property THE MAGAZINE OF THE INSTITUTE OF PROFESSIONAL AUCTIONEERS & VALUERS
CONVENTION 2003 RESIDENTIAL TENANCIES BILL OUTLINED
contents W E L C O M E
T H E
P R O P E R T Y
P R O F E S S I O N A L
Welcome to the Summer 2003 issue of The Property Professional. I would like, first of all, to thank the many members who travelled to Killashee House Hotel at the end of May to attend our AGM and Annual Convention. I think everybody enjoyed the occasion and benefitted from the contributions made by our panel of speakers. For those of you who were unable to attend, a summary of the main speeches is printed elsewhere in this issue. The Convention is, of course, also a time to relax and to catch up with old friends from around the country. Those of you, who, like myself, played golf at Rathsallagh found it very challenging but worthwhile. I would like to congratulate the winners, not least our former President Pat Davitt, who won the overall prize. A special word of thanks, too, to our sponsors who make the event possible each year, despite the ever-pressing demands. The Institute’s new President, Paul Gartlan is already settled into his new role and I look forward to working with him along with the two Vice-Presidents and members of National Council in representing your interests in the year ahead.
THE PROPERTY PROFESSIONAL IS THE MAGAZINE OF THE INSTITUTE OF PROFESSIONAL AUCTIONEERS & VALUERS 129 LOWER BAGGOT STREET, DUBLIN 2. TEL: 01 6785685 FAX: 01 6762890 E-mail: firstname.lastname@example.org Website: www.ipav.ie CEI Website: www.web-cei.com
On the education front, our first year part-time Certificate students have recently completed their course and are now preparing for next year’s Diploma course. These students are indeed blazing a trail and it is hoped that many of them will continue to study to Degree level in a distant learning project under the auspices of the University of the West of England in Bristol. Successful students will then obtain the same degree as our full-time students who are based at the University. For those of you who are thinking of studying for the Certificate, or who have members of family or staff who intend to study, details are available from our Head Office in Baggot St., Dublin. Finally, as the traditional holiday period is upon us, I would like to wish you all a pleasant vacation at home or abroad. Best wishes
Liam O’Donnell Chief Executive
2 Message from the President 4 Property Tax Issues 6 Justice Minister extends money laundering provisions to auctioneers
Chief Executive Officer Liam O’Donnell F.I.P.A.V.
7 Ipav makes submission to Joint Oireachtas Committee on the
Tim Ryan Tim Ryan Communications Tel: 01 6624649
9 Fine Art presentations! 10 Annual Convention 2003
Advertising Noted Marketing & Design Tel: 01 2830044
12 Ipav President predicts a balance between housing demand and supply
Design & Layout
16 Residential Tenancies Bill 2003 debate begins
Designroom Tel: 01 6617080
18 Meet IPAV’S new Senior Vice-President, Cork-based Richard Nagle of Global Properties 19 In the Dáil…..
Views expressed by contributors or correspondents are not necessarily those of PIBA or the publisher and neither IPAV nor the publisher accept any responsibility for them.
20 New Departure in Education Provision the property professional
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THE PRESIDENT Firstly, can I say how honoured I am to have been elected President of the Institute of Professional Auctioneers and Valuers at our recent AGM and to follow in the footsteps of my predecessors who have contributed so much over the years. Running a practice close to the border with Northern Ireland gives me a unique insight into the problems that face auctioneers and estate agents North and South and I hope I can draw on this experience to further contribute to IPAV’s growth and development over the next year. Thanks to the efforts of previous Presidents, National Council and the support of members nationwide, IPAV is now a strong and vibrant organisation, ably equipped to represent the best interests of members at local, national and international level. In my address to this year’s Annual Conference, outlined in detail elsewhere in this magazine, I was critical of the prophets of doom and gloom which we hear and read about in the broadcast and print media daily. I take a far more positive and upbeat approach. By any standards, this country has had Paul Gartlan IPAV President a great run over the past ten years. While the Celtic Tiger may no longer be with us, there are signs of sustained economic growth in the future, albeit at a much slower pace. Interest rates look set to remain at historically low levels which provide many young and not so young people with the opportunity to own their own homes. The notion of home ownership is strongly embedded in the Irish people and current interest rates will allow that aim to be realised by more and more couples and single people. But there are problems too, not least of which is the continuing rising costs at all levels in the economy. This year’s Budget was a Budget of stealth taxes whereby the Minister for Finance leaned very heavily on the commercial property sector to secure extra coffers. The biggest blow to this sector was the huge increase from 6 to 9 per cent in the rate of Stamp Duty. Given the relatively high prices of commercial properties, this was particularly severe and has already had repercussions in the marketplace. In the past six months we have also had the abolition of indexation for Capital Gains Tax purposes, the restriction of Capital allowances to the buildings to which they are attached and the total ending of roll-over relief. All of these measures have affected confidence in the market. And, as I said at this year’s Conference, no other sector of the economy is subject to such continued, flawed Government interference. Recently, IPAV has also made a submission to the Oireachtas Committee on the Constitution, which is examining the whole issue of property rights. In it, we concluded again that the less Government interference there is, the better. Left alone, market forces will see a better balance between supply and demand in the marketplace. There is evidence that such a situation is already happening and we are likely to see a levelling off in house prices for the remainder of this year. IPAV also prides itself in its education courses and as President I look forward to taking an active part in seeing, at first hand, the various courses around the country and in meeting both our full and part-time students. Our education and professional training is the bedrock of our Institute and will stand the test of any Government Committees that may be established. Already this year, we have had one debate in the Seanad on the issue of regulating the auctioneering profession. IPAV has long acknowledged the need for self-regulation and the Taoiseach, in this regard, has remarked on our success when he officially opened our new offices earlier this year. The appointment of two outside members to our Disciplinary Committee is yet another example of our efforts to show the greatest possible degree of openness and transparency. These are just some of the issues that lie ahead for us. I look forward to the support of National Council and all the members nationwide in furthering this Institute in all its endeavours. Thank you for your support.
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PROPERTY TAX ISSUES DERMOT BYRNE GIVES AN OVERVIEW OF THE LATEST DEVELOPMENTS IN THE PROPERTY MARKET FROM A TAXATION VIEWPOINT.
The principal taxes that impact on property transactions are as follows: * Stamp Duty * Income Tax * Capital Gains Tax
Before the introduction of Finance Act 2003 the maximum rates of duty for property costing over €76,200 was 6%. Thus, for example, on a property costing €500,000 the duty has increased from €30,000 (500,000 @ 6%) to €45,000 (500,000 @ 9%) There are however a number of reliefs available for the owner-occupier who buys a new house or apartment.
STAMP DUTY Arguably, of all the additional costs facing a prospective purchaser of property, Stamp Duty remains, perhaps, the most expensive. The Finance Act provided for no changes in the rate of duty for residential property perhaps a realisation of the difficulty facing the first time buyer, specifically in the Greater Dublin area. There were substantial increases in the rates of duty as it applies to non-residential property. These changes apply both to the rate of duty and to the threshold bands. The rates of Stamp Duty as the now stand are as follows.
If the new house/apartment is not larger than 125 square metres/1345 square feet and qualifies for a Department of Environment floor area certificate, it is exempt from stamp duty. If the new house is not able to obtain exemption under the above it will only suffer duty based on the site cost/value or on 25% of the total cost of the house, whichever is the higher. The figure obtained from the above will determine the rate of duty to apply. Example: New residential property cost €400,000, site cost €130,000.
RESIDENTIAL PROPERTY Value
First Time Buyer
Up to €127,000
NON-RESIDENTIAL PROPERTY Value Up to €10,000 €10,001- €20,000 €20,001-€30,000 €30,001-€40,000 €40,001-€70,000 €70,001-€80,000 €80,001-€100,000 €100,000-€120,000 €120,001-€150,000 Over €150,000
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Rate 0% 1% 2% 3% 4% 5% 6% 7% 8% 9%
Duty will apply to the higher of €130,000 or €100,000 (being 25% of €400,000) and the rate of duty will be 3%, based on the €130,000 and not on the €400,000.
INCOME TAX Revenue have consistently utilised the tax system as a means of encouraging investment in locations where they consider that development is desirable. To this end they have introduced property tax breaks. By structured property investment a business can obtain a reduction in its tax liability.
PROPERTY TAX BREAKS The Schemes that are currently in effect are as follows: 1. 2. 3. 4. 5. 6.
The The The The The The
1998 Urban Renewal Scheme 1998 Rural Renewal Scheme Town Renewal Scheme Park and Ride Scheme Living over the Shop Scheme Student Accommodation Scheme
1998 URBAN RENEWAL SCHEME This scheme applies to urban areas selected by the Minister, based on “integrated area plans” submitted by local authorities. The incentives available are as follows: * Factory Buildings: will be able to avail of increased capital allowances on any expenditure incurred in relation to construction or refurbishment of a qualifying building. While a factory building can normally only obtain capital allowances at the rate of 4%, an initial allowance of up to 50% is available to both owner-occupiers and Lessors. * Commercial Premises: Buildings such as office accommodation and multi-storey carparks will also be able to avail of increased capital allowances. Allowances at the same rate as those for factory buildings will be available for the construction or refurbishment of qualifying commercial buildings. * Section 23 Relief: This highly valuable relief is available in relation to expenditure incurred in the cost of construction of rented residential accommodation. The purchase price paid for the relevant property, less the amount that relates to site cost is available to offset against firstly, the profit obtained on renting the property and secondly, against other property income. A section 23 property provides a means by which a large number of rental units can be taken out of the tax net.
RURAL RENEWAL SCHEME This scheme provides the same reliefs as the Urban Renewal Scheme but instead this scheme applies to the Upper Shannon Region – covering all of Leitrim and Longford and certain parts of Cavan, Roscommon and Sligo.
TOWN RENEWAL SCHEME Same reliefs as per the above schemes. However, this scheme applies to certain urban areas with a population of between 500 and 6,000.
RELIEF FOR PARK AND RIDE FACILITIES Capital allowances are available in respect of qualifying expenditure incurred on park and ride facilities in the larger urban areas. Park and ride facilities are buildings or structures served by a bus or train service with the purpose of providing for members of the public intending to travel by public transport, parking space for vehicles. The person who has incurred the qualifying expenditure on the qualifying park and ride facility, whether that person is an owner operator or is a leaser of the facility, is entitled to claim an initial allowance for the first chargeable period, equal to 50% of the expenditure and then to claim an annual writing down allowance equal to 4% of the capital expenditure.
LIVING OVER THE SHOP SCHEME This scheme is aimed at providing residential accommodation in vacant space over commercial premises in the cities of Cork, Dublin, Galway, Limerick and Waterford. Section 23 Relief, at 100%, is available in respect of refurbishment, conversion and construction expenditure incurred by lessors and owner occupiers on the residential property on the upper floors. There is also relief for expenditure incurred on the refurbishment and construction of associated commercial property on the ground floor.
Expiration date prior to Finance Act 2003
Expiration date post Finance Act 2003
Town Renewal Scheme
31st December 2003
31st December 2004
The Park and Ride Scheme
30th June 2004
31st December 2004
The Student Accommodation Scheme
30th September 2005
31st December 2004
INTEREST RELIEF CHANGES Interest on monies borrowed for the purchase, improvement or repair of a property is wholly deductible. However, interest charges incurred, prior to the first letting are not deductible. The situation as regards interest on residential property has undergone a complete about turn over the last number of years. The Bacon Report denied any deduction in respect of interest on borrowings which are employed after 22 April 1998 on the purchase, improvement or repair of a rented residential premises. The Finance Act 2002 reversed these measures. An allowance is now granted for interest accruing from 1st January 2002 on loans used to acquire an interest in residential property.
Section 26 of Finance Act 2003 provides for a number of changes as regards the termination dates of a number of the property incentive schemes such as the Urban Renewal Scheme. Once 15% of the total project cost is incurred by 30th June 2003 then the termination date of the scheme will be 31st December 2004. This requirement does not apply to the three schemes listed below. Similarly, there have been a number of extensions to the Town Renewal scheme, the Park and Ride Scheme and the Student Accommodation Scheme. The dates of termination prior to Finance Act 2003 and post Finance Act 2003 are listed below. The Living over the shop scheme has retained the same expiration date of 31st December 2004
CAPITAL GAINS TAX Any disposal by an individual of property will, with certain exceptions, trigger a charge to Capital Gains Tax. The gain will be liable to tax at 20%, based on the difference between the proceeds for the property and the cost of the property indexed to account for inflation up to 2002. There are a number of reliefs available, for example
MORTGAGE INTEREST RELIEF Unrestricted interest relief is allowed with regard to any interest incurred in acquiring a property for commercial purposes. There are, however, restrictions as regards the maximum amount of mortgage interest relief that can be obtained on the purchase of a private residence. The levels of Mortgage Interest Relief available remain significantly less than the mortgage interest that would be incurred by the average individual. The table below provides details of the current maximum rates of mortgage interest relief that can be claimed. Thus, if a single person got a €250,000 personal mortgage at 3.35% he would incur interest of €8,375 while the maximum he could claim for is €4,000, resulting in unclaimable interest of €4,375
a) Principal Private Residence (PPR) Relief: exempts any gain on the disposal of the family residence. b) Retirement Relief: Any gain on disposing of business assets used in a trade by an individual aged over 55 can obtain relief from C.G.T.
VAT The sale of developed property located in Ireland attracts VAT at 13.5 %. Developed property is generally that built since 1st November 1972 when VAT was introduced.
2002 Single Person
2002 Married Person
2003 Single Person
Old property which has been refurbished may also become developed if capital expenditure of the lower 10% of the market value of the property or €100,000 is incurred. It is a danger for any vendor or professional adviser as the Revenue Commissioners will assess the B vendor on VAT where it has mistakenly €2,540 not been charged and the vendor usually has no way of obtaining additional €5,080 proceeds from the purchaser. €2,540
2003 Married Person
STUDENT ACCOMMODATION SCHEME Section 23-type relief is available in respect of capital expenditure incurred on the construction, conversion or refurbishment of rented residential accommodation for third level students. The relief is available in respect of expenditure incurred between 1 April 1999 and 31st December 2004
the Spanish/Irish double taxation treaty. The manner in which treaties work differs, depending on the income. In this example, a credit will be available in Ireland for the tax that was suffered in Spain. The Irish Revenue has indicated that they are getting the names of the Irish investors in Spain to check how the properties were purchased.
Mortgage Interest Relief
CONCLUSION Note: figures in column A apply in the case of a first-time buyer in the first 5 years of the Mortgage or, if the mortgage is post 2003, then for the first 7 years, while those in column B relate to second-time buyers.
FOREIGN TAX ON PROPERTY The issue of double taxation as regards any rental income should be considered. For example, an Irish resident individual with a rental property in Spain will suffer Income Tax both in Ireland and in Spain. There is, however, relief available under
It must be appreciated from the above that the complexity of the tax issues surrounding property transactions has grown almost beyond recognition in recent years. This, coupled with the increases in the value of property, has resulted in many more transactions creating a potential liability. While the above provides an overview there is in relation to any transaction a need to obtain professional advice. * Dermot Byrne is principal partner in Dermot Byrne & Associates, Taxation Consultants, Larch House, 44 Northumberland Ave., Dún Laoghaire Tel: 01 2808315
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JUSTICE MINISTER EXTENDS MONEY LAUNDERING PROVISIONS TO AUCTIONEERS THE MINISTER FOR JUSTICE, EQUALITY & LAW REFORM, MICHAEL MCDOWELL TD, HAS RECENTLY INCLUDED AUCTIONEERS AND ESTATE AGENTS IN THE PROVISIONS OF THE MONEY LAUNDERING REGULATIONS AS REQUIRED BY EU REGULATION. THEY COME INTO EFFECT ON SEPTEMBER 15 NEXT. The new regulations fulfil Ireland's obligations under the European Council Directive 2001/97/EC on prevention of the use of the financial system for money laundering. The Directive updates a 1991 Money Laundering Directive to take account of developments in the fight against international crime. Sections 31 and 32 of the Criminal Justice Act 1994 and its related regulations already give effect in Ireland to the 1991 Directive. The regulations make provision for disclosure of information to the GardaĂ and the Revenue Commissioners by any person to whom Section 32 applies. The principle changes encompassed by the 2001 Directive extends the obligations concerning customer identification, record keeping and the reporting of suspicious transactions to a number of new activities and professions. Therefore, to comply with the 2001 Directive, the list of designated bodies required to report money laundering transactions is expanded by regulation to now include: Accountants, Auctioneers Auditors
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Estate Agents Tax Advisers Solicitors Investment business firms. Dealers in highvalue goods, e.g. precious stones, precious metals and works of art where payment is made in cash for a sum of â‚Ź15,000 or more and Casinos At the request of the Irish Financial Services Regulatory Authority (IFSRA), two additional categories have also been included Administration companies providing services to collective investment schemes Providers of money remittance services. The Regulations will come into effect on 15 September 2003 to allow those involved, in particular the professional bodies representing those designated, to put the necessary procedures in place, including training and information campaigns. On 28 December 2001 a new money laundering Directive, 2001/97/EC, (the 2001 Directive), was published in the EU Official Journal. The 2001 Directive updates a 1991 Money Laundering Directive to take account of developments in the fight against international crime.
The 1991 Directive (91/308/EEC) on prevention of the use of the financial system for the purpose of money laundering obliged Member States to comply with certain requirements to combat money laundering of proceeds of drug offences. It required credit and financial institutions to establish the identity of their customers when opening accounts in addition to establishing the identity of those nonaccount holders with whom they had dealings where the transaction exceeded a fixed amount (ECU 15,000) and to report suspicious transactions to the authorities. The principal changes encompassed by the new Directive extend the obligations concerning customer identification, record keeping and the reporting of suspicious transactions to a limited number of activities and professions which have been shown to be vulnerable to the activities of money launderers, such as auditors, external accountants and tax advisers, real estate agents and notaries and lawyers when participating in certain transactions with their clients.
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IPAV MAKES SUBMISSION TO JOINT OIREACHTAS COMMITTEE ON PROPERTY RIGHTS Jim Power
IPAV RECENTLY MADE A SUBMISSION TO THE JOINT OIREACHTAS COMMITTEE ON THE CONSTITUTION WHICH HAS BEEN ASKED BY THE TAOISEACH TO EXAMINE THE WHOLE AREA OF PROPERTY RIGHTS. ECONOMIST JIM POWER WAS COMMISSIONED TO DRAFT A REPORT. THE FOLLOWING IS AN EDITED SUMMARY.
INTRODUCTION Of all possible subjects, the housing market is the one that is guaranteed to attract most media and popular attention in Ireland. This is because Ireland has one of the highest levels of home ownership in the world and housing for many people represents their greatest financial asset and the mortgage on the property very often represents their largest financial liability. Those harbingers of doom who have been predicting an imminent collapse in the Irish housing market over the past five years or so have attracted more than their fair share of media attention. Despite this, the market has not collapsed and indeed continues to grow strongly. The reality is that the Irish housing market over the past decade has not represented an unsustainable bubble. On the contrary the rapid increase in house prices can be easily explained by reference to demographic and economic fundamentals.
Official Interventions Official interventions in the housing market have had mixed results. For example, the decision to abolish mortgage interest relief on investment properties forced a sharp pullback of investors from the market during 2001. This resulted in reduced demand for housing and a deceleration in house price inflation. Then, when mortgage interest relief was reintroduced for investors in Budget 2002, investors immediately returned to the market and gave another boost to demand and house prices. The decision to abolish the relief in the first place was flawed. Mortgage interest relief on
investment property is a legitimate business expense and as such should be afforded the same treatment as any other business expense. The decision to remove the relief also had the undesirable effect of driving property investors offshore to markets such as Spain and the UK. This did not benefit the Irish economy. Demonising the investor is not a sensible policy as investors are a necessary element of the overall housing market. To provide a proper rental market investors are essential. Following the reintroduction of mortgage interest relief, the supply of rental properties has increased significantly and this has resulted in a welcome moderation of rent costs. The abolition and the re-introduction of the relief created a distortion in the market, increased uncertainty and price volatility and undermined the efficient functioning of the rental market. The lesson that should be learnned is that the Government should be very careful in its interference with the market because, if left to its own devices, the market will almost always achieve a desirable and efficient outcome. Furthermore, it is very difficult to get the timing of intervention right and if the timing is wrong it can have undesirable and destabilising effects. For example the decision to introduce a maximum Stamp Duty rate of 9% on commercial property in Budget 2003 was ill advised. It was increased at a time when the commercial property market was already in a significant downturn and was experiencing increased vacancy rates and falling rents. The timing of this change was not good.
IMPROVING LABOUR MOBILITY A properly functioning housing and rental market is essential for mobility of labour. Labour mobility is in turn essential for balanced regional economic development. Availability of rental property and greater housing turnover are essential to encourage workers to move around for work, either within or between countries. Research has shown that workers will become more mobile if there is a supply of affordable rental properties and if housing transaction costs are moderate. The current Irish stamp duty regime is penal and acts as a serious disincentive to turnover of housing. The reduction in Capital Gains Tax from 40% to 20% increased the turnover of capital assets, improved economic efficiency, and resulted in a higher tax take under this heading. A reduction in stamp duties on residential property could have a similar effect, by leading to older people trading down and freeing up larger properties for families. The increased activity should at least maintain the tax take and if carefully chosen a new lower rate could actually result in an increased take. Stamp duties, legal and other transaction costs act as a major disincentive to housing mobility which, in turn, undermines worker mobility.
RURAL HOUSING For a wide variety of reasons, traditional farming in Ireland is in decline, with more and more people leaving the land. In the face of reform of the Common Agricultural Policy (CAP), the activities of the World
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Trade Organisation (WTO) and increased competition from low cost food producing countries, particularly in the context of EU enlargement, this trend of displacement of farmers from the land is set to continue. This threatens to undermine the fabric of the rural way of life and the rural economy. Consequently, there is a need for policies that will generate a dynamic rural economy and rejuvenate a rural way of life that is now under serious threat. Alternative sources of employment need to be provided to prevent displaced workers from the agricultural economy moving into already congested urban areas. Such migratory flows are bad for both rural and urban areas and they need to be halted. To help achieve this there needs to be an emphasis on attracting new employment opportunities to rural areas, either through start ups or the attraction of new industries. The National Spatial Strategy needs to be pursued with considerable vigour. The provision of proper physical infrastructure is essential, including roads, sewage, public transport, a proper rail network and air access where possible. Remote business needs to be facilitated through the provision of adequate IT capability, with widespread broadband availability a minimum requirement. In order to facilitate rural re-settlement, the planning laws need to be changed. It is totally unacceptable that local planning authorities can prevent non-natives of a county from building a house in that county. This is a serious impediment to labour mobility and rural economic development. Such policies prevent an inflow of talent and help create a moribund and inward looking local economy. People should be given freedom to build in the countryside and those local authorities that are restricting planning for ‘outsiders’ are undermining the future of rural Ireland. Such policies risk creating a de-populated wasteland. This is not acceptable. To facilitate proper infrastructural and rural development, the whole planning process, as it relates to road and housing development, needs to be reviewed and changed. The time taken to go through the appeal process and excessive compensation payments are antieconomic development and anti-progress and impose a huge cost on taxpayers. A ready supply of zoned and fully serviced land needs to be facilitated by reforms to the planning system.
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LAND COSTS Research has shown that there is a high elasticity of supply of building land. In other words, increased land prices will bring forth an increased supply of development land and consequently a greater supply of new housing. It is also the case that there is a high correlation between land costs and house prices. In recognition of this latter fact, the Taoiseach recently asked the Oireachtas All Party Committee on the Constitution to look at the cost of development land. The suggestion is that the cost of building land be capped through a constitutional amendment. Article 40, Section 2(0) of the constitution states that ‘The State shall, in particular, by its laws protect as best it may from unjust attack and, in the case of injustice done, vindicate the life, person, good name, and property rights of every citizen’. Placing a constitutional cap on land prices would appear to be against the spirit of this constitutional right to private property. Furthermore, a constitutional change to cap land prices could be followed later on by measures to cap the price of houses themselves. This would represent a further serious attack on the constitutional right to private property. The fundamental rights section of the Constitution protects rights to the ownership of basic personal possessions, such as homes and personal goods but, according to some, also protects major differentials in the ownership of productive wealth within Irish society. This highlights the importance of the constitutional qualification that property rights must be subject to regulation in accordance with the principles of social justice. In the opinion of the Constitutional Review Group, if the State is to function, property rights must yield to a wide variety of countervailing interests, among them the redistribution of wealth, the protection of the environment and the necessity for consumer protection. The interpretation of this is that the State may regulate and interfere with property rights but not in a manner that disproportionately interferes with such rights. It is reasonably clear that on legal grounds the introduction of a constitutional cap on land prices for development could be introduced subject to being passed by popular referendum but that may not be the best solution. The stated aim of the Taoiseach is to bring
about a situation where ‘development enriches the many and not the few’. The owner of land has the right to maximise the price obtained for it. Interference with this right represents interference with the way in which the market system operates and should be avoided. Rather the way to address this issue is to loosen up the rigid planning laws to bring more development land on stream. Increasing supply is the only sure way of getting the price down and in such circumstances the owners of land or developers would have a reduced incentive to hold on to land, in the hope of getting significantly higher prices at a later date. A market-based solution would be most desirable.
FIRST-TIME BUYERS The removal of the first-time buyers grant was desirable because it represented false economy for many of them. A more acceptable approach is to, instead, increase mortgage interest relief for first time buyers. This was done in Budget 2003, but it did not go far enough to help the sector of the housing market that has suffered most in recent years. It would be desirable to increase this relief further in Budget 2004. The proposal to remove a DIRT liability on savings by first-time buyers, that will go towards house purchase, would represent a positive help to first-time buyers.
RENTAL MARKET The Residential Tenancies Bill has recently been published. This Bill seeks to address many of the concerns of tenants and this is to be welcomed. A good tenant’s charter would help the rental market but the terms should not be too rigid or tight. Offering security of tenure to tenants after a period as short as six months is too tight. A period of twelve months would be more appropriate for all concerned. As well as rights, the obligations of tenants should also be provided for.
VOLUNTARY CODE OF PRACTICE FOR MORTGAGE PROVIDERS. Deregulation of financial markets played a major part in the creation of the UK property bubble in the late 1980s which burst with devastating effect. The recent announcement by the Central Bank of Ireland to investigate
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the mortgage lending practices of Irish financial institutions is a welcome recognition of the dangers of a similar occurrence in Ireland. Over the past decade the Irish mortgage market has seen significant deregulation and the entrance of new players to the market. This has been positive for competition, has reduced mortgage margins and has satisfied a legitimate demand for mortgage credit in the market. However, excessive credit creation and, more particularly, lenient lending practices could create serious problems for the overall stability of the housing market and of the overall economy. It is in the long-term interests of all players in the Irish housing market, including financial institutions, vendors, buyers and auctioneers, that the stability and integrity of the housing market is guaranteed. In this regard it would be beneficial to get all lending institutions in the mortgage market to agree a Voluntary Code of Conduct in relation to mortgage lending. This should
include areas such as the required deposit, the savings record of the borrower and the loan to value ratio. It would also be beneficial to agree common standards for stress testing. A concerted effort to encourage borrowers to lock into long-term fixed mortgage rates would be constructive. This would protect borrowers from the vagaries of short-term interest rate volatility and is a feature of most other housing markets. The Housing Statistics Bulletin December Quarter 2002 shows that in 2002, 59.4% of the total loans approved were variable and 40.6% were fixed. This in itself is a low level of fixed mortgages but if one considers that a large proportion of those fixed loans were discounted fixed rates for a one-year period, then the underlying situation is less stable. In 1998, 68.9% of loans approved were fixed. The discounted short-term rates on offer for first time buyers look very attractive on the surface but they can create a false sense of financial security. At the
end of the discounted period, the return to standard rates could pose a significant financial shock to some borrowers. A high percentage of loans fixed for periods as long as 10 years would provide a huge level of insurance for individuals, the housing market and the overall economy. Risk reduction is desirable. In exceptional circumstances, such as those that prevail at the moment, fixed loans are relatively expensive but it would still be in the long-term interests of everybody to take the fixed option.
Such a Voluntary Code of Practice should not be seen as a diminution of competition but would represent a prudential set of standards that would enhance the stability and sustainability of the overall housing market. (Copies of the full report are available from IPAV Headquarters Tel: 01 – 6785685)
FINE ART PRESENTATIONS! Recipients of this year’s Certificates and Diplomas in the Fine & Decorative Arts courses, organised by the Institute of Professional Auctioneers & Valuers, were presented with their parchments by IPAV President Paul Gartlan and the President of the Irish Antique Dealers’ Association, George Stacpoole in the Stephen’s Green Club on Wednesday, May 28. This was the new President’s first official function wearing his chain of office! “The full-time or part-time courses are ideal for people who are pursuing a new interest or who are seeking out a fresh career in the wonderful and exciting world of the Fine & Decorative Arts,” says course organiser Roxanne Moorehead. “Many previous students have gone on to enjoy very successful careers later.” The Irish Times book award for the most outstanding thesis went to Denise O’Connor of Wellington Road, Ballsbridge, Dublin 4. The Best Achiever award went to Reka Baloghy from Hungary, currently living in Dublin’s Ringsend. Full details of the next courses, which begin in September, can be had by contacting IPAV at 01 - 6785685 or by e-mailing email@example.com (Above)
Denise O’Connor, Ballsbridge, Dublin 4 who received The Irish Times book award for the best thesis.
Reka Baloghy, a native of Hungary, who received the Best Achiever award from IPAV Chief Executive Liam O’Donnell
Breda Corcoran, Trimleston Gardens, Booterstown, Co. Dublin, who received a Diploma in the Fine and Decorative Arts from George Stacpoole (right) and IPAV President Paul Gartlan. the property professional
Annual Convention 2003
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LARGE TURNOUT FOR AGM AND CONVENTION 2003 There was a large turnout for IPAV’s AGM and Annual Convention at Killashee House Hotel, Co. Kildare on May 23 and 24 last. Carrickmacross-based auctioneer Paul Gartlan took over the Institute’s chain of office from popular outgoing auctioneer Patrick Davitt. However, there was some consolation for Pat on Saturday night when he discovered he had won the overall prize in the golfing outing to the challenging Rathsallagh Golf Club on Friday afternoon! Pat was presented with his award by Rose Mulcahy, Property Manager of the Irish Examiner who sponsored the competition. Cork-based auctioneer Richard Nagle of
Global Properties in Cook St and Ballincollig was elected IPAV Senior Vice-President while former Fianna Fail senator Willie Farrell was elected Junior Vice-President. As a senator, Willie voiced the concerns of IPAV in the Upper House for many years and continues to play an active role in the Institute. In his address to delegates, the new President said he did not share in the doom and gloom philosophy or indeed predictions made by some commentators. “In my view,” he said, “our economic commentators could play a leading role in keeping our economy buoyant by maintaining an upbeat and positive view which reflects the reality. This country has
WILLIE RAISES €6,450 FOR SPECIAL OLYMPICS Former Senator Willie Farrell, the new Junior Vice-President of IPAV, raised €6,450 for the Special Olympics World Summer Games from a golf marathon in which he played nine holes in each of the four provinces on the same day! Willie is the current Chairman of the Irish Amputees and Disabled Golf Society. On Saturday, May14 last, Willie set out on his mammoth task by playing nine holes in Roscrea (Munster)Golf Club. “Indeed,” says Willie, “I would like to pay particular tribute to President, Lady Captain and Club Secretary of Roscrea Golf Club who all turned up to open the Club at 7am and showed me around the course.” Then, it was on to Birr (Leinster) for the next nine holes before heading for Rosses Point (Connaught) where he met members of the Sligo Special Olympics team for a round. Willie’s final port of call was Bundoran (Ulster) where he finished another nine holes exactly 11 and half hours after he had started in Roscrea!
had a great run, we have all contributed to this success and despite the fact that we can expect some slowing down I am very optimistic about the future.” Speakers who addressed the Convention included former FG leader Alan Dukes, Joe Larkin, Managing Director of ICS and Communications Consultant Wally Young. Among those in attendance at the weekend Conference were President of the Confederation of European Estate Agents, André Groot, Fine Gael Senator Paul Coghlan and Philip Sherry of the Sherry FitzGerald Group.
Accompanying Willie on the trip were his son Seamus, who did the driving, and Dermot Cunningham who acted as his cadet. “It was a challenging task but nevertheless a most enjoyable one,” says Willie, who enjoys a round of more relaxed golf regularly since his retirement. “ I would like to thank my old friend Billy Owens and the Captain and members of Birr Golf Club for their kindness and contribution and the people in Rosses Point for organising the Sligo Special Olympics team to meet me. The members of Bundoran Golf Club were also extremely helpful and I would like to thank them for their kindness and hospitality.” Willie added that he also wished to thank auctioneers and politicians from around the country who had been his main contributors. In particular, he thanked Fianna Fáil senator Geraldine Feeney for her help and IPAV Chief Executive Liam O’Donnell and staff members Laura Raleigh and Val Mogerley. As a Seanad candidate, Willie received IPAV’s Seanad nomination for many years and represented the views of the Institute to Government on a regular basis. IPAV Chief Executive Liam O’Donnell paid tribute to Willie’s success and said he was a splendid ambassador for the Special Olympics. “Now that he is retired, we are delighted in IPAV that we will be seeing more of him in his new role as Junior Vice-President,” he added.
Willie with his Special Olympics cheque.
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Annual Convention 2003
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Finola Murphy was on the Property Partners Stand at the Convention
IPAV’s incoming President Paul Gartlan is congratulated by Senior Vice-President Richard Nagle
Pictured at the Annual Conference were guest speakers Alan Dukes, Director of the Institute of European Affairs and Joe Larkin, Chief Executive, ICS.
Ian and Pat Murray were on the Raymur Stand at the Convention
Pictured at the Convention were (L – R) Mervyn Lloyd, Mohill, Co. Leitirm; Padraig Smith, Ballyjamesduff, Co.Cavan and Alan Dukes.
Oliver Dempsey and Paul Kirwin at the Barrowvale Technology Stand at this Year’s Convention
Thanks to our sponsors! IPAV wishes to sincerely thank the Sponsors of Convention 2003:
Independent Newspapers The Irish Examiner Property Partners
The Irish Times The Sunday Tribune DSL Display Systems Ltd. the property professional
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IPAV PRESIDENT PREDICTS A BALANCE BETWEEN HOUSING DEMAND AND SUPPLY THE FOLLOWING IS A SUMMARY OF THE REMARKS BY NEW IPAV PRESIDENT PAUL GARTLAN TO THIS YEARâ€™S ANNUAL CONVENTION IN KILLASHEE HOUSE HOTEL
I would now like to pay tribute to my predecessor, Pat Davitt, for his dedicated work for our Institute over the past year. On my own behalf and on behalf of every member of our Institute, I want to say thanks to you, Pat, for a job well done and I also take this opportunity to thank Paula, Patâ€™s wife, for her support during the year.
Paul Gartlan IPAV President
IPAV got off to a great start this year when in late January the Taoiseach Bertie Ahern officially opened our offices at 129 Lower Baggot Street. For the development of this fine Georgian Building I would like to pay tribute to our National Council, my predecessor and in particular our Chief Executive Liam O'Donnell for their hard work and dedication in bringing this project to fruition. These offices are primarily there to help us provide a better quality service to our members throughout the country. Here there are many facilities, including a designated meeting room, a seminar room, an auction and lecture room, study facilities and a growing archival resource. In many ways, the new offices reflect the increased professionalism of the Institute. They will enable us to further our two basic aims of establishing and maintaining high standards of professional conduct among our members and also providing the public with a guarantee of a professional service, by acting as a watchdog to protect their interests.
OUTLINE OF PROPOSALS Our Annual Convention gives us the opportunity to reflect on the past year and to plan for the future. I have a few thoughts about our future which I would like to share with you.
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The first point I would like to make is that I do not share in the doom and gloom philosophy or indeed predictions made by some commentators. In my view, our economic commentators could play a leading role in keeping our economy buoyant by maintaining an upbeat and positive view which reflects the reality. This country has had a great run, we have all contributed to this success and despite the fact that we can expect some slowing down I am very optimistic about the future. New homes continue to be the dynamo in the residential sector. Prices continue to rise but I feel as more new homes come to the market we will see greater balances in supply and demand which I believe will lead to more predictable pricing levels. There are many groups predicting continued economic growth and I believe that we will be part of that. The second issue I want to mention is the fact that, for reasons best known to themselves, the Government continues to interfere in Property Legislation. This year it has been the turn of the commercial sector. The biggest blow to the commercial sector was the huge increase from 6 to 9 per cent in the rate of Stamp Duty. Given the relatively high prices of commercial properties, this was a particularly severe blow. In the past six months we have also had the abolition of indexation for Capital Gains Tax purposes, the restriction of Capital allowances to the buildings to which they are attached and the total ending of rollover relief. All of these measures have affected confidence in the market. Why, I ask, is all this Government interference necessary? No other sector of the economy is subject to such continued, flawed interference.
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Outgoing President Pat Davitt hands over the chain of office to Paul Gartlan at the Annual Convention
OIREACHTAS REPORT IPAV does not believe in being purely a critical voice. We believe we have a moral obligation to come up with proposals and to forward them to the powers that be. In this regard, our Institute recently commissioned well-known economist Jim Power to draft a submission to the All-Party Oireachtas Committee on the Constitution which is looking at the whole area of property rights. The main lesson from the report is that the Government should be very careful in its interference with the market because, if left to its own devices, the market will almost always achieve a desirable and efficient outcome. Furthermore, it is very difficult to get the timing of intervention right and if the timing is wrong it can have undesirable and destabilising effects The report concludes that the fundamentals now driving the market are changing. The yawning gap between demand and supply has narrowed significantly and the market is now close to a position of equilibrium. Going forward, a number of the factors that were instrumental in causing the rapid upward adjustment to house prices will be less influential. However, reasonable demand will continue to be supported by historically low interest rates, demographics, falling household size and investor demand. As the market approaches a position of
equilibrium, the report states that house price inflation is set to moderate but a sharp decline in house prices is not imminent. Such a stabilization of house prices would be in the best interests of all interested parties and particularly the stability of the economy. The report does put forward a number of suggestions. Chief among these is to get all lending institutions in the mortgage market to agree a Voluntary Code of Practice in relation to mortgage lending. This should include areas such as the required deposit, the savings record of the borrower and the loan to value ratio. It would also be beneficial to agree common standards for stress testing. The report also urges that a concerted effort be made to encourage borrowers to lock into long-term fixed mortgage rates. This would protect borrowers from the vagaries of shortterm interest rate volatility and is a feature of most other housing markets. I would like to thank economist Jim Power for his work on our behalf.
EDUCATION COURSES Nowhere has the institutes development been more successful that in its educational programme. IPAV believes that education and training is at the heart of professional practice and is the rising tide that lifts all boats.
2001 was a very significant year in our education programme when we made available, for the first time, access to the full certificate course for part-time mature students. These students who have now completed their second year, are following the same course as our full-time students in Dun Laoghaire and Cork College of Commerce. On completion of that course, they will then have the opportunity to continue on to study for the Diploma and ultimately a full Degree under the auspices of the University of West of England in Bristol. I am proud to be President of an Institute that has such a positive and inclusive approach to education and the prospect of many of our members achieving degrees through this new system is very exciting indeed.
CEI On the broader front, IPAV continues to play a positive role as an active member of the Confederation of European Estate Agents. Our Chief Executive continues to represent us at board level and I am looking forward to representing you, where necessary, at European level in the year ahead. As your President, I intend to make our voice louder and to make it heard where it matters. But most of all, I look forward to your support and help during my term of office.
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GETTING THE MOST FROM YOUR WEBSITE
Are you getting the most from your website at present? I often ask our customers what benefits they feel they are getting from their website so that we can better serve new customers by offering them the right advice. The most common answer I get these days is that it saves money on printing brochures and property lists. Savings of €2,000 per annum are common but one auctioneer told me that she was saving over €16,000 each year. I was amazed and I asked her how she was achieving savings of that magnitude to which she replied that before they purchased their website they had one full time staff member who spent all day every day printing out brochures and property lists to hand out and send in the post. However, now they do not give out any brochures or property lists whatsoever and that member of staff has now switched to a more rewarding job i.e. bringing in more sales.
WHAT IS YOUR WEBSITE DOING FOR YOU? Some people don’t realise what their website is doing for them, one auctioneer told me that they were getting no enquiries from their website and asked me to see what I could do for them. I was surprised because they were getting an average of 347 page views per day so I called out to see what could be the problem. It turned out that they were getting about 22 enquiries a week and I knew this by looking at their inbox because the emails had the words in brackets [website enquiry] on the subject field of each enquiry but the auctioneer thought that those enquiries were coming from one of the portal sites they were advertising on.
CHECK YOUR EMAIL AND CONTACT FORMS REGULARLY Be careful to check that your email addresses are configured properly in Outlook Express or Microsoft Outlook, we were asked
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to investigate recently a case where an email address wasn’t working and clients of this company were asking why they were not responding to queries. It turned out that the name of the email address was different than the email account it was actually using. Check that your contact forms on your website are working on a regular basis, if your contact forms stop working you are loosing business.
WEBSITE HACKERS Make sure to check your website every day to ensure that it is working correctly. I saw a number of cases this year where websites had been hacked and some or all of the information was deleted. One of the sites was hacked by a gang in South America and the other by a gang in Spain. There was little that could be done to seek compensation from these people and it was a long and time consuming job to get the sites back to where they were again. There is never an absolute solution to safeguard your website from attack but make sure to ask your web developer company what safeguards they have in place to protect your website from attack. Get them to put it in writing. There are a number of ways to protect information on your website and varying from basic security to backup solutions. I saw another case this year where a web developer was charging over €1,000 per annum for upkeep of the website and supposedly to market the site and keep an eye that it was working alright. However, it turned out that the website was down for 3 months and he never even noticed it. That was an unusual case but, imagine the amount of business that was lost in those 3 months! There are monitoring tools available to watch your website to ensure it stays live, they can email you or even send you a text message if your site ever goes down, this would have prevented what happened above.
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MARKETING YOUR WEBSITE
GAINING NEW BUSINESS
It is very important to market your website properly. There are very few web companies in the country that know how to optimise a site and market it properly. Ask your web development company can they do this, they will probably tell you they can. Ask them to give you ten examples of sites that they have optimised for the most common property key word phrases so that they appear at the top of search engine results. You will have to pay to get these results but it is worth it. Do you know what enquiries you are getting as a result of referrals from other websites? If you know information like this it can help you to improve the performance of your site. Ask your web company can they provide you with information on each incoming enquiry on how the person found you. Did they type in your web address directly or did they do a search for your name on the web or what key words did they use to find you and which search engine did they search.
Are you using your website to gain new business? Ask your web company how can they collect information on visitors to your website. A certain percentage of people who are searching for a property are also selling a property so if your website is being searched by these people this is an opportunity for you to gain new business. Your website itself will convey this message if it is professionally designed, easy to navigate and fast to download. If your website does not look professional you’re not going to get any new business from it. By collecting visitor information you can then contact them and gain new business. These are things you can’t do if you depend exclusively on a portal site to market your property.
IMAGE SIZE AND DOWNLOAD TIME Make sure that your pages are not too large and take too long to download. I saw a case recently where an auctioneer was using a
broadband connection and was very happy that his site was downloading in less than 10 seconds. However when we tested it on an analogue connection with a standard 56K modem it was taking up to a minute to download some of the pages. Visitors won’t wait around that long for a page to load. It turned out that the web site was not designed to minimise the file size of the photos of the properties and they were too large. This was a website that cost over €5,000!
It is worth your while to spend some time and money improving your website every year. Technology is improving all of the time and it is important to offer the best service to your customers, if you don’t your competition will! For comments or suggestions on this or future articles please contact Oliver Dempsey, Barrowvale
Technology, phone: 1890 217 131 or email: firstname.lastname@example.org.
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RESIDENTIAL TENANCIES BILL 2003 DEBATE BEGINS
THE MUCH HERALDED RESIDENTIAL TENANCIES BILL FINALLY GOT ITS FIRST READING IN THE DÁIL BEFORE THE SUMMER RECESS. HERE TIM RYAN TAKES AN IN-DEPTH LOOK AT THE HOUSING MINISTER’S OPENING ADDRESS AND THE CONTENTS OF THE BILL.
Described by Housing Minster Noel Ahern as “one of the most important Housing Bills to have been brought before this House in many years and the most comprehensive reform of the residential private rented sector in Ireland for almost 150 years,” the Residential Tenancies Bill finally reached the Dáil Chamber on June 10. This Bill updates the legislation applying to the private rented sector. It brings protection for tenants, in terms of rent reviews and much needed security of tenure. It gives landlords and tenants an effective means of resolving disputes that arise between them and it will lead, it is hoped, to greater professionalism within the sector. The Residential Tenancies Bill is the result of a productive collaboration between the Department of the Environment & Local Government, the Department of Justice, Equality and Law Reform and the Attorney General's office. It is a large and fairly complex Bill, involving changes to many longstanding aspects of landlord and tenant law.
VITAL ROLE Introducing the Bill, Minister Ahern said the Government recognises the vital importance of the private rented sector in the overall housing market. It also facilitates mobility, he said, which is a growing feature of the labour market and it can help to address social housing needs. “Recognising these factors,” he continued, “but aware also that the sector was not reaching its potential, the previous Government established a Commission on the Private Rented Residential Sector to examine the workings of the landlord and tenant relationship and to make recommendations in relation to the sector. This Bill implements the recommendations made by that Commission.” That commission was a widely representative group of relevant interests, the 18 members of which signed up to the measures contained in the Bill. IPAV Chief Executive Liam O’Donnell was a member of the commission and continues to represent the Institute on the ad hoc board.
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Minister Ahern admitted that the Commission's recommendations did not fully meet all the demands of the competing interests in the sector and that was to be expected. “These demands,” he said, “are born of differing views about the relative rights and responsibilities of those who provide rented accommodation and those who live in it. Consequently, the Bill does not contain everything that accommodation providers and renters might like. However, it strikes a fair and reasonable balance between those demands and it provides a framework for a stable, effective and efficient private rented sector. This, in turn, will encourage further development and growth in the sector.”
MAIN PROVISIONS Minister Ahern outlined the main provisions of the Bill which is available from the Government Publications Office or on the Oireachtas website. Part 1 contains the usual general provisions, including the scope of the Bill. The provisions of the Bill do not apply to certain types of rental arrangements, including holiday, employment related or business lettings, formerly rent controlled dwellings, or long occupation lease tenancies. Furthermore, it does not apply to social housing. Part 8 of the Bill deals with the establishment of a statutory Private Residential Tenancies Board. The Board will have the key role of providing a statutory dispute resolution service. It will also have responsibility for tenancy registration, research and the provision of information, policy advice and guidelines in relation to the private rented residential sector. There are also specific provisions for the appointment of mediators and adjudicators to enable the board fulfil its dispute resolution functions. The Board will have a pivotal role in the operation of this legislation and its effectiveness will have a major bearing on the success of the new regime. The ad hoc Board is in place, preparing the ground for the statutory role and helping to inform the
development of the legislation. Part 2 specifies for the first time in statute law certain minimum obligations of landlords and tenants regardless of whether there is a written tenancy agreement. Landlords are required to maintain the structure and interior of the rented dwelling to the standard existing at the commencement of the tenancy to insure the dwelling, to allow the tenant enjoy “peaceful and exclusive occupation” and to reimburse tenants for expenditure on repairs appropriate to the landlord. It also places an onus on the landlord to enforce tenant obligations. Third parties will have recourse to the new tenancies board, where necessary, to ensure this is done. For their part, tenants will be subject to a number of specific legal obligations. They must pay the rent and other charges specified in the letting agreement. Other obligations will include requirements to ensure no act or omission causes the landlord to be in breach of his or her obligations. They must notify the landlord of any repair requirements, do nothing to cause the dwelling to deteriorate beyond normal wear and tear and, if it does, to make good such damage. They must not engage in or allow anti-social behaviour and not assign, sub-let, alter, improve or change the dwelling without the written consent of the landlord. Part 3 provides that the rent payable may not be greater than “the open market rate” and may not be reviewed more than once a year, unless there has been a substantial change to the nature of the accommodation. Rents may be reviewed upwards or downwards. Disputes about the rent charged or arrears of rent may be resolved under the dispute resolution procedures of the Tenancies Board. One of the roles that will fall to the new Tenancies Board will be to monitor and research trends and developments in the sector. This will include reviewing the operation of the legislation. It will be in a position to consider at first hand the issue of rents and examine distortions that might be encountered in relation to a particular case or category of accommodation or a particular area and take such distortions into account in
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determining a dispute over rent. The Board will also have power to make recommendations in regard to the operation of this and other aspects of the legislation.
PART 4 TENANCY Part 4 introduces a greatly improved level of security of tenure for tenants. This will be based on a four year cycle whereby tenancies will be deemed to be terminated at the end of each four year period. This does not preclude the tenant remaining in occupation but, if he or she does, it will be under a new tenancy. This new cycle of tenancies will start for existing tenancies from the commencement date of this Part. It is not backdated. During the initial six months of any tenancy, the landlord will be free to terminate without giving a reason. Once the initial six months have passed, the tenant will have a qualified right to remain for a further three and a half years. A tenancy that has been in existence for more than six months will be known as a "Part 4 Tenancy". The owner will, however, have a right to reclaim the property for justifiable reasons such as own or family occupation, sale, change of use or major refurbishment. These grounds are essential to basic property rights and encourage participation in the sector by accommodation providers. Naturally, the tenancy can also be terminated in the event of failure to comply with the tenancy obligations. If a landlord terminates a tenancy on grounds that subsequently transpire to be false, the tenant can refer the matter to the Tenancies Board and compensation of up to €20,000 may be awarded. Unlike landlords, tenants will always be able to terminate a tenancy, subject to giving the required notice, without having to specify reasons. The Bill will not force tenants to remain in a tenancy for four years or any set time. Where a sub-tenancy is created, the subtenant will be treated as if the sub-tenancy commenced on the same date as the original tenancy and the sub-tenant will have the benefit of the remainder of the former tenant's security. Where a tenancy is assigned, a new tenancy is created and the assignee tenant will commence the six month qualifying period. There are also specific provisions covering situations of a dwelling occupied by multiple tenants that can give rise to difficulty. These include a means to ensure a bad tenant in a multiple tenancy can be removed without unfairly ruining the other tenants' renting arrangements. Termination of a tenancy, regardless of the reason or who is doing the terminating, must be by notice. Part 5 introduces a graduated scale of notice
periods for terminating a tenancy, increasing the length of tenancy from four weeks initially to 16 weeks after four years. Of course, longer notice periods than those specified can be given and shorter notice periods are also provided for in certain circumstances, such as failure to comply with tenancy obligations or serious anti-social behaviour by either party. In addition, it is open to the parties but only when one has advised the other of the intention to terminate, to agree between them any shorter notice period that suits them. Disputes in relation to termination notices may be referred to the Private Residential Tenancies Board.
DISPUTES Part 6 of the Bill introduces a completely new framework for dealing with disputes arising between landlords and tenants and this will be a major function of the board. At present, if a landlord and tenant are in dispute, the only options available to them are to end the tenancy, endure continued disagreement and unhappiness or refer the matter to the courts, which can be a confrontational, costly and very lengthy process. The new dispute resolution mechanism through the Tenancies Board will be more accessible, affordable and user-friendly. Any dispute arising between landlords and tenants of dwellings to which the Bill applies may be referred to the Board, which will largely replace the courts in this area. It will operate a two-stage dispute resolution procedure, with the first stage consisting of either mediation or adjudication. In the first instance, the parties in dispute will be offered the services of a mediator. This will give them the opportunity to resolve matters in a friendly way. Both parties will be helped to examine the circumstances and facts of a dispute. The mediator will help them to think through the problem and to choose a solution that will work for both of them. The mediation process will be supportive, nonconfrontational, confidential and speedy. A mediation service is already available nationally on the basis of joint voluntary referral by landlords and tenants. However, should either of the parties decline the services of a mediator or if the dispute is not suitable for mediation, an adjudicator will be appointed. The adjudicator will investigate the issue in dispute, hear the evidence of both sides and issue a determination on the matter. Both the mediation and adjudication procedures will be confidential. In the event that mediation fails to resolve the dispute or issues remain outstanding, or
should one of the parties reject the adjudicator's determination, the matter can be referred to a Tenancy Tribunal to be established by the Tenancies Board. The Tribunal will be composed of three persons drawn from the Board's Dispute Resolution Committee, which will be formed for that purpose. The Tribunal's proceedings will be public and its determinations published. Its determination of a dispute will be binding on the parties and may be appealed to the High Court only on a point of law. Enforcement of any determination orders that are not complied with will be through the Circuit Court. The mediators, adjudicators and members of the Dispute Resolution Committee will be drawn from various professional backgrounds and areas of expertise, particularly with experience in landlord and tenant issues andor mediation, adjudication or arbitration skills and competencies. They will be appointed for a period of at least three years on terms and conditions to be determined by the Board.
TENANCY REGISTRATION Part 7 of the Bill provides for a new system of tenancy registration. The 1996 registration regulations oblige landlords to register rented dwellings with the local authority. According to the Minister, this system has not worked well. The level of compliance has been low. In future, landlords will be required to register details of all tenancies with the Board, which will maintain a public register but this will not reveal the identities of the landlord or tenant or the rent. The Board will supply appropriate details to local authorities for the purposes of their role in enforcing standards and rent book regulations in the sector. It is intended that funding from the registration fees paid to the Board will be distributed to local authorities to support their enforcement activities. The fee of each registration will be €70. However, a composite fee of €300 will be applied where a landlord is registering a number of tenancies in the one building at the same time. The fee will be revised in line with general price changes. Failure by a landlord to register the tenancy where required to do so by the board will be an offence and may result in a fine of up to €3,000 and-or imprisonment for up to six months. Continued contravention may lead to an additional fine of up to €250 per day. There is also provision for injunctive type applications in the case of very serious emergency disputes coming before the Tenancies Board. This will allow fast-tracking of cases involving imminent danger to life or illegal evictions.
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Senior Vice-President, Richard Nagle. Managing Director of Global Properties Ltd
MEET IPAV’S NEW SENIOR VICE-PRESIDENT, CORKBASED RICHARD NAGLE OF GLOBAL PROPERTIES
IPAV’s new Senior Vice-President, Richard Nagle, is Managing Director of Global Properties Ltd. Auctioneers & Valuers with offices at 12 Cook Street, Cork and Main Street, Ballincollig. With over 30 years experience in the property profession, he can speak with some authority on the property market. Having completed his secondary education in De La Salle College, Macroom, he established Global Properties Ltd. in 1972 and opened offices in Cook Street, Cork - a brave decision in those days of high unemployment, stagnant economy and limited activity in the property market. Perhaps its having survived through those difficult times has made him into the practical, down-to-earth property professional he is today.
A FAMILY BUSINESS Global Properties is a family run business where he is joined in the company by his sons, Barry and Con. Barry joined in 1989 after completing his degree course in Valuation Surveying & Estate Agency at Limerick Institute of Technology and now is a Director with responsibility for residential sales. He is based at 12 Cook Street. Con Nagle joined the company in 1994, having previously spent a number of years with Bank of Ireland plc.. He has a Masters Degree in Economics from U.C.C. and is currently President of Ballincollig Enterprise Board. Con has responsibility for commercial sales and new house developments and heads up the Ballincollig Office which was opened in 1999. Global Properties are one of the larger and more influential auctioneering practices in Cork City and county and offer a complete range of services to their clients in the residential commercial and industrial markets. Global Properties are also market leaders in new homes sales. Richard Nagle is quick to point out the contribution his highly qualified, professional
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staff have made to attaining this position. Over the years, he has invested in the most modern technology to keep the company to the fore, thus enabling them to give their clients the edge in today’s competitive market yet retaining the personal touch and service only a family business can offer. Currently, Global Properties are selling agents for some of the larger housing developments in the greater Cork area and can count as clients such well known names as McInerney Construction, Frinailla Developments, Fingerpost Developers, Murnane & O’Shea Ltd., D & J Builders and M.M.D. Construction.
MAJOR CHANGES “The residential market has undergone major changes over a couple of years with increased demand for 1 and 2 bed units in apartments, duplex and townhouses,” he says. “A perfect example of this is the sale by Global Properties of 57 – 1, 2 and 3 bed units in a matter of hours, from plans of a housing development at Pope’s Hill, Cork, recently.” Other large new housing developments which Global are currently selling include a 250 house scheme at “Cluain Ard”, Cobh, Co.Cork for McInerney Construction, a 200 house scheme for Frinailla Developments Ltd. at Ballincollig which was released last November with the final 20 houses now on release. Other develpments currently on offer include Mansfield Park, Kinsale, large 4-bed detached houses priced at €500,000, 5 - bed detached houses at Jamesmont, Rochestown, Cork, priced €520,000 and the Orchard, Fairy Hill, Monkstown, 2 and 3-bed townhouses. Richard Nagle is very bullish regarding the industry’s prospect in the future, coming off the back of 18 - 20% increases over the last couple of years. He feels the market has settled and predicts an 8 -10% increase in values this year which is a realistic prospect bearing in mind inflation rates are likely to fall back to about 3% . With his 30 years experience in the business, he does not agree with economic commentators who predict the
market is likely to go into recession. He is vocal in his condemnation of such commentators as they do a great disservice to young people who may postpone purchasing and opt instead for rental accommodation. Richard is probably one of the few auctioneers who read in detail the recent Economist article – all 14 pages – which predicted a drop of 20% in Irish house prices. “These so-called experts, most of whom work for banks and stockbrokers, have been predicting sharp falls in house prices for the past seven or eight years,” he says. “If one had taken their advice, then one would be an awful lot poorer for it now! The Economist magazine claimed house prices are now high when compared to average incomes and average rental prices. We all know this. What the Economist did not take into account is the evolution which has taken place both in Ireland in general as well as in the housing market over the past 10 years. This increase in prices and house values is easily explained by fundamental changes in the Irish economy. “Our economy has seen a collapse in unemployment with almost half a million more employed than 10 years ago. Strong economic growth, falling household size, a significant population bulge among those in the house-buying age group and inward migration are some of the major changes which occurred. Others include a steep adjustment in interest rates, increased wealth and an increase in marriage breakups. The obvious result of all this is higher prices as more money chases relatively fewer properties. For those considering buying property for their own use at the moment, postponing the decision in the hope that prices will fall could prove to be an extremely costly choice.”
SECOND-HAND MARKET Global Properties has always been very strong in the second-hand residential market and have been involved in many of the major sales throughout the city and county from
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IN THE DAIL….. THE FOLLOWING ARE RECENT WRITTEN MINISTERIAL REPLIES TO DÁIL DEPUTIES
730. Mr. R. Bruton asked the Minister for the Environment, Heritage and Local Government the number of late applications for the payment of housing grants which were lodged after the closing date; the number which did not have contracts signed before 14 November 2002; and if he will relax the closing date in order that these otherwise eligible people can draw down the first time buyers grant.
85. Mr. Boyle asked the Minister for the Environment, Heritage and Local Government his plans to alter planning guidelines in relation to high-rise development.
Minister of State at the Department of the Environment, Heritage and Local Government (Mr. N. Ahern): The relevant regulations provide that applicants under the new house grant scheme, terminated as and from 14 November 2002, were required to have entered into a contract to purchase or build a house on or before 14 November 2002 and that the application for the grant be received in my Department on or before 4 December 2002. The dates stipulated in the regulations regarding signing of contracts and the lodging of applications at the termination of the scheme cannot be set aside in any case. New house grants in respect of 345 applications received subsequent to 4 December 2002 cannot therefore be allowed and the applicants have been informed accordingly.
Minister of State at the Department of the Environment, Heritage and Local Government (Mr. N. Ahern): My Department has not to date issued any specific planning guidelines in relation to high-rise development. However, the guidelines for planning authorities on residential density, published by my Department in September 1999, deal, inter alia, with issues relating to building height. The residential density guidelines indicate that while it is a common perception that higher densities require taller buildings, it is possible to increase density significantly with modest increases in height. The guidelines state that in general, low rise buildings which respect the scale and character of Irish towns and cities are appropriate. However the guidelines recognise that taller buildings may be appropriate in specific circumstances, namely, in locations specifically identified in development plans as being appropriate for higher buildings, such as locations close to an
expanse of water or public parkland where a building of greater scale may be more appropriate or in a central district, town or city centre location where an increase in massing and height in the form of a contemporary and stylish building, could make a positive contribution to the skyline. Dublin City Council published a report "Managing Intensification and Change - A Strategy for Dublin Building Height" in September 2000. The strategy recognised the intrinsic quality of Dublin as a low to medium rise city, predominantly below 30 metres high, but indicated that areas such as Heuston or the Docklands with large under-utilised sites are development character areas with opportunity for considerable development. In such areas, there is potential for higher buildings without compromising the local context. The guidelines for planning authorities on residential density are construed as being Ministerial guidelines under section 28 of the Planning and Development Act 2000. Planning authorities and An Bord Pleanála must, therefore, have regard to those guidelines in the exercise of their planning functions. I have no plans at this time to revise the residential density guidelines.
Continued from previous page coastal properties to the large period houses of Sunday’s Well and Montenotte, to 3 and 4 bed semis in suburbia or inner city terraced houses. Currently Global have a range of houses in the €200,000 to in excess of €1 million price range and sales here are reasonably buoyant. Location, as always, has a major influence on prices. The commercial and office markets are slow at present, with an over supply in the offices and warehousing sections. However, he points out that this end of the business tends to go in cycles and, with vendors becoming more realistic, he expects to see more movement over the next couple of months. Wearing his hat as Senior Vice President of the Institute of Professional Auctioneers and Valuers he is generous in his praise of previous Presidents and Chief Executive Liam O’Donnell. “The fantastic feate of IPAV in acquiring our
own offices at 129 Lr. Baggott Street, Dublin and its refurbishment to a “Five Star” standard for use by all members was an outstanding achievement,” he says, “and there were many satisfied faces when the premises was officially opened by An Taoiseach, Bertie Ahern TD, earlier this year. The establishment of the Group Bond Scheme was another notable achievement for IPAV, he adds. “Our Educational Programme is the envy of many professional organisations. Since Liam O’Donnell and myself walked through the doors of Cork College of Commerce many years ago with a proposition to host classes there, this programme has mushroomed into a programme of considerable merit and now IPAV offer students Certificate, Diploma and Degree courses at centres in Cork, Dublin, Limerick, Galway, Waterford, Athlone, Derry and Bangor.
“I would like to see the Institute continue its policy of activity representing the interest of its members nation-wide. There are a wide range of issues which have to be addressed at local and national level. Our over-zealous Government intervention in the housing market needs to be curtailed. In the past, it has created more problems than it solved. Exorbitant rates of Stamp Duty need to be looked at. The introduction of a 9% rate on non-residential property plus the high rates of Stamp Duty on residential property has seen an outflow of funds out of the country which will effect future investment in this country, not to mention the loss of revenue to the Exchequer. “The complete Planning Process needs to be streamlined and brought into the 21st Century. There are also the problems associated with planning for single dwellings in rural areas. These are all problems which IPAV is addressing.”
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the property professional
NEW DEPARTURE IN EDUCATION PROVISION ATHLONE INSTITUTE OF TECHNOLOGY, CORK INSTITUTE OF TECHNOLOGY AND TALLAGHT INSTITUTE OF TECHNOLOGY TO OFFER CERTIFICATE PROGRAMME. BY PETER BRADY, CHAIRMAN, EDUCATION ADVISORY COMMITTEE The question is often asked what is a professional practice? The Chambers Dictionary defines a profession as a “non manual occupation requiring some degree of learning or training”. In this context, professionalism is defined as “the competence or the correct demeanour of those who are highly trained and disciplined”.
The challenge for the Institutes is to ensure that students will have access to the same progression route as the full-time student. To achieve this, it is recognised that they will require the appropriate resources to realise their potential.
The professional, therefore, is one who has formal educational qualifications and subscribes to a code of practice defined by a professional, representative body.
The new structure for the delivery of the part-time route establishes a clear line between provider and examiner. Intending students will register in the traditional manner with the Institutes of Technology and will benefit from that status by having access to libraries and other learning resources.
For over ten years now, the Institute of Professional Auctioneers and Valuers has been very active in the field of education, to provide the knowledge and skills to practice as a professional in an increasingly demanding workplace. The Certificate in Auctioneering and Estate Agency and the Diploma in Property Management and Valuation are designed specifically to meet the needs of the profession. Concentrating on school leavers, the Certificate programme provides for relatively open access with a view to providing students with an opportunity to develop their learning to their own level of competence. The prospect of converting their own experience into a recognised qualification proved a very attractive prospect for adult learners.
CERTIFICATE PROGRAMME Commencing in September 2001, the Certificate in Auctioneering and Estate Agency was offered on a part-time basis to those who were over twenty-three years of age and who wished to obtain a qualification in property. Over two hundred and fifty students completed the Certificate stage this summer. The Diploma in Property Management and Valuation will be offered to those successful graduates at Certificate level who fulfil the entry requirements for this advanced level of study. While the Institute took direct responsibility for the delivery of the part-time route for the last two years, from September 2003, this responsibility will be undertaken by the Adult Education Departments in the Institutes of Technology.
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This is an obvious advantage given that the course is a demanding one and will require many hours of study by each individual student. Having access to a library and the other learning facilities, including IT, is an essential element of any learning programme.
Aiden Davitt, Sherry FitzGerald Davitt & Davitt, Castlepollard, receiving a Certificate in the Fine and Decorative Arts from the President of the Irish Antique Dealers’ Association, Mr. George Stacpoole and IPAV President Paul Gartlan advanced stage and the Institute hopes that the final stage of the award will be in place by September 2004. “More to do” is a familiar phrase these days. Motivated by a belief that the highest standards of practice can only be achieved through a thorough education in all aspects of property, it seems there will always be more to do for this writer and a very busy Education Committee!
IPAV will be free to concentrate on its function as an examining body with all the work that it entails. Throughout the year, the Education Committee has been heavily engaged in talks with the Heads of Adult Education in Cork, Athlone and Tallaght Institutes of Technology to make sure that the best possible platform for learning will be available for future students. In addition, talks with the University of the West of England are at an
Outgoing IPAV President Pat Davitt is presented with the overall golf prize at the Annual Convention in Killashee House Hotel by incoming President Paul Gartlan and Rose Mulcahy, Property Manger, the Irish Examiner
PART-TIME EDUCATION FOR YOU? Are you, a member of your staff or family, interested in availing of IPAV’s part-time Certificate in Auctioneering and Estate Agency course? This highly regarded and sought-after will be available on a part-time basis at a number of centres throughout the country from next September. The locations are Dublin, Cork, Waterford, Limerick, Galway, Athlone and Derry. Lectures are given for three hours on one evening per week and the cost of the course is €1300 per annum. Applicants must be over 23 years of age. Successful students are ideally prepared for careers in auctioneering and estate agency or in parallel professions. These students also have the opportunity to continue to study to Diploma or Degree level, also on a part-time basis. In addition, full-time courses, up to and including Degree level, for schoolleavers continue to be available at Cork and Dún Laoghaire Further information about all courses is available from IPAV at 01 – 6785685 or by e-mailing: email@example.com.
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Regan & Associates A r c h i t e c t s *ARCHITECTURE
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Regan & Associates - Committed to design excellence in the field of architecture and urban design. We at Regan & Associates have built our professional reputation across a wide range of building types including office, retail, custom design houses, private developer housing & apartments and public housing schemes. We also specialise in all aspects of planning and urban design, designing buildings to satisfy the needs of our clients and local authority planning requirements. From conceptual design, through planning, into production drawings and contract documents for tender purposes, you are guaranteed the highest standards of technical specification and professional service, bringing you excellent building projects on time and within budget. For further information regarding the full range of design and on-site management services available from Regan & Associates contact us at Cork Office: Calco House, Second Floor, Airport Industrial Estate, Ballygarvan, Cork. 021- 431 8183 Or Dublin Office: 60 Clonlea, Balinteer Road, Dublin 16. 01-298 0711
Read the Bible on .Fridays. If you’re in the market for property, make sure you read the Property supplement with the Irish Independent every Friday. You get all the listings citywide and nationwide. Special features for first time buyers. What’s on the plans and what’s new to the market. Rental values and auction results right up to Thursday evening. So don’t miss the Irish Independent Property supplement, every Friday. It’s not just the gospel according to Estate Agents, it’s the last word on Irish property.
The complete read on property. Every Friday.