Pat Rabbitte (Dublin South West, Labour)

The effective regulation of auctioneers and estate agents has been demanded in this House for many years. A Bill to regulate auctioneers, letting agents and property management agents is long overdue.

It is remarkable that throughout the boom none of the successive Fianna Fáil-led Governments that gorged themselves on property taxes were prepared to move to proper regulation. A distinguished Member of the Upper House was able to demonstrate that the process required for an auctioneers licence was perfunctory in the extreme. Provided the applicant could furnish a modest bond there is no test as to his suitability.

Fianna Fáil used think of itself as a national movement where auctioneers are an integral part of the infrastructure, somewhere up there with publicans. As a leading publican said at that famous public meeting that we will never forget, "Who does the Government think is running the country?"

For the best part of a decade there has been an even more urgent need to regulate property agents who emerged and multiplied with the arrival of multi-unit developments. Often these gentlemen were a front for the property developer who built the development. Acute difficulties for residents have been created in many of these developments but it has taken six or seven years by Government to respond to advocacy for regulation in this House. In so far as this Bill is part of the answer, I welcome its belated introduction.

I do not particularly blame the Minister. I am not referring to the fact that this Minister has repeatedly disavowed any familiarity with the property sector and would not know a developer if he met one on the street. Rather I am questioning the wisdom of abolishing the department of law reform. The department of justice already has a huge legislative schedule and, in a department so tightly controlled as justice, it may simply be unrealistic to anticipate that sufficient priority would be given to law reform. Given that Fianna Fáil has been more or less permanently in office, the permanent government has learned how not to displease its political masters. The result is that control of beggars is accorded a higher legislative priority than regulation of auctioneers who have played a part in beggaring the rest of us.

Now the horse has bolted, the Government is responding to boom-time demands. The Government sat back while bankers, developers and auctioneers colluded to manipulate the market to facilitate profit-taking to such an extent that the crash became inevitable and families have been pauperised. Disquiet about certain practices in the auctioneering business finally gave rise to a review group being established in 2004. This was the period over which the then Taoiseach consistently resisted pleas in this House to look at a Kenny report style mechanism to control the price of building land. Eventually, he kicked to touch and referred the issue to the Oireachtas Committee on the Constitution. His excuse or explanation being that arguments on this side of the Health that the Kenny report or some of its key recommendations might be implemented posed constitutional difficulties. The committee concluded, of course, that where the exigencies of the common good required it, there was no such impediment in the way of addressing the cost of building land. The then Taoiseach did not act and now we are all paying the price.

The principal proposal of the review group established in 2004 is the establishment on a statutory footing of a property services regulatory authority. Its purpose would be to control and supervise providers of property services and to improve standards in the provision of those services. Six years later, the Minister's Bill now reflects that principal recommendation.

One of the questions that arises is whether we need another agency and elaborate architecture to police a sector currently dormant and unlikely to be over-activated in the years immediately ahead. Is there no existing agency of State that might be given responsibility for these functions? For example, might these functions not be reposed in the National Consumer Agency? It appears to many people that as it stands the National Consumer Agency has few powers and believes it discharges its role merely by advising people to shop around. If its role is purely about consciousness-raising among consumers on the relative merits of shopping baskets, surely this function could be done to better effect by the national broadcaster? Why not give the National Consumer Agency some statutory teeth, including the key functions envisaged in the Bill, such as the capacity to earn fees?

More pertinently, I ask the Minister to state, when he is responding to this debate, whether discussions have taken place with the Property Registration Authority to ascertain whether it is in a position to discharge these functions. It seems the property registration authority would be eminently well-placed to undertake the functions and activities envisaged by the Bill. I would be pleased if the Minister will indicate if he has considered this option, whether discussions have taken place with the Property Registration Authority, and whether it is the case that the authority already possesses the skill set necessary to discharge the functions envisaged in the Bill.

It is arguable that the elaborate architecture envisaged by the Bill has its origins in boom times and can be funded only in better times. Notwithstanding the intention that this new authority will be funded from fees levied on licensees, these questions need to be answered. Must we really establish a new authority on every occasion that we attempt a needed reform or seek to regulate a professional body? Perhaps there are circumstances that require precisely such an approach but is this one of them? Over the past 20 years, the Government has tended more and more to franchise out functions to agencies and quangos while at the same time employing outside consultants to help with the retained duties of a Civil Service diminished in numbers. Can we afford to continue to govern in this way?

It is clear that the Ministers clinging to office in this Government are still in the mindset of the profligate days when throwing around money was the formula for retaining power. It is a mindset that has imperilled our country, yet those responsible behave as though the citizens should be indebted to them for supposedly latterly putting the country before party. When one talks to people from outside this country, they express disbelief that the same politicians so guilty of undermining our way of life are still in office.

I acknowledge the welcome extension of the licensing system to encompass property management agents and that the residents who are clients of these agents will now enjoy at least some statutory safeguards. Taken together with enactment of the Multi-Units Developments Bill, there should belatedly be protections in place for apartment owners, many of whom never anticipated or understood the challenges facing them when they bought into some of these developments. However, as the Minister is aware, there are a few outstanding important issues awaiting to be addressed on Report Stage of that Bill.

To most people outside of the House that a person should be deemed fit and proper to discharge the functions of an auctioneer seems an obvious first step. However, no such requirement as to character has been implemented up to now. I accept that the Bill envisages that in the future, the authority will enforce a more rigorous regime in this regard. I look forward to us having the opportunity on Committee Stage to test the adequacy of these provisions.

I am less clear as to the powers of the authority to intervene where it is suspected that there is collusion and anti-competitive practices being operated by the big players in the estate agency business. There is no doubt but that the big players in the estate agency business played no small part in artificially inflating property prices during the boom. Even before the crash, many individual families - especially first-time buyers - paid a heavy price for some of the practices engaged in by some auctioneering groups. Of course, in the vicious spiral that occurred, the big players in the estate agency business fuelled the crisis, and were encouraged and abetted by the broadsheets that profited from property supplements larger than the main newspaper. In the process, the big players cannibalised many of the small local auctioneers with no beneficial results to the local community. The developers, the big auctioneering firms, the banks and the newspapers were a heady cocktail that together puffed up the market at the expense of the consumer and ultimately caused the crash that is inflicting such hardship on so many families.

The Government refused to intervene because, as the then Minister for Finance, Deputy Cowen, famously stated, it was not his job to interfere in the market. It was a statement of such monstrous misjudgment that it will take a generation to recover from the consequences. The Government did not refrain from extending tax-based property incentives for long beyond their usefulness. The question that arises for the Minister is whether the new authority will have the power to arrest this type of self-serving spiral of greed.

Whether or not the Minister wants to proceed with the creation of a new authority as distinct from, as I have suggested, asking the existing Property Registration Authority to discharge these functions, I would like to raise a few questions, mainly in regard to Part 6.

I wish to raise a few questions with the Minister in respect of Part 6 of the Bill in which attempts are made to regulate licensees regarding the sale or letting of land. Auctioneers or valuers also provide a crucial function in the fixing of rents at rent review stage - to which Deputy Shatter referred - in long-term leases or where the court is asked to fix the term of a new lease where a tenant is claiming statutory rights and is consequently required to fix the rent. Tenants, including commercial tenants, have little or no confidence in valuers and auctioneers to disclose fairly and candidly all material facts with regard to comparable properties being let in the general vicinity of a premises. The tenants and the court are dependent on the valuers presenting comparators, that is, details of comparable lettings of which they are aware, for similar properties.

There should be a mandatory statutory obligation contained in the Bill, in the context of the fixing of a rent in any tenancy, whether it be the initial rent or in a rent review, that the valuer should disclose all material facts in connection with lettings being advanced. For example, if the valuer is aware that the rent set in a lease he or she is presenting as a comparator to the court has been varied informally or that some other arrangement has come into existence, for instance, a waiver of rent for a period of time or a landlord carrying out works in connection with securing a letting, this should be fully disclosed in a rent review, in any arbitration or in any process where the valuer's expertise is being relied upon. It should be a specific criminal offence to fail, omit or wilfully refrain from disclosing material facts about any letting, values or terms being presented in support of a rental value for any property.

Ireland should follow the lead of the UK Misrepresentation Act 1967. In practice, valuers, estate agents and auctioneers have a monopoly on information and the public are at their mercy as to the market rent for domestic and commercial properties. This is manifestly not in the public interest and the public have no confidence in the sector to regulate itself. There is no reason a proper and clear record should not be kept at the creation of each letting agreement of one year duration or longer of crucial data such as the core terms of the letting, for example, the square footage of the property, the intended usage and the rent. This data could be readily collated and made available to the public.

Under the Registration of Title Act 1964, leases for 21 years or longer can be registered as burdens and details of their existence can be ascertained and data pertaining to them are submitted to the Land Registry. Under the Registration of Deeds and Title Act 2006, the Minister for Justice and Law Reform has the power to extend registration to leases that are for less than 21 years. The greater the transparency and the more readily available to tenants and their advisers the true facts regarding the terms of lettings, the more likely we are to have a fair system of rents and less need for lengthy arbitrations or litigation to resolve disputes with regard to the fixing of the terms of new tenancies. Litigation and arbitration are costly processes and do not serve the interests of tenants who can often ill-afford the legal and expert fees involved. Never was this more applicable than today.

Deputy Shatter has raised the question of rent reviews and I know that the Minister has expressed views on this subject. I refer in particular to the question of upward-only rent reviews on which a Private Members' Bill was introduced by my colleague, Deputy Ciarán Lynch, but the Minister for the Environment, Heritage and Local Government, has not responded positively.

In the interests of transparency, the Minister should introduce regulations immediately under section 59 of the Registration of Deeds and Title Act 2006, facilitating the registration of leases or lettings which are for 12 months or for a greater duration. The Property Registration Authority is perfectly equipped to deal with this matter. It has a system in operation for the past 40 years for the registering of leases.

The expansion of the category of leases to be registered readily facilitates data capture of rent. The data capture of rent is important, given the number of times Members of this House have received complaints in that regard. This is critical data which any Government seeking to manage the rights and interests of tenants and landlords needs to take into account as it reveals dynamics and trends in the property industry. There is no reason the sale prices of properties should also not be published and made available. This Bill would afford an ideal opportunity to confirm formally the position. What the public and national interest require at this time is a property price register and a publicly-accessible database.

For an appreciable period of time, the Minister has sought to hide behind the decision of the Data Commissioner that publication of house sale prices would offend the Data Protection Act. The Data Protection Commissioner operates the relevant legislation including the Data Protection Act 1988. This Act was amended by the Data Protection (Amendment) Act 2003, which brought Irish law into line with the EU Data Protection Directive 95/46/EC. However, in England, details on property sale prices are readily available and the same EU data protection directive governs England as well as Ireland. Other common law jurisdictions, such as New Zealand, routinely publish sale prices and the information is openly accessible to the public. If we want to avoid distorting the rent or property market with regard to rent or prices, then the only method of prevention is to publish the actual facts about rents achieved and the sale prices of properties. The Data Protection Acts should be amended, to the extent that this is necessary, to bring the position into line with other countries, including England and Wales.

Furthermore, once the legislation is formally amended, data from previous years, particularly from 1 January 2005, should be made available so that the true facts and circumstances about sales of houses, in particular, are available for consideration. The public have a legitimate interest in having access to the information. In each conveyancing transaction the Revenue Commissioners acquire a document called a Particulars Delivered document which contains full details of price and so forth. Therefore, the data is already captured, is held by the Revenue Commissioners and is readily accessible. What is missing is the political will to facilitate the disclosure of the data.

The questions I have raised are purely in connection with Part 6 of the Bill. It is very unlikely that this Second Stage debate will conclude in the near future but I hope the Minister will take time to respond. We missed out on the ten-year period when this legislation was so badly needed. I cannot see the point now in rushing to enactment and bringing in an imperfect piece of legislation. This Bill has its origins in the boom times. Unfortunately, the market at present does not exist. The dead hand of NAMA is over all property transactions and, until that matter is stimulated, there will not be any movement.

The opportunity is there for us to get this legislation right. However, there is still a reluctance to deal with the kind of issues I have raised in respect of Part 6, including a reluctance on the part of the Minister to do so. I do not know why this is the case. Surely, notwithstanding the affinity that exists between the Minister's party, the property industry and the players within it, we must have learned that never again can we inflict this on our country. The damage which has caused us all to talk about co-operation and consensus to keep the IMF wolf from the door has been provoked because of the mistakes we made in this area. The Minister must acknowledge there is not just a necessity to admit those mistakes on his part and, in particular, on the part of his namesake, the former Taoiseach, but they must admit we need to address them now. We have not addressed them, as this Bill stands.

It is a very elaborate architecture. I do not know whether the capacity exists in the industry to pay for it. I am more concerned about the skill set that will be available to the authority to do the job of monitoring, policing, supervision and prosecution, if need be, of bad practice and the kind of manipulation of the market to which Deputy Shatter referred in his earlier remarks. We all remember it very well. We all remember the queues, in particular the arranged queues and the manipulated partial sales, as if there was a shortage of land and of houses for sale in the country, and we remember all of these kids who were walked into that by the smooth sales speak of so many commercial professionals.

It absolutely sticks in the craw now to see some of those beginning to re-emerge onto television and to give us opinions about the economic situation we are now in. They are crawling out from under the stones again - the banker economists who told us to party on and buy more houses because the prices were still going up.

See this speech in context