Paul Coghlan (Fine Gael)

I welcome the Minister and I welcome the Bill. I thank the Minister for his detailed outline of what it contains. The memorandum is very detailed, which is a great help. This legislation arose from the 2004 auctioneering-estate agency review group and gives effect to the principal recommendations of that group. The proposal to move from the existing District Court based licensing system for auctioneers and agents to a new statutory authority is very welcome as we have been calling for it for a long time. While I do not speak as an auctioneer, I am one. Despite that, I hope I have an objective view of what is required and I agree with very much of what the Minister has told us.

I welcome the fact that we will have a separate Bill very quickly to deal with the management of multi-unit developments. That is very necessary because there have been many abuses and many of the residents of such places do not know where they stand. We support the objectives of this Bill. Throughout the recent property boom times the provision of property services such as auctioneering, sales, and maintenance have raised questions over the conduct of some service providers. We on this side of the House have consistently called for more regulation of this industry to better protect first-time and vulnerable buyers from unscrupulous practices. While there are many honourable people involved in property services, we have all heard of experiences of bad practices. Those who conduct their business in a transparent and honourable way have nothing to fear from this proposed legislation.

A persistent criticism is that it took so long for the legislation to be published. The Government provisionally set up the national property services regulatory authority in 2005 on a non-statutory basis. A director designate was appointed in July 2006 and it acquired full-time premises in Navan, a staff and annual budgets of hundreds of thousands of euro each year since then. However, the farcical situation existed whereby the authority could not operate because it had no legislative backing. That is being attended to and it is very welcome.

We see this Bill as a missed opportunity to include regulation on property management companies. After the recent boom there are approximately 500,000 people living in apartments and mixed developments in Ireland today. Associated with these developments are approximately 4,600 management companies. There continue to be many problems associated with this sector. Many home owners do not understand that they are shareholders in a management company, why this is necessary or that the management company of which they are a member and shareholder is not the same as the management agents who manage their block or estate.

Control of management companies is not being handed over to their owners. Developers in control of a management company may organise its AGM at a time and location where working residents would not be able to attend easily. In many cases, there are no sinking funds in place. Owners have no mechanism to seek redress when they are dissatisfied with service provision or the level of fees. There is no legal means of enforcing satisfactory completion of a development.

My party published its comprehensive policy on management companies last summer and we will seek to amend this Bill to reflect many of our policies. While we welcome the published legislation to regulate the property services sector, we take issue with the setting up of a new quango to do it. There is much room for quango consolidation. A national property services regulatory authority should incorporate the Private Residential Tenancies Board, PRTB, the proposed regulation of property services and regulation of property management companies. No doubt the Minister will give us his response and consideration of those when we reach Committee Stage.

It is good to note that the two institutes, the Institute of Professional Auctioneers and Valuers and the Irish Auctioneers and Valuers Institute, generally welcome the provisions of this Bill. However, there are some areas where people in the business feel it is overly prescriptive, especially in a market which is currently under such stress.

Section 2 refers to relevant price range. It states that land valued for sale or letting by a licensee means a price range where the difference between the upper limit of such valuation and the lower limit of such valuation is not more than 10% of such lower limit. I suggest this is too narrow and overly prescriptive given the volatility of prices, both during the boom and in the current recession. I suggest the 10% should be omitted and the section rephrased to reflect a valuer's reasonable judgment given prevailing market conditions. In fairness to the Minister, he said he provided a little for an out in regard to market conditions. In any event, we can tease that out on Committee Stage.

Section 75(4)(a) refers to the establishment of a compensation fund over a four year period reaching a minimum of €5 million and maintained by the authority. This could cause hardship and could be a severe financial burden on some practitioners if it is not thought out properly. I suggest €2 million should be the target figure as experience in both institutes has shown that no more than €150,000 has been paid out over 25 years to clients as a result of dishonesty by agents. It should be noted that even in the current very difficult market conditions, there have been no claims on the compensation fund to date. We can tease out those matters on Committee Stage.

The Bill takes care of the fact that many of the recommendations of the review group were considered but rejected because they could be counterproductive. Some of the recommendations put to the review group were off the wall, although maybe I should not say that, perhaps in one instance illegal, unenforceable or simply unworkable. Continuous professional development for members of the profession is very important as are the insurance requirements which I very much welcome.

It is conceivable that people in the Republic could establish a company in Northern Ireland for the purpose of avoiding the legislative provisions of the Bill. The EU services directive is likely to present a major problem for the property services regulatory authority in that a company established across the Border in Northern Ireland, where it would be subject to no licensing requirement and where the PSRA remit would not extend, could operate in the Republic in competition with those complying with the new legislation and paying the substantial additional costs involved in same.

Compliant agents in the Republic will look askance at the Oireachtas and the EU if this is allowed happen. Surely there are competitive issues at play here if, by doing what is suggested, people were able to save the cost of a licence; save the cost of professional indemnity insurance; save the cost of contributing to a compensation fund and offer no protection for client funds; do not have to achieve educational standards; do not have to undergo CPD; and may escape regulation totally if their base is in Northern Ireland. We will not countenance that. I hope we tease out some of these matters in more detail on Committee Stage.

My attention has been drawn to section 80 which suggests some comfort as regards the protection of clients' funds. We can leave that matter until Committee Stage.

Many people, who I am sure have been in touch with the Minister as they have been with us, and the Society of Chartered Surveyors have serious concerns. The society has a major concern about Part 6. It sees these provisions as seeking to turn established practice on its head without, in its view, a full awareness of the consequences in the property market which such fundamental changes will have. What is proposed in Part 6 is unprecedented to the point of being experimental. In the society's view, the measures proposed in Part 6 are not grounded upon a report from a commission or consensus of economic consultants with a particular expertise in the Irish property market or, indeed, any report.

Section 54 requires a valuer and every selling agent to somehow apply formidable foresight in determining, with unrealistic precision, the price for which a property will sell on the open market. The view of the society is that the current terms of section 54 are unreasonable and clearly unworkable in practice. It believes that the failure of the valuer to predict with absolute precision the price for which a property will sell on the open market will be punishable under Part 7 and will also expose valuers to liability from vendors and purchasers. Both auctioneering institutes are concerned about that.

Section 2 defines "advised market value". A document known as the red book prescribes standards under which chartered surveyors operate. The red book is now recognised practice internationally and is acknowledged by the international stock exchange for the listing of companies, the international banking community and the international accounting standards board. The red book provides a widely recognised and utilised definition of the term "market value". Uniquely, as a result of this Bill, Irish law will be at variance with international practice as to what constitutes market value. It is significant that the highest international standards in this area do not purport to compel a chartered surveyor to somehow foresee with great precision the exact price a property will achieve upon a sale. The contrast between the internationally recognised best practice as provided for in the red book and the terms of section 54 are striking. The society is very anxious that is brought to the Minister's attention. I hope it has been in touch with him or his advisers.

Section 54 fails to recognise the task of valuing a property as not an exact science determined through the application of fixed mathematical formulae. We referred to that previously when debating this matter and when seeking legislation.

Section 55 provides that an auctioneer-estate agent must not discuss or publish an estimate of the sale price which is below the advised value. The effect of this provision is to force a vendor to offer his or her property for sale at a price determined by a third party and not at a price or level of his or her own choosing. Obviously this is something against which we must guard. In any event, some professionals feel that freedom for the vendor to have the final say in the level at which his or her property is placed on the market is one of the core elements of a free market. This provision is completely at variance with a person's established right to market and sell his or her property at whatever level he or she wishes.

I look forward to Committee Stage. We will have a number of amendments and I look forward to the Minister's consideration and, perhaps, his acceptance of them.