The Government has indicated it is not opposing the Second Reading of his Bill. It would be preferable to have a Minister present.
Seller's Legal Pack for Property Buyers Bill 2021: Second Stage [Private Members]
We are well ahead of schedule.
Well, people are supposed to be watching the schedule. Is the Minister of State, Deputy Carroll MacNeill, in a position to stay?
I ask Deputy MacSharry to proceed.
I move: "That the Bill be now read a Second Time."
I thank the Minister of State for facilitating us. The Minister for Justice, Deputy McEntee, has been in contact with me to say the Government is not opposing the Bill. A lot of colleagues are supporting it and I am very grateful to them for that opportunity. Before I begin, I welcome members of the Institute of Professional Auctioneers and Valuers to the Gallery, including its CEO Pat Davitt and its president John Kennedy. I thank them for their vision in suggesting this legislation. I also thank former Oireachtas Member and Senator, Lorraine Higgins, of Rockwood, for her assistance in drafting the legislation, which I am pleased to bring forward for the Second Stage debate today.
The Seller's Legal Pack for Property Buyers Bill 2021 was first introduced to the House in November 2021.
I look forward to hearing constructive contributions from other Members.
With the Bill, we are for the first time addressing the frustrating delays in conveyancing, as a matter of legislative urgency. In that context, its overall objective is to contribute to a reduction in these delays being experienced by would-be buyers when they seek to purchase a property. The Bill does exactly what it says on the tin. It aims to create a statutory requirement for a seller's pack, including legal documents to be made available to potential buyers, when a property is placed on the market, which will cut the current long delays being experienced at times by prospective buyers. The Bill will allow for the determination of saleability from the commencement of an intent to sell and will reduce the likelihood of sales falling through. The documents contained in the seller's pack will be made accessible to the seller to provide the opportunity for the seller to take a greater role in the sales process. The legislation will improve on the previous pre-contract investigation of title, to improve the process not only for conveyancers but also for lawyers.
Growing and serious delays in the conveyancing process are leading to property sales falling through. A survey conducted by the Institute of Professional Auctioneers and Valuers, IPAV, has found that four out of every five agents say they have seen sales fail because of this problem. A total of 26% said it occurred frequently and 4% said it happened very frequently, while 70% acknowledged it happened occasionally. This Bill will reduce conveyancing transaction times and, as a result, streamline the costs associated with that, help to cut out gazumping and gazundering, allow for more certain and transparent transactions for property and afford protections to sellers and, more crucially, the consumer. In an Ireland Thinks poll of 1 September, of the 1,228 respondents, 77% were in support of the measures set out in the Bill, while 73% acknowledged that prolonged delays in conveyancing had led to significant challenges for purchasers. The research by the IPAV shows that 81% of estate agents presiding over the sale of property found the delay to be either frustrating or very frustrating, ultimately for the consumer. This delay adds costs to conveyancing, and it is so often only when a property has gone sale agreed that the assembly of the documentation required to give effect to the sale begins. This measure will prescribe in advance that a statutory process must be followed by all property service professionals. Before they place a property on the market, they will be bound to ensure all the necessary documentation is in place, thereby ensuring for the seller the efficiency of the process, and for the consumer who is seeking to buy, certainty on the transparency of the process. It will further ensure that what we see is what we will get and that what is being bought is as it is alleged to be.
I will now outline the content of each section. The Bill contains seven sections. Section 1 deals with interpretation and defines some of the terms used in the Bill.
Section 2 will empower the Minister for Justice of the day to make regulations as provided for under the Bill.
Section 3 sets out the main provisions of the proposed seller's legal pack and what each pack should contain. One of the key drivers behind the introduction of the seller's legal pack is a desire that potential buyers should be equipped with detailed property information before buying a property in order that they will make informed decisions. This will also mean the process will be much less stressful for potential buyers because they will be provided with all the information prior to making an offer. Section 3(1) outlines the essential documents required for a sale to proceed, whereas section 3(2) outlines the documents that may be included in the seller's legal pack, at the discretion of the seller, should they be of interest to potential buyers. The documents contained within section 3(1) and (2) will enhance the transparency of property transactions and will reduce transaction times, which will further reduce seller and vendor liability. Section 3(10) will provide for exceptions for document inclusion but if there is anxiety, either on behalf of the agents or members of the legal profession, this will not affect a fee structure that already exists or the work they normally undertake as part of their work. It will merely front-load the process to provide certainty and efficiency to all.
Section 4 will provide for exemptions to the compilation of a seller's legal pack where sales may be complex, such as a portfolio or mixed sales or where sales are made under unique or other circumstances such as within a family or occupied properties. The section is necessary to address the fact some sales may occur under circumstances where a seller's legal pack may not be feasible or useful, such as where no marketing is required, perhaps to a family member.
Section 5 deals with the age of the seller's legal pack of documents when first included. This is an important element of the Bill that will ensure only up-to-date information derived within a maximum of 12 months from the date the property was put on the market can be included in the documents. The documents contained in the seller's legal pack must be dated no earlier than the date that falls, as I said, a full 12 months before the property was placed on the market. I believe this is common sense and is self-explanatory. The section will provide for a quick process when compiling the seller's legal pack because it will ensure original documentation is provided alongside documentation of subsequent alterations to the property that would be of interest to buyers. This will ensure the seller's legal pack is compiled with valid documents and will provide a measure of transparency in the seller's legal pack.
Section 6 deals with enforcement and proposes that the enforcement arrangements will be carried out by the seller's property service provider. The section is necessary for those involved in the buying and selling property markets to understand their requirements in respect of the seller's legal pack.
Section 7 sets out the Short Title and the commencement dates of the sections after enactment.
The Bill is designed to act on the reality that exists in conveyancing systems, and with it, we have the opportunity in this House to take some important steps to create a new dynamic intended to tackle the unnecessary and time-consuming delays plaguing the purchase of property in this country. I commend the Bill to the House.
I thank Deputy MacSharry for putting forward the Bill and allowing me an opportunity to set out the Government's position on it. The Government will not oppose the Bill. In fact, I welcome the objectives behind it to improve efficiency and reduce costs in the process of buying and selling property, which are certainly commendable goals we all share and want to achieve. Indeed, the Government and I, as Minister, continue to take major initiatives to address the need for fundamental reform and greater efficiency in our property law and conveyancing practices. To take just a few examples, there are key legislative and policy developments, such as the Land and Conveyancing Law Reform Acts 2009 to 2021, inclusive, which have greatly reformed and modernised property law and simplified conveyancing practice. Second, the Tailte Éireann Act 2022 consolidated the mandatory nationwide registration of property within property valuation, mapping and surveying functions in a single State body, Tailte Éireann, from March 2023. A total of 90% of property titles nationally are now registered, which greatly simplifies the future conveyancing of that property. Third, there was a report to examine whether the proposed introduction of a new profession of conveyancer, or the greater use of digital technology, could reduce overall conveyancing delays and costs. I look forward to receiving that report from the Legal Services Regulatory Authority, which is expected in the coming weeks.
Despite these considerable achievements, we all acknowledge remaining delays and costs in many property sales are still a problem and that further progress is needed. The objectives behind the Bill, therefore, merit further recommendation and examination. The core intention of the Bill is to propose a new statutory obligation whereby, when a seller wishes to put a property up for sale, they must first supply a seller's legal pack. This pack must then be made available to all potential buyers and advertised as part of the sale. The Bill suggests that introducing this pack will reduce conveyancing delays and costs by front-loading the production of key documents on the property being put up for sale. It also suggests the pack will ultimately reduce the number of sales that fall through.
Nevertheless, it is important to outline where we have identified challenges and difficulties with the Bill to see how we can work through them and to learn about mistakes that have been made in other jurisdictions. There is a risk the Bill as drafted could lead to increased conveyancing costs and delays and even reduce the supply of properties coming onto the market, so it is important we take the opportunity during this debate to highlight a number of issues that have been identified and will need to be considered further both by Deputy MacSharry and by the Oireachtas joint committee as it carries out post-Second Stage scrutiny.
First, and as I have mentioned, other jurisdictions have not necessarily had positive experiences with sellers' legal packs. A similar pack was introduced in England and Wales in 2007, but had to be suspended in 2010. The government concluded that the pack had added to rather than reduced conveyancing costs and delays. We should bear that experience in mind when seeking to introduce something similar here. Second, the Bill could lead to additional costs being placed on sellers, but may not realise corresponding savings for buyers. For example, compiling the minimum mandatory documents required for the legal pack under section 3(1) will incur significant up-front expense before a property is brought to market or any potential purchaser is in view. As we have heard from the Deputy, section 5 requires that each document in the pack as compiled to be less than 12 months old. These minimum documents have to be obtained from multiple sources, most of which charge their fees. The risk is that if a sale falls through, or no serious purchaser appears, that these will be sunken costs. Some sellers, in particular those trading up or in financial difficulties, and some executor sales may not have money available to meet these up-front costs. In addition, buyers and their lenders need any of the mandatory documents that are time sensitive to be up to date when the sale is closed. Again, the seller risks having to update those documents for closing and applicable fees will potentially need to be paid again. We will have to look at the timeline or whether there is a way of expanding that. Sellers will also incur extra legal fees. Currently, their solicitors only have to deal with queries about title from one buyer who has gone sale agreed, and paid a booking deposit. However, the Bill requires the legal pack to be advertised much earlier, and to all potential buyers. The seller's solicitor would have to deal with queries from multiple potential buyers, which would potentially increase their workload and their fees in turn. Sellers' costs would also increase because the Bill requires the seller to provide a range of searches against the property for the legal pack. Searches are expensive and this again would require sellers to duplicate costs that are currently carried out by buyers. Buyers and their lenders will still prefer to rely on their own searches, which run right up to the closing date.
Third, it would be important to ensure that the Bill would not add delays to the conveyancing process. For instance, under the Bill the property cannot be placed on the market until the pack is ready. However, some of the documents required under section 3(1) can take weeks or months to obtain. In England, the experience was that the seller's pack was delaying properties getting on the market for sale. Section 3(3) states that the pack shall not include documents other than those listed in earlier subsections (1) and (2). I have been informed that the Law Society is concerned that this could lengthen the timeline for sales by forcing sellers to undertake preparation for sales in two phases - one for the mandatory documents under section 3(1) and the other for non-mandatory documents. This would run counter to the pre-contract investigation of title, PCIT, system introduced by the Law Society in 2019, which requires buyers and sellers to produce each required document at the most efficient point in the conveyancing process. This has greatly reduced delays between signing contracts and closing the sale. In addition, by limiting a seller's disclosure about the property to the information listed under section 3 of the Bill, the seller would not be meeting the obligations placed by lenders on the buyer's solicitor, who has to check the title thoroughly in order to provide his or her certificate of title on the property to the lender. This could cause wider legal difficulty so would have to be examined further.
Fourth, a number of stakeholders including the Law Society, Tailte Éireann and the Property Services Regulatory Authority have raised some technical concerns about the specific documents required for inclusion in the legal pack under section 3 of the Bill, including the minimum mandatory documents. It would be important that there be consultation with these different bodies. I also note that the Bill does not refer to a number of other key documents that would have to be provided and checked. These include Family Home Protection Act declarations for residential property, and detailed documentation under the Multi-Unit Developments Act 2011 for apartments such as fire safety documents and other further specialised documentation for agricultural or perhaps commercial properties.
Finally, the Bill seeks to create new statutory obligations through the introduction of the seller's pack and identifies the protection of consumers and purchasers as one of its key objectives, but it does not envisage any independent enforcement mechanism. The issue of enforcement is again something that would require further consideration. I welcome again the objectives of the Bill, but I must also outline and underline the issues I believe would need to be examined and fully considered further as the Bill moves to Committee Stage where it risks not achieving its overall intended purpose, that is, to make things easier for people who want to buy and sell houses. It is clear that a number of practical and legal issues need to be addressed first. Before proceeding to Committee Stage, I strongly recommend that the Deputy, working closely with the Oireachtas joint committee, gives consideration to the issues I have outlined and that there would be consultation with the various stakeholders. These steps would ensure that the Bill's potential objective could be realised effectively.
I thank Deputy MacSharry and the organisations and individuals who have assisted him in producing this Bill. It is a Bill Sinn Féin is happy to see proceed to Committee Stage. It also gives us an opportunity to raise some related but wider issues in terms of the reform of the regulation and oversight of the buying and selling of houses. I will come to that in a moment. I also want to thank the Minister for her constructive approach in many of the concerns she has raised with the Bill. They are concerns that both myself and my colleague, Deputy Pa Daly, had discussed as valid reasons why this Bill needs to go to Committee. Those matters need to be teased out, because this is an area where there is a huge need for better regulation, but that regulation needs to be got right based on the input of all relevant sectors.
One group of people I would add to the list, which the Minister has just mentioned, are consumers themselves. Too often in this debate it is valuers, estate agents, lawyers or State agencies like Tailte Éireann and their respective bodies that are consulted. We have to ensure that any strengthening of the regulations surrounding the buying and selling of residential homes in particular puts consumers at the heart. Far too often we hear not just stories of sales that fall through, but stories of malpractice. We hope they are at the fringes of the market in terms of artificial bidding and developers withdrawing from contracts. I am sure the Minister has been closely watching Rathmolyon in County Meath, which has created significant issues for people who paid deposits on new homes more than a year ago. As I am sure the House knows, the most recent development there has been the appointment of a receiver. Very hard-working people who paid deposits and signed contracts in good faith are now in an even more precarious position than they were prior to the appointment of the receiver. Depending on the approach of the receiver and the extent of the debt owed by that developer to primary creditors the possibility of losing deposits, in addition to losing the prospect of their homes, looms very large.
I advise Deputy MacSharry that in addition to the issues raised by the Minister, I also think some of the legal definitions in the Bill need to be carefully thought out. The most obvious one is to define matters such as sale agreed more clearly in law. That is valuable but also one that needs to be thought through. I think therefore that committee scrutiny is absolutely essential. In that context, my colleague Deputy Pa Daly, who is unable to be here, will engage in a positive way with that pre-legislative scrutiny. He would like to see the committee progress it as appropriately as possible in its timeframe.
While the Minister is here I will raise some broader issues about the regulation of this area, which is directly related to this Bill. Her Department is under very real pressures with the important work she is doing in terms of combatting domestic and gender based violence and other issues around law and policing reform. It will therefore always be a challenge for the fundamental reform of property services regulation, for example, strengthening the Property Services Regulatory Authority, and as she has mentioned the Multi-Unit Developments Act. That was always going to be challenging. Her Department has a huge number of priorities. This is no criticism of the Minister or her officials. However, those key areas of regulation are lower down the priorities for a variety of good reasons. In the last Oireachtas a number of us wanted the housing committee to spend some time looking at those matters, because housing, its regulation, the delivery, buying and selling of houses including the matters under consideration in this Bill are matters higher up the priority list of our committee. However, we are precluded from doing so because this rests with the Minister. She will know that when the Tailte Éireann legislation was going through the House, the Oireachtas joint committee which dealt with it made a number of recommendations to the Minister. One was that the Property Services Regulatory Authority should be transferred into that new entity and come under the auspices of the Department of Housing, Local Government and Heritage rather than the Department of Justice for the same reasons.
I am firmly of the view that if the Oireachtas committee is to consider this Bill, it would be useful for it to consider some of those wider matters, either by way of consideration of amendments to this legislation or just to consider them. Often we see stories of people putting bids on houses and then being told there are other bidders. They are not sure if they are real bidders or if there is a phantom auction going on. The price goes up and, ultimately, they pay more or are unable to continue to compete. The process lacks transparency or meaningful consumer protection. That has to be looked at.
Likewise, there are issues, and Rathmolyon is a good case in point, where people pay deposits and sign contracts but the other side of the transaction fails to sign and then comes back saying that before they will sign additional money has to be paid or the contract will fall through. Such practices are clearly not within the spirit of the existing regulations but are occurring and need regulation.
When I first engaged with the Property Services Regulatory Authority, I thought it would be a body to which, for example, if somebody had a genuine complaint, they could go to make a formal complaint against a property services management company, an estate agent, a valuer or an owners' management company and action could be taken. However, it is a voluntary code of conduct which the authority has virtually no powers to enforce. That stretches well beyond the issue before us but engages with the issue of owner management companies, including those that remain in the control of the developer and are not yet transferred to the owners, as well as property management agents etc.
There is a broader issue of reform and the reforms before us could be part of a wider review. The Department of Housing, Local Government and Heritage and our committee have a role to pay in that. The Minister will find that members of our committee see that as something more immediate which we would like to address. If it was something into which the Department was minded to put time and energy, many of us on this side of the House would be keen to work on a cross-party, cross-Government-Opposition basis. Ultimately, Deputy MacSharry and the IPAV, which assisted him in developing the Bill, want to ensure the process of buying and selling a home is more open and transparent and carries less risk for all players, that if and when people break the rules, there is somewhere to go to complain and enforce them, and that consumers have protection.
I welcome the Bill and the Minister’s response to it. My colleague, Deputy Daly, looks forward to its passage to Committee Stage.
I again thank Deputy MacSharry for bringing forward the Bill and thank IPAV and those Members who have worked on it. The overall objective is to support those selling and buying homes to do so in the most efficient and effective manner. We have all probably experienced or know people who have experienced delays and challenges in selling a home, with a knock-on impact on purchasing their own. It is about making sure we have a system that is as effective as possible.
We have to acknowledge and look at where these types of packs have been used elsewhere, how they have not worked and how we can learn from that. That is why I have outlined some of the initial challenges we have identified with a view to seeing how we can work through and overcome them and put forward something that would support consumers and those working in the industry.
I look forward to engaging with the Deputy and the justice committee, as well as potentially those on the housing committee and others, as this goes through the Stages.
I thank the Minister for not opposing and for taking a constructive approach in terms of referring it to committee. I thank the Sinn Féin Party. Other parties expressed support as well. We are all on the same page in terms of trying to achieve the outcome. Ultimately, to follow on from Deputy Ó Broin, it is all about consumers. While we are here in the presence of some of the professional bodies, if we do not have buyers and sellers there is no business for anybody and we are not generating taxation or anything else. It is all about them and making it more efficient.
I listened carefully to the challenges the Minister and Department feel need to be addressed. That is what Committee Stage is for. Nobody is overly precious about any aspects of the Bill. We all want to achieve the same thing. On Committee Stage we can tease out any aspect of that.
Nevertheless, I will offer some rebuttal. The UK experience was probably about 13 and a half years ahead of its time and 87% of property practitioners in the UK now feel the home information packs, as they were called there, would be better placed to succeed today. Documentation is much more readily available in the digital age and digital is acceptable for the transfer of documentation. In that context, we believe it is timely to bring this forward.
There is no evidence to suggest the pre-contract initiative which came from the Law Society has reduced conveyancing times. Neither will this add expense. Legal professionals currently prepare all of this documentation for public auctions. We just suggest it be done for everything and be done in advance. It will not be at extra cost. Planning compliance, site map, BER and all the title documentation will be required in advance, instead of doing it after sale agreed, when the clock is ticking on a six-month mortgage approval or loan offer. I am a licensed auctioneer and we have all experienced sales falling through because information cannot be got. We all know from experience that professional organisations, be they legal or other bodies, can be precious about things when it is not their idea but it is worth noting the Law Society did not choose to engage in the process when we were drawing that up, though we put it to it. We hope it will engage now. There is no threat to any of these bodies. Going down the route of conveyancer, which the Minister has suggested in the past, can only assist the process. The UK experience, I am afraid, does not stack up to what they are saying. The levelling-up white paper prepared by the British Government and Prime Minister before last is still on their agenda and is to reintroduce home information packs, acknowledging the fact we are in a different age and that they were a little ahead of themselves in 2010.
I know the joint Oireachtas committee is extremely busy but I hope it will embrace the role of teasing out the Bill as quickly as possible. We believe it will ultimately help consumers and make the jobs of solicitors, conveyancers and property service providers a little bit easier, once we get used to it. I again commend the Bill to the House and am grateful to colleagues for allowing us to proceed to committee. Hopefully we will get it enacted with whatever improvements the Minister sees fit as quickly as possible.
Question put and agreed to.
Cuireadh an Dáil ar athló ar 4.19 p.m. go dtí 1 p.m., Dé Máirt, an 10 Deireadh Fómhair 2023.
The Dáil adjourned at 4.19 p.m. until 1 p.m. on Tuesday, 10 October 2023.
End of Take