the Bill to give the responsibility for the gathering and holding of the necessary detail in this respect to the authority. I look forward to progressing these amendments on Committee Stage.
I turn now to the Bill's main provisions to give Members a general outline of its scope and how the proposed system of regulation will work in practice. Section 2 contains the important definitions which determine the scope of the Bill. I draw Members' attention specifically to the definition of "property service". It means the provision in the State of any of the following services, namely, the auction of property other than land, the purchase or sale, by whatever means, of land, the letting of land; and property management services. All auctioneers, letting agents and property management agents will, therefore, require a licence from the authority. Certain limited exemptions to the licensing requirements are set out in section 3.
This licensing requirement will apply to the property services employer, such as, for example, an auctioneering company or partnership, and to an individual providing a property service in the course of employment or as an independent contractor. If the property service is provided in the State, a licence will be required irrespective of whether the property concerned is located in the State. Part 11 contains provisions which deal with the provision of property services here by those who hold licences issued by corresponding licensing authorities in other European Union member states.
Part 2 contains many standard provisions relating to the structure and operations of the new authority, including provisions regarding the appointment of the authority members and staff, the conduct of meetings and the keeping and auditing of annual accounts. I draw Members' attention to the main functions of the authority set out in section 11. These functions include the operation of a comprehensive licensing system covering auctioneers, letting agents and property management agents. In addition, it will set and enforce standards for the grant of licences, such as, for example, educational and training standards, levels of professional indemnity insurance, as well as standards to be observed in the provision of services by licensees. Moreover, it will establish and administer a system of investigation and adjudication of complaints relating to the provision of property services, will promote increased consumer protection and public awareness of property services in general and the cost to consumers, risks and benefits associated with the provision of those services. It also will establish, maintain and administer the compensation fund.
This Part also provides for the charging of fees. It is intended that this fee income should be sufficient to meet the costs of administration of the Act. This is in line with the recommendation of the review group that the new regulatory structure should be funded through fee income generated by the authority for licences and other services. Part 3, comprising sections 29 to 43, sets out details of the new licensing system which will apply in future. Under section 29, it will be an offence in future for a person to provide a property service without the appropriate licence, unless he or she falls within one of the limited exemptions in section 3. If a licensee provides a property service other than a service for which he or she holds a licence, or holds himself or herself out as available to provide a property service other than the service in respect of which he or she has a licence, it will constitute improper conduct and an appropriate sanction may be imposed.
In order to provide ready access to the list of licensees, section 30 requires the authority to establish and maintain a public register of licensees. This will enable users, or intending users, of property services to confirm that a provider is registered to provide the service they require.
Sections 31 to 35 contain details of the licensing system. Each application for a licence must be accompanied by references as to character and competence, including details of education, training and experience; evidence of availability to the applicant of the necessary level of professional indemnity insurance; and the appropriate fee.
In the case of applications for licences as a property services employer or an independent contractor, the applicant must also furnish a certificate by an accountant that proper financial systems and controls are, or will be, in place for the protection of client moneys. Such applicants will also have to furnish an up-to-date tax clearance certificate.
When deciding whether to issue a licence, the authority will take into account the information provided by the applicant and, where appropriate, any information provided by the Garda Síochána under section 43. In short, it will not issue a licence unless it is satisfied that the applicant is a fit and proper person to provide the property service concerned and complies with all statutory requirements. A successful applicant must pay the appropriate contribution into the compensation fund before the licence will be issued.
Before refusing to issue a licence in any case, the authority must notify the applicant of its intention to do so, and the reasons for it, and give the applicant an opportunity to make representations. It will be possible to appeal any refusal to issue a licence to the property services appeal board which is also being set up under section 74 and Schedule 5.
Arrangements applicable to the renewal of licences are set out in sections 36 and 37. Part 3 also includes provisions imposing obligations on licensees to have their licence in their possession and to produce it, if requested, or to display it in their place of business depending on whether the licensee is an individual or a company. It also requires licensees, other than those who are employees, to include their registration number in advertisements, on their stationery and in sales brochures, etc.
Section 41 provides that where a licensee is declared bankrupt, his or her licence will be suspended immediately and will remain suspended until it expires or the bankruptcy is discharged, whichever occurs first. Section 42 requires an applicant for a licence or a licensee to notify the authority of any material matter which would be likely to affect the validity of the licence.
Part 4, comprising sections 44 to 46, sets out a number of general obligations with which licensees must comply. Section 44 requires licensees to issue a letter of engagement to all clients. Once the letter has been signed by both the licensee and the client, it becomes a property services agreement. Details of the extensive information that must be included in such a property services agreement are set out in Schedule 2.
A property services agreement must include details of the services to be provided by the licensee, the fees or commission payable by the client and the period during which the agreement has effect, etc. The authority will specify the form of letter of engagement which all property services providers must use.
Section 45 imposes an obligation on property services employers and independent contractors to keep records of all services provided for a period of six years.
Part 5, comprising sections 47 to 55, contains very important provisions dealing with client accounts and related matters. It updates existing provisions in the Auctioneers and House Agents Acts 1947 to 1973 and, importantly, extends them to property management agents.
Section 47 empowers the authority to make regulations in relation to the kind of bank accounts which may be opened by licensees for the keeping of client moneys, the rights, duties and responsibilities of a licensee in respect of client moneys, the accounting records which must be maintained by a licensee, and client entitlements, etc. Section 48 makes it an offence knowingly to lodge client moneys to an account other than a client account, or knowingly to make a false or misleading entry or record in accounting records.
This Part also contains provisions for the protection of client moneys and documents in the event that the authority refuses to renew a licence, a licence is suspended or revoked, or the licensee ceases to provide property services. It also makes provision for the protection of client moneys in the event of the bankruptcy or insolvency of a licensee.
Part 6, that is sections 56 to 62, deals with the sale and letting of land and includes new provisions requiring auctioneers and letting agents to provide statements of "advised market value" or "advised letting value", as the case may be, to their clients within a seven day period. The "advised market value" of land for sale must be reasonable and the authority may investigate cases in which values appear not to have been reasonable. This value can be a price range but the difference between the minimum and maximum value cannot exceed 10% of the lower value. The advised value can, however, be altered to take account of market conditions.
Where land is being sold at auction, the vendor will be prohibited from bidding for it and from authorising or permitting another person to do so on his or her behalf. Where land is being sold by private treaty, section 61 requires licensees to retain records of all offers received, including conditional acceptances.
In order to avoid conflicts of interest, section 60 specifies the conditions under which a licensee acting for a vendor may provide a financial service to a purchaser or potential purchaser. It prohibits the provision by a licensee of such a financial service to a purchaser without the prior written consent of both parties. Section 62 empowers the authority to make regulations in relation to matters concerning the sale or letting of land. This will include regulations concerning the contents of advertisements, booking deposits, the terms of building contracts and similar issues.
One of the shortcomings of the current system identified by the review group is that the only available sanction against misconduct is refusal to renew a licence. Part 7 addresses this deficiency by making provision for a comprehensive system for investigating complaints and imposing appropriate sanctions where such complaints are upheld.
Section 63 provides that any person can make a complaint to the authority and the authority must investigate the complaint provided it is made in good faith and is not likely to be resolved by mediation or other informal means between the parties.
Section 64 provides that where the authority considers that immediate suspension of a licence is necessary to protect clients or customers, or potential customers, it may make an application on notice to the licensee to the High Court for an order to suspend the licence.
In exceptional circumstances, where the authority considers that there is an immediate risk of financial harm to clients or customers, or potential clients or customers, it is empowered to apply to the High Court on an ex parte basis for an interim order to suspend the relevant licence. An interim order can last for a maximum of eight working days. In order to extend any such order, the authority must apply to the High Court on notice to the licensee for a new order.
Section 65 provides that an investigation may be carried out by the authority on foot of a complaint or on the authority's own initiative. It provides for the appointment of an inspector, or inspectors, to carry out such an investigation and to submit a report to the authority. Section 66 gives inspectors comprehensive powers to enable them to carry out investigations, including powers to enter and search premises, carry out examinations and inquiries and conduct an oral hearing. This section also provides that a person who obstructs or impedes an inspector is guilty of an offence.
Section 67 provides protection for persons, including employees of licensees, who make complaints to the authority.
Section 68 sets out the actions to be taken by inspectors and the authority on completion of an investigation and includes provisions to ensure that fair procedures are applied. On completion of an investigation, the inspector must submit a report to the authority. Before doing that, a draft of the report must be sent for comment to the licensee or licensees where the investigation concerned more than one licensee, and to the complainant if the investigation arose from a complaint.
After considering an investigation report, the authority may decide to request the inspector to carry out a further investigation, impose a major or minor sanction, as appropriate, if it is satisfied that improper conduct is occurring or has occurred, or dismiss the complaint and take no further action. Before making its decision, the authority may conduct an oral hearing or invite the licensee or licensees, if the investigation related to more than one licensee, and complainant, if the investigation arose from a complaint, to make submissions on the investigation report. A "minor sanction" is defined in section 2 as a reprimand, warning, caution or advice, while a "major sanction" is defined as the suspension or revocation of a licence, payment of up to €50,000 into the compensation fund, payment of up to €50,000 towards the costs of the investigation, or payment of a penalty of up to €250,000.
Factors to be taken into account in determining the appropriate sanction are set out in section 73. These include the need to ensure that any sanction is appropriate and proportionate to the improper conduct, the seriousness of the improper conduct, any gain made by the licensee as a result of the improper conduct, and the amount of any loss suffered or costs incurred as a result of the improper conduct.
Sections 69 to 72 contain detailed provisions dealing with major sanctions. Section 70 provides that a licensee may appeal a decision of the authority imposing a major sanction to the High Court. Where the licensee does not appeal the decision, the authority must apply to the High Court under section 71 to have its decision confirmed. Section 72 makes provision for an appeal to the Supreme Court on a point of law.
In addition to a complaints and investigation procedure, an appeals system is also essential. Part 8 provides for the establishment of an independent property services appeal board to hear and determine appeals against specified decisions of the authority. Matters relating to the composition of the appeal board and its operations, including the procedure for handling appeals, are set out in Schedule 5.
Part 9, which includes sections 77 and 78, provides for the establishment, administration and maintenance of the property services compensation fund. Its purpose is to compensate clients of licensees who suffer a financial loss as a result of dishonesty on the part of a licensee or an employee, partner or agent of a licensee in the course of the provision of a property service. Section 78 sets out rules on the payment of compensation out of the fund. Detailed provisions in regard to the administration of the fund are set out in Schedule 6. Part 9 and Schedule 6 are modelled on similar provisions in the Solicitors Acts.
Part 10 empowers the authority to draw up regulations for professional competence schemes for licensees and principal officers of licensees and related matters.
Part 11 and Schedule 7 contain provisions governing the provision of property services in the State by persons who hold licences from comparable authorities in other member states. Rights of establishment and freedom to provide services are set out in the European Community treaty. These treaty rights have been elaborated in greater detail more recently in Directive 2006/123 on services in the internal market.
A person who has a licence or other authorisation from another member state to provide a particular property service has a right to provide that service here without having to obtain a licence from the authority. However, that person must be subject to client account protections similar to those in Part 5 of the Bill.
A person who is permitted to provide a property service here on the basis of an authorisation from another member state will be subject to the authority's complaints and investigation procedures, and to the new statutory requirements in regard to letters of engagement, client accounts and the sale or letting of land.
Part 12, comprising sections 86 to 98, contains miscellaneous provisions. I indicated that once the Bill comes into force in respect of any category of property service, the provision of that type of property service without a licence will be prohibited. In order to ensure that this prohibition is enforced, the authority's powers of investigation extend to persons who are suspected of providing a property service or claiming to be available to provide such a service, without a licence. This power is set out in section 86 of the Bill.
If the authority considers that a person is operating without a licence, it must report the matter to the Garda Síochána and the Minister. The authority may also seek a High Court injunction requiring the person to cease the activities concerned.
Section 91 deals with offences and it empowers the authority to bring and prosecute summary proceedings for offences under the Act.
Sections 92 and 93 empower the authority and the Minister to make regulations implementing detailed provisions in the legislation. Sections 95 to 97 provide for transitional arrangements to facilitate the transition from the existing licensing system for auctioneers and house agents to the new licensing regime.
The Bill provides for an appropriate and comprehensive new system for regulating the property services sector. I am confident the provisions set out in it will, when enacted, serve to enhance the standing and image of the sector, provide much-improved consumer protection for the clients of property services providers and serve to assure the public that high standards will be applied and maintained. I will be making amendments on Committee Stage in respect of the two issues I have indicated.