Property Services (Regulation) Bill 2009 [Seanad]: Report and Final Stages

I move amendment No. 1:

In page 13, line 10, to delete "of," and substitute ", of".

This is a minor drafting amendment. It might the briefest amendment I have ever dealt with.

Amendment agreed to.

Amendments Nos. 2 and 8 may be discussed together.

I move amendment No. 2:

In page 14, line 3, after "59(3),” to insert “or 60(1),”.

I thought we might have given more time to the previous amendment.

On Committee Stage I flagged my intention to introduce new provisions to address the potentially serious conflicts of interest which can arise where an auctioneer promotes an apparently attractive loan package to intending purchasers without revealing that the financial institution providing the loan has already funded the development or is prepared to do so where the property is being sold from the plans. This conflict of interest can arise, in particular, in the case of multi-unit developments where a particular financial institution has links with the developer and seeks to reduce its exposure to risk by assembling what appears to be an attractive loan package for intending purchasers. Purchasers who avail of the package may end up paying over the odds for the property. Amendment No. 8 addresses the issue by inserting a new section 60 which will ensure transparency in such cases and thereby improve consumer protection.

Subsection (1) prohibits a licensee from providing information, advice or assistance concerning a lending institution's willingness to provide a mortgage for a purchaser of residential property unless the vendor — in other words, the builder or developer — has advised the licensee whether that lending institution has provided or intends to provide a loan for the development or construction of the property. The licensee must then inform the purchaser whether the lending institution has been involved in funding the development. This provision will apply to persons who develop or build residential properties on a commercial basis, not to private persons selling their own homes. Subsection (2) provides, therefore, that the requirement in subsection (1) will not apply where the vendor is an individual acting outside his or her business. Subsection (2)(b) also allows for the making of regulations by the Minister for Justice and Equality to exclude other specified classes of vendors from the requirements set out in subsection (1). The regulation making power is a precaution in case it becomes necessary to make further exceptions to the new requirement.

It should be noted that the new requirement applies not only to actual purchasers and vendors of residential property but also to prospective purchasers and vendors because section 2(2) of the Bill defines "purchaser" as including a prospective purchaser and a "vendor" as including a prospective vendor.

Amendment No. 2 extends the definition of "improper conduct" in section 2 to include a contravention of the new disclosure requirement by a licensee. It means that a contravention may result in imposition by the authority of an appropriate sanction on the licensee.

The Minster for Finance is proposing to enhance the powers of the Central Bank to ensure the interests of consumers are further protected when mortgage credit is being provided in the Central Bank (Supervision and Enforcement) Bill 2011 which is before the House. The Central Bank is also responsible for ensuring mortgage lending in Ireland conforms with the appropriate standards and that where conflicts of interest arise, they are identified and dealt with. The Bill I have just mentioned provides for substantial penalties for financial service providers who fail to abide by the rules.

Amendment agreed to.
Bill recommitted in respect of amendments Nos. 3 and 4.

I move amendment No. 3:

In page 14, between lines 39 and 40, to insert the following:

""land" has the meaning assigned to it by the Land and Conveyancing Law Reform Act 2009;".

The Bill does not include a specific definition of "land" because the definition in the Interpretation Act 2005 is a generally applicable definition. However, it appears that the lack of a definition has resulted in some confusion relating to residential property and the purpose of the amendment is to insert a definition in order to remove any uncertainty on the matter. It states "land" has the meaning assigned to it by the Land and Conveyancing Law Reform Act 2009. The definition of "land" in that Act is more detailed than the definition in the Interpretation Act 2005 in so far as it explicitly includes "buildings or structures of any kind on land and any part of them, whether the division is made horizontally, vertically or in any other way". Therefore, it clearly includes apartments, as well as other types of buildings.

Amendment agreed to.

I move amendment No. 4:

In page 15, to delete lines 38 to 40 and substitute the following:

"(i) which is formed for the purposes of becoming the owner of all or some of the common areas of the development, and".

This is a technical amendment that will ensure consistency between the definition of "management body" in the Bill and the corresponding definition in the Multi-Unit Developments Act 2011.

Amendment agreed to.
Bill reported with amendments.

I move amendment No. 4a:

In page 22, line 6, to delete "Part 1” and substitute “Part 2”.

This is a drafting amendment.

Amendment agreed to.

I move amendment No. 5:

In page 29, to delete lines 21 to 46 and in page 30, to delete lines 1 to 34.

Amendment No. 5 relating to section 15, amendment No. 6 relating to section 16 and amendment No. 17 are being discussed together.

On Committee Stage I indicated the possibility of Report Stage amendments to sections 15 and 16 to address possible duplication between the disclosure of interest provisions in section 15 and those already in place in the Ethics in Public Office Acts. Arising from discussions with the Attorney General's office, the amendment proposes the deletion of section 15, while amendment No. 6 replaces subsection (3) of section 16 with a revised wording which provides protection for the disclosure of information as required under the Ethics in Public Office Acts. Amendment No. 6 goes on to insert a new subsection (4) in section 16 which will facilitate the provision of information for the authority and the Minister and also, where the information may relate to the commission of an indictable offence, for other public authorities such as the Garda, the Director of Corporate Enforcement, the Central Bank and the Revenue Commissioners.

Amendment No. 17 deletes paragraph 11 of Schedule 5 which applies section 15 to the appeals board. It is no longer required following the deletion of section 15.

Amendment agreed to.

I move amendment No. 6:

In page 31, to delete lines 1 to 3 and substitute the following:

"(3) Nothing in subsection (1) shall prevent the disclosure of information by a person in the circumstances referred to in section 35(2) of the Ethics in Public Office Act 1995.

(4) Nothing in subsection (1) shall prevent the disclosure of information—

(a) to the Authority,

(b) by or on behalf of the Authority to the Minister, or

(c) which, in the opinion of a person referred to in that subsection, may relate to the commission of an indictable offence to—

(i) the Director of Corporate Enforcement,

(ii) the Competition Authority,

(iii) a member of the Garda Síochána,

(iv) an officer of the Revenue Commissioners,

(v) the Central Bank of Ireland, or

(vi) such other person as may be prescribed under section 96 after consultation by the Minister with any other Minister of the Government appearing to the Minister to be concerned.”.

Amendment agreed to.

I move amendment No. 7:

In page 43, line 18, after "paragraphs (a) to (f)” to insert “of this subsection”.

This is purely a drafting amendment.

Amendment agreed to.

I move amendment No. 8:

In page 62, between lines 6 and 7, to insert the following:

"60.—(1) Subject to subsection (2), a licensee shall not provide information, advice or assistance, whether by means of a brochure, advertisement (in whatever media) or otherwise, to a purchaser of residential property in respect of the possible availability of a loan from a lender in respect of the purchase of the property unless—

(a) the vendor of the property has advised the licensee, in writing, whether or not the lender has provided or indicated the lender's willingness to provide a loan (whether in whole or in part) for the development or construction (whether in whole or in part) of the property, and

(b) the licensee informs the purchaser of whether or not the lender has provided or indicated the lender’s willingness to provide a loan (whether in whole or in part) for the development or construction (whether in whole or in part) of the property (which may be done, in the case of a brochure or advertisement, by including the information concerned in the brochure or advertisement, as the case may be).

(2) Subsection (1) shall not apply in any case where the vendor of the residential property concerned is, in his or her capacity as such vendor—

(a) an individual acting outside his or her business, or

(b) a person, or a person who falls within a class of persons, prescribed under section 96 for the purposes of this paragraph.

(3) In this section "lender" includes a holding company and a subsidiary (within the meaning of section 155 of the Companies Act 1963) of the lender.".

Amendment agreed to.
Bill recommitted in respect of amendment No. 9.

I move amendment No. 9:

In page 87, between lines 5 and 6, to insert the following:

"(3) Subject to subsection (4), the Commercial Leases Database may, at the Authority’s discretion, contain, in respect of a commercial property lease, the particulars provided for in paragraphs (a) to (d) of subsection (2) notwithstanding the fact that such a lease was entered into before the commencement of this section.

(4) Subsection (3) shall not apply to a commercial property lease entered into more than 5 years before the commencement of this section.”.

As the Bill stands, it is envisaged that the commercial leases database will only contain information on leases entered into on or after the commencement of section 87. Having considered the matter, I believe it would be in the public interest if certain basic information was also to be made available on commercial leases which have been entered into in the past. The amendment I am proposing is analogous to the provision contained in section 86 which relates to residential property sales prices. However, in the case of commercial leases, I am proposing that the database will only apply to leases which have been entered into within the last five years. The reason for this is that, in the rent review context, the most useful information is that which relates to open market lettings at the time of the review date. Thus, while access to some past information may be useful in terms of assessing emerging trends, that information will have little direct bearing on the level of rent to be fixed in current circumstances.

The public information on to past leases will be that information which is made available to the authority by the Revenue Commissioners. It will include the address of the commercial property concerned, the date of the lease, the term of years of the lease and the rent payable. That will ensure there is generally more information made available on the level of rental payments being made than is the case, and there will be more information made available than was originally envisaged in the Bill, as first published.

I have a query on separate legislation the Minister is preparing on upward-only rent reviews. Will that legislation have any implications for this Bill and vice versa?

That is an entirely separate issue, but as the Deputy is aware, detailed consideration has been given to the issue of upward-only rent reviews by my Department and the Attorney General. The matter will come before Government shortly for final decision. Obviously, once it has made a decision, its nature will be announced.

Is it likely that we will have to amend this Bill owing to possible implications of the legislation on upward-only rent reviews?

What we are doing in this legislation is ensuring there is transparency with regard to rental payments being made in the commercial area and that there is a bank of reliable knowledge available in order that when discussions occur on rent reviews or when individuals are considering renting properties, there will be access to transparent and reliable information from which comparators can be taken as to the types of rental arrangements made. In a sense, this is a stand-alone provision that will be of relevance for the future. Consideration is being given by the Government to the advice on other legislation. The matter will be dealt with shortly and we will make an announcement thereafter.

Amendment agreed to.
Bill reported with amendment.

I move amendment No. 10:

In page 87, line 19, after "out" to insert the following:

"(in addition to the particulars specified in paragraphs (a) to (d) of section 87(2))”.

This is a technical amendment which is being made in the interests of administrative efficiency. The particulars specified in section 87(2) relate to the basic information which will be made available to the authority by the Revenue Commissioners, while the section 88 particulars relate to the additional information to be provided by the individual tenant. The amendment will ensure all of the pertinent information will be readily discernible from a single form.

Amendment agreed to.

Amendments Nos. 11 to 13, inclusive, are related and will be discussed together, by agreement. Is that agreed? Agreed.

Bill recommitted in respect of amendments Nos. 11 to 13, inclusive.

I move amendment No. 11:

In page 88, between lines 7 and 8, to insert the following:

"(3) Where a tenant ceases to have an interest in a commercial property which is the subject of a relevant commercial lease, the tenant (or such other person as the tenant has authorised in writing to act on his or her behalf for the purposes of this subsection in so far as it relates to the cesser) shall, within the relevant period immediately following the day on which the cesser takes effect, give the Authority a notice in the specified form setting out particulars of the cesser (including the day on which it takes effect).".

The key amendment is amendment No. 11. It is intended to provide a mechanism to ensure the authority will be informed when a tenant ceases to have an interest in a property which is the subject of a commercial lease. This will be especially relevant where the tenant assigns the property to another tenant during the currency of such a lease. The amendment is directly related to section 88(2) which requires the tenant to give the authority certain information when a rent has been reviewed. In the context of enforcement, it is clearly very important that the authority have up-to-date information on the identity of the tenant. The amendment will facilitate the authority in its enforcement function. Amendments Nos. 12 and 13 are consequential changes.

Amendment agreed to.

I move amendment No. 12:

In page 88, lines 10 and 11, to delete "or (2)” and substitute “, (2) or (3)”.

Amendment agreed to.

I move amendment No. 13:

In page 88, line 15, to delete "or (2)” and substitute “, (2) or (3)”.

Amendment agreed to.
Bill reported with amendments.

I move amendment No. 14:

In page 91, line 31, to delete "reside" and substitute "resides".

The amendment is purely a drafting amendment.

Amendment agreed to.

I move amendment No. 15:

In page 95, line 23, to delete "outwith" and substitute "outside".

The same applies. This is simply a drafting amendment.

Amendment agreed to.
Bill recommitted in respect of amendment No. 16.

I move amendment No. 16:

In page 110, after line 29, to insert the following:

"5. Section 6 of the Protection of Employees (Employers' Insolvency) Act 1984 (as amended by Schedule 2 to the Criminal Justice Act 2011) is amended—

(a) in subsection (2)(a)—

(i) in subparagraph (xxvi), by deleting "and" after "that Schedule,",

(ii) in subparagraph (xxvii), by substituting "that Schedule, and" for "that Schedule.", and

(iii) by inserting the following subparagraph after subparagraph (xxvii):"(xxviii) any amount which an employer is required to pay by virtue of a decision of a rights commissioner under paragraph 1(2)(b) of Schedule 4 to the Property Services (Regulation) Act 2011 or a determination by the Labour Court under paragraph 2(1) of that Schedule.”,

(b) in subsection (2)(b), by substituting “, (xxvii) or (xxviii)” for “or (xxvii)”,

(c) in subsection (2)(c), by substituting “, (xxvii) or (xxviii)” for “or (xxvii)”, and

(d) in subsection (9), in the definition of “relevant date”, by substituting “, (xxvii) or (xxviii)” for “or (xxvii)”.”.

This amendment makes a number of changes to the Protection of Employees (Employers' Insolvency) Act 1984 in order to include in the insolvency payments scheme under that Act any compensation payable in accordance with a decision of a rights commissioner or the Labour Court under Schedule 4. Under the scheme, employees may claim for entitlements such as pay arrears, holiday pay, pay in lieu of statutory notice and awards due under employment legislation. Claims are generally made through the receiver or liquidator, as the case may be. Payments are made from the social insurance fund to which employers generally contribute.

Amendment agreed to.
Bill reported with amendment.

I move amendment No. 17:

In page 114, to delete lines 39 to 42.

Amendment agreed to.
Bill, as amended, received for final consideration.
Question proposed: "That the Bill do now pass."

I take the opportunity to thank the Acting Chairman and the Deputies who have contributed to our discussion this evening and during the earlier discussions at the select committee. Many of the amendments made on Committee and Report Stages are designed to introduce much needed transparency to the residential and commercial property markets in line with a commitment given in the programme for Government which I am pleased to be in a position to discharge in this legislation. Publication of residential property sales prices and the establishment and maintenance of the commercial leases database by the Property Services Regulatory Authority will help to restore much needed confidence to the property market. Together with the new statutory requirement on auctioneers to publish a realistic "advised market value" of property for sale rather than using the discredited "guide price" mechanism, the legislation will serve to enhance consumer protection and improve consumer confidence.

The new statutory requirements on auctioneers who provide advice for intending purchasers on the possible availability of loans from a particular lender, an issue we discussed, will help to avoid the types of conflicts of interest which can be to the detriment of such purchasers, as occurred during the boom years in circumstances where individuals were afforded what appeared to be easy loans in circumstances in which there was no transparency or disclosure and no revelation of a linkage between the financial institution making funding available to individual house purchasers and the developer which the same institution had funded.

Having completed its passage through the House, the Bill will now return to the Seanad for consideration of the amendments made here on Committee and Report Stages. My intention is that it will be enacted before the end of the year.

Since publication of residential property prices and the establishment of the commercial leases database are key priorities, I expect the new authority and the Revenue Commissioners will move to put a user-friendly system in place as soon as possible. I know that preparatory work has been under way for some time and I thank the Revenue Commissioners for their participation in the new arrangements.

With regard to the new licensing arrangements, a number of regulations specifying the required eligibility standards in relation to education and training and professional indemnity insurance will have to be made by the authority. In the meantime, the existing licences of auctioneers and letting agents remain valid until 30 June next. However, property management agents are not subject to any licensing arrangement. I expect, therefore, that the authority will give immediate priority to the introduction of much needed standards in this segment of the property services sector. New licensing requirements for such agents will complement the provisions of the Multi-Unit Development Act 2011 which entered into force early this year and enhance protection levels for apartment owners.

Question put and agreed to.