Don’t skip the foundation: The PSRA’s role in making property transactions transparent
Maeve Hogan, chief executive of the Property Services Regulatory Authority (PSRA).
Buying or selling property might be one of the biggest things you ever do, but how do you know you can trust the auctioneer or estate agent you are working with?
The Property Services Regulatory Authority (PSRA) is here to protect you.
Established in 2012 the PSRA is the statutory body with responsibility for licensing and regulating the property services sector in Ireland. Its remit includes ensuring that those licensed by the authority to provide property services are doing so in a lawful, professional and transparent manner.
“The PSRA oversee standards for auctioneers; estate agents; letting agents; and property management agents, and consumer protection is at the heart of what we do,” says Maeve Hogan, the PSRA’s chief executive.
There are about 1,800 such businesses licensed in Ireland and 4,000 individual licensed agents. “To become a licensed agent, you must have qualifications prescribed by the PSRA,” says Hogan. Furthermore, a business must have the required level of professional indemnity insurance and must be able to demonstrate that they have the appropriate financial structures and accounting procedures in place to safeguard client money entrusted to them.
Strict rules exist in relation to how agents must handle client funds. For example, booking deposits must be held in a client account and refunded within 10 working days if a sale falls through. Money held in a client account cannot be used for any other purpose and the agent cannot deduct fees or outlays from the deposits received until after the sale is concluded.
“We’re very, very strong on compliance concerning client monies,” says Hogan. “Forty-four licensed agents were sanctioned by the PSRA in the last five years for the misuse or mismanagement of client monies. Misuse of client monies or the withholding of deposits is not tolerated.”
The authority also sets minimum standards in relation to customer service, client engagement and communications. Before estate agents can bring a property to the market, they are legally required to provide the vendor with a binding letter of engagement or property services agreement to be signed by both parties.
This property services agreement outlines the contract terms, the scope of services, the fees charged and any additional expenses the vendor can expect to incur such as advertising or administration costs. “It’s a very detailed contract which protects both the agent and the consumer when selling their property,” says Hogan.
Agents must also provide full written disclosures to all parties if a conflict of interest arises, such as cases where the agent is acting for both the vendor and the purchaser. This transparency allows clients to make informed decisions.
Consumers can make a complaint to the PSRA if the agent they are working with has acted in an unprofessional manner, has failed to disclose relevant information to their client, has withheld a deposit or mishandled their client’s money in any way.
The PSRA will conduct a full investigation into any matter which constitutes “improper conduct” defined by their legal framework and can impose a range of sanctions from administrative sanction (advice, caution, warning or reprimand) to financial penalties and/or the suspension of an agent’s licence.
It also has the power to revoke an agent’s licence and issue a permanent prohibition order, confirmed by the High Court, which prevents the agent from securing a new licence or working as a property services provider again.
The PSRA also conduct regular compliance audits on licensed providers to ensure business is being conducted in a lawful manner.
For the most part, the PSRA’s field audits indicate that property services standards are generally high, with most issues being of a minor nature and easily remedied, Hogan says.
The Property Services Compensation Fund exists to recompense those who have sustained a financial loss due to the proven dishonesty of a licensed property services provider. Hogan suggests that this is not a common occurrence but “in the event that there is dishonesty resulting in a financial loss, the PSRA can make a grant from the fund to the consumer from the sector-funded compensation fund”.
The PSRA maintains a public register of all licensed firms and individuals, which is updated weekly.
It’s important to check the register before engaging any auctioneer, estate agent, letting or property management agent, says Hogan. Not only is unlicensed trading illegal, but consumers who use an unlicensed agent have no PSRA consumer protection and can’t make a claim to the compensation fund where dishonesty occurs.
Hogan feels that all parties involved in a property transaction should fully understand the process.
Buyers should be aware that when an agent is advertising a property for sale, the agent’s primary duty is to the vendor, and their role is to achieve the best outcome for them. “The agent’s client is typically the vendor who wants the maximum price for their property. That is what they are engaging a professional agent to deliver,” she says.
Agents also have obligations to a prospective purchaser who is placing an offer. An agent must record each offer received, communicate it to the vendor and acknowledge its receipt in writing to the prospective purchaser.
Purchasers should be aware that their offer may not be accepted. In some instances, the highest offer received may be rejected by the vendor, something that can cause upset for the would-be buyer.
“Vendors are not obliged to accept the highest offer and may choose a buyer based on other factors, such as being a cash buyer, or the person having a shorter transaction chain,” Hogan says. “It may be that the preferred buyer doesn’t have to sell their own home first, for example, or the vendor may choose to sell to a young family, rather than to an investor.
“Nine times out of 10 the vendor will take the highest offer, but they may not, and that’s their choice to make. A difficult part of the agent’s role is to deliver disappointing news to the unsuccessful party.”
Designed to boost market transparency, the PSRA publishes the Residential Property Price Register. The register contains the date of sale, price and address of all residential properties purchased in Ireland since January 1st, 2010.
While previously the prices achieved in property sales were shrouded in secrecy, the authority now publishes this information using data declared to the Revenue Commissioners for stamp duty purposes.
Ireland is seen to be leading the way for the regulation of property services across Europe. The establishment of the PSRA in 2012 marked a significant change in the sector and is the first dedicated regulatory body for the provision of property services in the EU.
While the PSRA cannot control the property market, it can safeguard consumers in their dealings with auctioneers and estate agents and protect the integrity of property transactions taking place through these service providers.
“Ireland is now the most regulated country for property services in Europe,” says Hogan, “but the key thing for consumers is to understand the process and to always use a licensed property services provider.”
For more information, visit psr.ie
