The proposed reforms of the property market are too limited, writes Orna Mulcahy, Property Editor.
Are you worried about gazumping, guide prices, the cost of surveys, sealed bids, auctioneer's fees and the security of your booking deposit on a new home? If so, there wasn't whole lot of comfort in yesterday's announcement of a new regulatory authority for auctioneers and estate agents to be set up by the Minister for Justice, Equality and Law Reform, Michael McDowell.
While the Minister plans to draft new laws over the next year that will tighten up regulations for estate agents as well as property letting and management agencies, the issues that most worry the public are unlikely to be addressed by legislation. The public will be able to make complaints to and seek redress from the new body. However, with the Minister insisting that the needs of the consumer have to be balanced by the need of the property market to function "in a dynamic way", it sounds like business as usual out there.
The announcement of the new authority to be based in Navan - well away from the hotbed of Dublin house prices - was welcomed by both auctioneering bodies, the Irish Auctioneers' and Valuers' Institute and the Institute of Professional Auctioneers and Valuers - and that says it all. If the auctioneers are happy, then the public is not going to see a whole lot of changes to the often fraught business of buying or selling a house.
Of the six problem areas most frequently aired in the media and listed above, only one was seriously addressed by the review group set up by the Minister, and that is guide prices. This is a hot topic among the chattering classes and in the business, but the report's recommendation that guide prices give way to a new system of advised minimum valuations (AMV) doesn't really change anything. An estate agent putting a property to auction will now issue an AMV to the vendor in writing, but that won't stop a posse of potential buyers pushing the price to a far higher level in the auction room.
There will be no onus on the owner or agent to peg the reserve price to the AMV. Agents have successfully argued that as the AMV is set weeks ahead of the auction - before the level of interest in the property is fully known - vendors must have the freedom to set a higher reserve just before the auction.
The issue of guide prices is a high-profile one that affects only a small percentage of properties sold in Dublin in a year. Outside Dublin, an even tinier percentage of property is sold through the auction process.
The problem is - can you legislate for a boom market, where buyers are determined and vendors greedy?
Guide prices aside, what auctioneers do now, they will be doing in five years' time and beyond because what they do is controlled by the law of contract and that is difficult to tinker with. Buyers in all parts of the country have complained about gazumping, where an offer for a house, initially accepted, is rejected in favour of a higher bid, or where, in a new homes development, the builder hands back the booking deposit in order to put the property back on the market at a higher price. Buyers will continue to be gazumped because gazumping is something that vendors do, not agents, and until a buyer has a contract signed by a seller, the buyer has no legally enforceable agreement.
On the issue of estate agents' fees, the review group found that the levels of fees were broadly fair. Given the intense competition for market share, with estate agents undercutting each other at a furious rate - particularly in Dublin - high fees are not a serious concern for vendors.
Suggestions that sellers could provide a surveyor's report that all potential buyers could use, free of charge, are unlikely to be taken up by the new authority, since it is doubtful that a serious buyer would accept a vendor's survey.
The practice of sealed bids, where estate agents invite potential buyers to make a best and final offer on paper, is unlikely to be changed either, though in a case where either the buyer or the seller is unhappy with the procedure, the agent may have to produce a precise record of the bids for the new authority. Similarly, where someone feels that their bid may not have been put to the owner at all, the agent in question will be asked to show a record of each and every offer. The penalty for agents if they breach any of these procedures will be a fine and the threat of their licence being withdrawn.
Such paper trails will inevitably tidy up the business to some degree, but it seems that there is little that the regulatory body will be able to do for people who find themselves in the throes of nasty negotiations and want to blow a whistle there and then. There will be no mechanism to stop the process - all they can do is complain afterwards about shoddy treatment.
The auctioneers are pleased because the body is likely to impose new licensing regulations that will discourage those with little or no qualifications from setting up office and calling themselves an auctioneer. This in turn is good for the consumer, since it has potential to increase confidence in the business.
There is good news too for nosey neighbours. The Minister has suggested that the authority build a database of accurate information on property sales, to which the public would have access. This would certainly be welcome in a market where tremendous secrecy surrounds private treaty sales, and high-profile transactions are often bound by client confidentiality.
Since coming into office this Minister has promised reform in many areas. But the property market reforms will be minimal. The golden rule still applies: caveat emptor.