New Standards set for Property Service Providers
Estate agents, auctioneers, letting agents, property management agents and other property service providers must now comply with new standards when providing property services. The standards, set by the Property Services (Regulation) Act 2011 (Minimum Standards) Regulations 2020 (the “Regulations”), take effect from 30 November 2020.
What property services and providers are affected by the Regulations?
The provision of certain property services in Ireland is governed by the Property Services (Regulation) Act 2011 (the “Act”) and, subject to some limited exceptions, only persons holding a licence issued by the Property Services Regulatory Authority (the “PSRA”) may provide these services. The new Regulations apply to all licensed property service providers (“PSPs”) under the Act including estate agents, auctioneers, letting agents and property management agents.
Services relating to the purchase, sale or letting of land, the provision of property management services and, notably, the auction of property other than land, are all “property services” for the purposes of the Act, and so, also the Regulations, if they are provided, for consideration, in Ireland. The location of the provision of the service is determinative as to whether the Act applies, rather than the location of the property itself; the property may be located outside of Ireland.
How are PSPs affected?
The Regulations set certain minimum standards and timeframes in the provision of property services including in relation to: (i) the charging and return of fees and expenses, and related communications with clients and others; (ii) the publication of information and management of advertisements; (iii) the holding and return of deposits for sales and lettings; (iv) the communication of offers received for sales and lettings (v) the passing on of payments and termination notices from tenants; (vi) the administration of service charge and sinking fund contributions in managed estates; (vii) the communication of conflicts of interest; and (viii) conduct and behaviour generally.
Notable prohibitions in the Regulations include:
- seeking or accepting any form of inducement (being any reward, advantage or enticement) in providing a property service;
- charging any fee with regard to the sale or letting of land (including where incomplete) to any person other than the client, or communicating to any person that is not a client of the PSP, that fees or expenses due from the client to the PSP are to be borne by that person;
- holding more than one booking deposit in relation to the sale of the same land at one time, without reasonable cause;
- being a director of a management body of a multi-unit development, where property management services are provided to that management body by the PSP or other specified parties (and applies also to principal officers or employees of a licensee;
- making the sale of land to a person conditional upon the PSP providing certain services to that person or making the provision of certain services conditional on the other party being represented by any particular legal adviser or firm of legal advisers; and
- directing or facilitating individuals who are not licensed to provide a property service (except in very limited circumstances relevant to employees).
Where a PSP provides a service, without consideration, that would otherwise be a property service if consideration were provided, the PSP must also inform the person to whom the service is provided and any person who is making a payment to the PSP related to that service, in writing, that the service is not a property service within the meaning of the Act and will not be subject to any protections arising under the Act.
What are the implications of breach of the Regulations?
A breach of the Regulations is “improper conduct” for the purposes of the Act. The PSRA is empowered to initiate investigations and impose sanctions for improper conduct, including financial penalties of up to €250,000 and/or suspension or revocation of a PSP’s licence. The Act additionally provides for a range of offences such as providing a property service without a licence, obstructing an investigation and mismanagement of client funds. Any person found guilty of an offence may be subject to a fine of up to €50,000 or 5 years imprisonment or both.
This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.