Dominic Hannigan (Labour)

I welcome the Minister of State. I welcome this legislation. It is the start of the road towards proper regulation, not just of estate agents and auctioneers but also of management agents, and it begins to address issues relating to the management of private estates.

The Bill will put the property services regulatory authority on a statutory footing. This is the body that will license and supervise firms offering a property service. The authority will also set standards and develop codes of practice and administer the compensation fund for those who suffer through a dishonest licensee. I have been asking for such a body to be put on a statutory footing for some time. It is in the interest of consumers to do so and I am glad the legislation is eventually before us.

The need for the Bill has been mentioned not just by Members, but in studies and reviews carried out over the past number of years. In 2004, the Minister for Justice, Equality and Law Reform set up a review group to look at the auctioneering profession. It found that the current regulatory system was outdated, felt that property management agents should be required to hold a licence and recommended that there should be an appropriate system to control entry into the profession. The group recognised concerns about pricing - particularly misleading guide prices - gazumping and gazundering. It recommended that a compensation fund be set up.

There have been other reviews, particularly on the management of estate developments in multi-unit developments. These developments typically consist of new apartment blocks with communal areas, halls and lifts. Management of estates also includes the management of common green areas in more traditional housing estates such as estates made up of detached or semi-detached houses. These reviews were carried out by the Law Reform Commission and the National Consumer Agency.

Both of these bodies have produced comprehensive reports with recommendations on how the situation with regard to multi-unit developments can be improved. These reports recognise that quite often the management companies and agencies exert excessive control over the maintenance of the developments. They highlight the difficulties this can pose, including the charging of exorbitant management fees to homeowners and, in some places, the absence of a long-term maintenance strategy. The reports recommend changes to improve the situation, in particular, giving homeowners more rights and more control over their homes and the setting of management charges. The Bill goes some way towards addressing these concerns and is quite detailed.

I intend to concentrate on the issues of the licensing of agents, the pricing of dwellings by estate agents and the existence of management companies in developments. The Labour Party may put down a number of amendments on Committee Stage.

The proposal to license agents is welcome. The Bill will make it an offence to offer a property management service without first having a licence, with a penalty of one year in prison and-or a fine of €5,000. The severity of this punishment should deter anybody from setting up or trying to set up an illegal practice, which is good news for the consumer. I am a little disappointed by the fact that there appears to be little teeth given to enforcing the code of practice to which licensed estate agents and auctioneers must adhere.

The code of practice for property service providers has already been developed and it sets out minimum standards to be followed by auctioneers and estate agents. However I understand - I would like the Minister of State to confirm whether this is the case - that if auctioneers do not follow the code of practice, they will not be civilly or criminally liable. If that is the case, would the Minister be prepared to make the penalty stronger?

I am pleased to see that the Bill makes an attempt to deal with the issue of gazumping. We all know of stories, the veracity of which cannot be checked, whereby when a buyer puts in an offer, another potential purchaser appears and makes a higher bid. The difficulty is that people do not know whether this other bidder is a real purchaser or a phantom bidder put in by a rogue estate agent to increase the sale price. It is difficult to tell if this practice is widespread, but there is some evidence that it has happened in the past and enough concern about the issue for it to give us reason to worry. A gentleman who visited my office in Ashbourne some months ago was convinced that when he put a bid on a property, a phantom bidder was put in place by the agent. This led to him having to pay at least an extra €20,000 on the purchase price, which represented approximately 10% of the cost of the property.

I am glad the Bill will make this practice an offence. A prison sentence of a year seems appropriate, but I ask the Minister to reconsider the proposed fine of €5,000 because that is quite small in the context of the potential gain a rogue estate agent might make, which could be many times that and which, over a number of occasions, could amount to several hundred thousand euro. The proposed fine is on the low side and I am signalling now that I propose submitting an amendment in that regard. People who engage in the practice of gazumping are low-lifes and should be driven from the industry. The fine is only approximately the same price as a first-class ticket to New York and is not sufficient to deter people from this practice.

On the matter of how to find out where gazumping occurs and how to prevent it, the gentleman who visited me has worked out a methodology for preventing it from happening and I will ask him to send the Minister of State some details on that for his consideration.

On the issue of management companies and agents, I note the legislation deals specifically with management agents and I recognise that the issue of management companies will not be taken care of until another day. I look forward to debating that legislation when it is introduced. I know of many families who must pay excessive charges for the upkeep of their estates. I know of families in Ashbourne who have paid for the maintenance of their estates, but have found that common lifts are not being taken care of. Their management agents are complaining about a lack of funds. When I visited an estate in Dunboyne last week, I spoke to people who are confused about having to pay €1,000 a year to have the grass cut in the communal areas. These are real issues. People feel they are being ripped off in the absence of regulation of management companies and agencies. I am glad that the management companies Bill appears to be on its way. It has to be said that many management agencies and companies do a fantastic job, although a few bad eggs need to be tackled. I hope the legislation before the House will facilitate that. We need to ensure that management companies are controlled by the residents of estates. The terms "management company" and "residents association" should be interchangeable. They should become one and the same thing.

We need to regulate the maintenance of open areas in estates that have been taken in charge by local authorities. I understand that the local authority parks department maintains the common areas of estates in the Dublin City Council and Fingal County Council areas. As there is no parks department in other counties, including County Meath, residents associations and management agencies have to find the money to pay for external contractors to maintain the common areas. It could be argued that this is an additional form of taxation for residents living outside the Dublin and Fingal areas. We need to examine the issues of equality that arise in this regard. Last year, the Minister, Deputy Gormley, said he would consider the possibility of establishing parks departments in counties such as Meath. What is his current thinking in that regard?

I welcome this legislation. It increases the rights and protections enjoyed by consumers in their dealings with estate agents and auctioneers, which is good news. I look forward to debating the forthcoming legislation on management companies in this House in the near future.