Real Estate Update: Attention Property Services Providers: New Regulations in Effect
19 January 2021
The Property Services (Regulation) Act 2011 (Minimum Standards) Regulations 2020 came into effect on 30 November 2020 and requires licensed property services providers (LPSPs) to adhere to additional minimum standards. We look at these standards and the implications of them for LPSPs.
Background - The Property Services Regulatory Authority and the Pre-Existing Regulations
The Property Services Regulatory Authority (PSRA) is the body responsible for the licensing, supervision and regulation of all LPSPs in Ireland. Subject to limited exemptions only persons holding a licence issued from the PSRA under the Property Services (Regulation) Act 2011 may provide property services.
A property service is (a) the auction of property other than land (b) the purchase or sale of land (c) the letting of land or (d) property management services.
The Regulations apply to any ‘property service’ offered by LPSPs, if they are provided for ‘consideration’, ie. some form of payment or compensation. In order to come within the remit of the Regulations, the property service must be provided within Ireland although the property itself may be located outside of Ireland.
The pre-existing regulations were designed to ensure that LPSPs have the necessary qualifications, are of good character, good financial standing and hold appropriate professional indemnity insurance.
The 2020 Regulations - obligations
The 2020 Regulations further build upon these minimum standards to ensure transparency and accountability in the provision of property services. The 2020 Regulations cover standards to be adhered to by LPSPs in relation to: (i) conduct, behaviour and experience (ii) handling of client’s money (iii) publication of information (iv) communication and recording of offers (v) validation of references and checks in respect of tenants (vi) timelines for transfer of money from tenants (vii) notification of termination of tenancies (viii) administration of service charge and sinking fund contributions and (ix) notification of potential conflicts of interests.
In addition to these minimum standards the 2020 Regulations also contain prohibitions on the way LPSPs conduct their business. For example, LPSPs must not:
Hold themselves out as possessing experience, competence, training or resources, which they do not possess
Accept any form of inducement, being a reward, advantage or enticement other than the agreed fee
Retain any unused advertising outlay
Charge any fee other than to their client
Knowingly produce, publish or circulate false or misleading advertising information including (a) sales records (b) sales prices achieved (c) experience of the licensee or any licensed principal officer or employee (d) fees charged or chargeable or (e) applicable commission rates
Hold more than one booking deposit in relation to the sale of the same land at one time, without reasonable cause
Be a director of a management body of a multi-unit development, where property management services are provided to that management body by the LPSP or other specified parties
Penalties for breach
Failure to comply with the standards set out in the Regulations is “improper conduct” and has serious consequences for offenders.
The PSRA has the power under the 2011 Act to impose major sanctions for improper conduct including monetary sanctions up to €250,000, suspension of the LPSPs licence, revocation of LPSPs licence or any combination of the above. The 2011 Act also provides for a range of offences such as providing a property service without a licence, obstructing an investigation or mishandling of client funds. Any person found guilty of such an offence may be subject to a fine of up to €50,000 or 5 years imprisonment or both.
The aim of the 2020 Regulations is to ensure that there is transparency and accountability in the provision of property services in Ireland. They require LPSPs to act in a professional and reasonable manner for their clients.
For LPSPs, now is the time to consider if your current processes and procedures are compliant with regulations or if they need to be modified and updated to operate effectively within the new regulations.
If you are in receipt of a property service, you should ensure that the property service provider is licenced with the PSRA and be aware of the minimum standards expected to be adhered to by the LPSP.
For more information on the impact of the 2020 Regulations, contact a member of our Real Estate team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.