Volume 2 | Number 2 | Summer 2012
SURVEYORS
JOURNAL CONSTRUCTION | LAND | PROPERTY
New standard bearer
Contents
Society of Chartered Surveyors Ireland, 38 Merrion Square, Dublin 2. Tel: Email: Web:
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32
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01-644 5500 info@scsi.ie www.scsi.ie
Ciara Murphy, Director General
EDITORIAL BOARD 2012 Chairman: Tom Dunne
DIT
Members: Colin Bray
Ordnance Survey Ireland
Deirdre Costello Jones Lang LaSalle Costello Commercial
John Costello
Think Media
Tom Cullen Frank Harrington Kevin Hollingsworth
Smith Harrington McGovern Surveyors
Keith Lowe
Douglas Newman Good
Paul Mooney
PM Property Consultants Ltd
Paul O'Grady
Think Media
Derry Scully
Bruce Shaw
Claire Solon
ESB
PUBLISHERS Published on behalf of the Society of Chartered Surveyors Ireland by Think Media Ltd Editorial: Design:
Advertising:
Ann-Marie Hardiman Paul O’Grady Tony Byrne Tom Cullen Ruth O’Sullivan Paul O’Grady
www.scsi.ie Views expressed by contributors or correspondents are not necessarily those of the Society of Chartered Surveyors Ireland or the publisher and neither the Society of Chartered Surveyors Ireland nor the publisher accept any responsibility for them.
The Surveyors Journal is printed on recycled paper.
PRESIDENT’S MESSAGE
4
ECONOMIC OVERVIEW
18
The cat’s stopped bouncing EDITORIAL
5
CONSTRUCTION NEWS
To notify or not to notify?
20
A bad Act
22
Society launches house rebuilding app
6
New President inaugurated
7
LAND
APC diplomas awarded
8
Survey Ireland adds to geomatics knowledge
24
Dairy tale
26
NEWS FEATURE
14 PROPERTY
Check. They’re Chartered – bringing our standards to public attention
INTERVIEW New standard bearer
16
Is receivership for you?
29
Licensed to act
32
THE LAST WORD
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Land locked Volume 2, Number 2, Summer 2012 | SURVEYORS JOURNAL |
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President’s message
Believing in better times ahead New Society President ROLAND O’CONNELL sets out his priorities for the coming year.
It is a pleasure to submit my first column as President, and I look forward to using this space in the Journal over the next year to set out my thoughts on our profession and the work of our Society. During my inaugural speech at the AGM, I said that I believe it is a mark of the calibre of members from all the disciplines who, while faced with arguably the hardest trading conditions any of us have ever had to face in what is a day-to-day struggle for survival, still find the energy and time to devote to Society committees with no personal reward for doing so. Their willingness to do so on our behalf and on behalf of the public at large is commendable. This Journal is testament to the work and involvement of our members, and I want to start this column by congratulating and thanking all those members who give up so much of their time to sit on committees, boards and working groups, both in Merrion Square and in the regions. You are our best ambassadors and there is no doubt that the great successes over the last year have been testament to your enthusiasm. Over the next year, I am looking forward to visiting more of the professional group meetings and the regional committees to understand more about our profession and the issues that are shaping it. Thanks to our Society’s enhanced visibility, the Government and other stakeholders are interested in our suggestions for reform. Our task is to continue to raise that visibility and increase our profession’s usefulness both to the Government and to the public. Times are very tough for our profession. The banks are still not functioning properly, consumer sentiment is weak and international investors remain cautious about Ireland’s economic prognosis. Willpower alone will not change the Irish or the European economy, but there are small things that we, as Chartered Surveyors and members of the Society, can do to help make some positive changes for the future. In my AGM speech I noted that over the last number of years our profession has largely been a tale of redundancy and emigration,
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but if we believe in a better future, and I do, then we must also plan for it. It is already evident that an increasing awareness of the skills and qualities of Chartered Surveyors in Ireland has opened new opportunities for us and we must focus our efforts on attracting bright ambitious young people into the profession. While very tough at times, ours is a fantastic profession, which offers a varied, fulfilling and exciting career. I believe in better times ahead and we need to encourage school leavers to consider our profession when choosing their college course. We must also offer structured training and opportunities to develop their skills when they come and work with us. All of us remain grateful to those who guided us when we were developing our skills and knowledge, and it is our duty to mentor the next generation of Chartered Surveyors, even if our motivation is a purely selfish one of ensuring that there are bright motivated people to carry our own businesses forward. It is a tremendous honour to be elected to the office of President of the Society of Chartered Surveyors Ireland. Be assured that I am committed to working diligently over the next 12 months to ensure that I repay this honour that you have bestowed upon me. I hope that through this column I can share some of my observations and experiences as President, and set out some more thoughts on how we can be a positive contributor to the future of our country and profession.
Roland O’Connell, President Society of Chartered Surveyors Ireland
Editorial
Did we learn any lessons? Editor Tom Dunne re-iterates industry calls for an end to a shameful arrangement of self regulation. If we are to learn anything from the current economic crisis it should be that there is a need for proper state regulation of industries where individuals and the public generally will suffer when things are not done properly. From the Anglo Irish Bank to Priory Hall surely we must have learned that getting regulation right is important for all our security, safety and prosperity. The Building Control (Amendment) Regulations 2012 is a clear example that lessons may have not been learned. This will be plain from the critique of these Regulations provided by the Building Surveying Professional Group through their Chairman Kevin Hollingsworth in this edition (p22-23). There are many problems with these Regulations and the Society's concerns are shared by other professional bodies with a public interest mandate and industry representatives. Crucially Kevin points out that not having a completed code of practice prior to endorsing new mandatory inspection and certification obligations is inconceivable and unworkable. Several of the other flaws are well elucidated in the article. Given what we all have learned about the inherent dangers of conflicts of interests it is almost unbelievable, and will probably be unacceptable to construction professionals and the public, that the new building control system provides that the building owner will still be the paymaster of the certifier. The best location of the responsibility for certification is with the local authority and we need to give them the powers and the expertise to independently certify buildings as fit for use. They need to do that on all our behalves and in the public good. After everything we have gone through in the last few years in this country, it is unthinkable that the Government is proposing to continue to facilitate self-regulation that has co-incided with (and I would add facilitated) the drop in standards of construction. As is abundantly clear from the Priory Hall debacle, the Minister for the Environment, Community and Local Government, Phil Hogan, as a leading member of a Government with a mandate to reform, ought to put an end to this arrangement.
Tom Dunne, Editor
Volume 2, Number 2, Summer 2012 | SURVEYORS JOURNAL |
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News
Society launches house rebuilding app The latest house rebuild guide, published by the Society of Chartered Surveyors Ireland, shows that national average rebuild costs have increased marginally for 2012. Andrew Nugent, Chairman of the Society’s Quantity Surveying Professional Group, said the increase was due to changes in Part L of the building regulations, such as improved insulation requirements, and increases in materials, VAT and other input costs. The increase means that homeowners may face modest increases in home insurance premiums. Mr Nugent said that the most important thing for homeowners is to make sure that they are not overpaying or underinsuring their homes, and with this in mind the Society has developed a new free iPhone/Android app and online calculator. “We are delighted to launch these new features and we believe they will be of great assistance to owners in helping them to calculate their rebuild costs in a speedy and straightforward way,” he said. Home and property owners can access the Online House Rebuilding Cost Calculator by going to www.scsi.ie or by going to the Apple App store or Android store and downloading the free calculator onto their mobile phones by searching SCSI Rebuild.
Pictured at the launch of the Society’s new Online House Rebuilding Cost Calculator are: Chartered Quantity Surveyors Patricia Power and Kevin Brady.
North Eastern Branch AGM
Tennis tournament
Pictured at the AGM of the Society’s North Eastern Branch are (from left): New Society President Roland O’Connell; Pat McGovern; Peter Murphy; Society Director General Ciara Murphy; and Past-President John Curtin. Pictured at the AGM of the Society’s North Eastern Branch are (from left):
Dust off the tennis rackets, because we are planning to hold our ever popular tennis tournament on Wednesday, August 29. Hopefully, by then summer will have arrived. Once again, the venue will be Lansdowne Tennis Club and the tournament will be sponsored by The Irish Times. An entry form will be circulated to members shortly.
This issue in numbers NUMBER OF CANDIDATES who successfully completed Final Assessment in 2011
60
(page 8)
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DEADLINE IN JULY when the PSRA expects to begin licensing property professionals
(page 10)
News
AGM
Launch of Buildcost
John Curtin, then Society President, wishing Jason Tully (left) and Liam Langan every success in their new chartered quantity surveying practice, Buildcost. New President Roland O’Connell (left) received the Society chain of office form outgoing president John Curtin.
The Society’s AGM took place on Tuesday May 15, and Roland O’Connell was inaugurated as President. Micheál O’Connor was elected Senior Vice President. Following a lively election campaign between Martin O’Donnell and Pauline Daly, Pauline was elected as Second Vice President for the year.
Sign up now for Young Surveyors tag rugby The fantastic Young Surveyors five-a-side tag rugby extravaganza will take place on Friday, June 22, at Belvedere Rugby Club. To take part, all you need is to assemble a team of at least five players (one must be female), and as many subs as you wish, and turn up for registration from 5.00pm (kick-off is at 6.00pm sharp). There will be lots of prizes on the night, including trophies for winning and runner-up teams, a player of the tournament prize, and lots of spot prizes. Refreshments will also be provided on the night. Don’t miss out on this terrific opportunity to have fun and meet colleagues in your profession. Entry costs €200 per team. To register, contact Marcus O’Connor (MFO), Tel: 01-497 9050/087-678 8100, or Email: Marcus@mfo.ie.
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Annual Conference – date for your diary The Society’s Annual Conference will take place on Thursday, October 25, in Chartered Accountants House, Dublin 2. The theme for the Conference will be ‘Shaping the Future’, and we are currently working towards an exciting line-up of speakers.
Golf outing
The annual golf outing for LionHeart (the Benevolent Fund), which assists members in need, took place on Friday, June 8, in Woodbrook Golf Club. Look out for a report and winners’ photos in our autumn edition.
PERCENTAGE OF THE land areas of Ireland offered for sale in 2011
PERCENTAGE DECLINE in new house building from the peak
(page 18)
0.3
(page 28)
Volume 2, Number 2, Summer 2012 | SURVEYORS JOURNAL |
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News
Diploma awards ceremony 2012
The 2012 recipients of the diploma for completion of the APC are pictured with (front row): Ben King, Chairman, Geomatics Professional Group; Hugh Markey, Chair of the Commercial Agency Professional Group; then Society President John Curtin; Society Director General Ciara Murphy; and, Andrew Nugent, Chair, Quantity Surveyors Professional Group. APC Diploma recipients: Sally Bailey, Chris Boyle, Darren Broderick, Antoinette Byrne, Helen Callaghan, Patrick Campion, James Connolly, Keith Craddock, Darragh Cronin, Shane Duffy, Catherine Fitzpatrick, Alan Fitzpatrick, William Goggin, Caroline Gorman, Stephen Hale, Frank Harrington, Ian Kilcoyne, Mairead Loughnane, Ciaran Lydon, Lara McCarthy, David McCarthy, Aidan McDonald, Daniel McLaughlin, Sean McMahon, Robert Moore, Jennifer Mulholland Mahon, Aoife Murray, Katie Norton, Eoin O’Donoghue, James O’Donoghue, Gerard O’Malley, Aileen O’Carroll, Daniel O’Connor, Fearghal Rooney, Brian Shields, Graham Skelly, Brian Thackaberry, Peter Turley, Ailson Walsh, Katie Williams. Diploma recipients not present on the day: Barry Arthurs, Aonghus Callanan, John Carleton, Diarmuid Casey, Paddy Cusack, Jonathan Dowling, Ross Harris, Sarah Jane Kiernan, John Maloney, Ken McDonald, David McGrath, Seamus Meehan, John O’Halloran, Terry O’Leary, Colin O’Sullivan, Cathal Phelan, Robert Rowan, Mark Ryan, Seamus Ryan, James Slater.
The annual ceremony to award diplomas to candidates who successfully completed the APC took place on March 30, 2012, in St Stephen’s Church, Mount Street Crescent, Dublin 2. 2011 saw 86 candidates apply for Final Assessment. Sixty candidates successfully completed the APC, and 38 were present on the day to receive their diplomas. Following the presentation of the Society of Chartered Surveyors Ireland diplomas, the annual presentation of medals and burses took place. The Austin Reddy Memorial Medal was presented by Declan Reddy to Ciaran Hickey for having achieved first place in the final year of the DIT Construction Economics & Management Degree course 2011. The Noel Dooley Burse was presented by Patrick Leonard to Liam Fleming for having achieved first place in the third year of the DIT Construction Economics & Management Degree course 2011. Finally, the David Bailey Burse was presented by Daphne Bailey to Darragh Dennigan for having achieved first place in the third year of the DIT Property Economics Degree course 2011. The Society made a special presentation to Mary McLoughlin, past School Secretary in DIT, who contributed 42 years of her life to surveying education in DIT. Mary retired in November 2011, and was awarded Honorary Membership of the Society.
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Former Secretary at the Department of the Build Environment Mary McLoughlin was award Honorary Membership of the Society in recognition of over 40 years’ service to students. Mary is pictured with then Society President John Curtin, and Alan Hore of DIT.
Following the ceremony, a reception was held in 38 Merrion Square for candidates and their guests.
News
Professional Groups join for CPD There was an excellent turn out of members on May 16 at the Heritage Hotel, Portlaoise, for the CPD meetings of the Rural and Residential Agency Professional Groups. A residential morning The Residential Agency Group meeting took place in the morning, and after some introductory remarks, Group Chairman Ed Carey introduced the first speaker of the day, Tony Collins of JC Collins Insurances Ltd. Tony gave a very informative presentation drawing on his extensive experience in the professional indemnity claims environment. He advised delegates to always identify the client, i.e., the person or body to whom the surveyor owes a duty of care, and to make sure that a written agreement/contract is in place, setting out the terms of reference for work to be carried out. He stated that the client should always indemnify the surveyor for risks associated with their property, as failure to do so is a common cause of claims later, for example if someone has an accident while viewing a property. He advised delegates on the importance of file management and organisation, and of always applying an established standard such as the Red Book. Finally, he gave valuable advice on claims management, and what to do when a claim is received. He recommended engaging with the insurer as soon as the claim is received, and emphasised the importance of record keeping, including emails, and of collaboration at all times with the insurer. He reminded delegates that it is in their interest to be actively involved in their case from the beginning. Tony was followed by Ken O’Flaherty, Finance Director at myhome.ie. Ken offered an update on the property market, setting activity in the context of the economic situation, particularly to the end of 2011. He said that despite the negative outlook at the start of the year, which was a result of factors such as the ongoing threat to the Euro, Ireland’s austerity budget, and lack of availability of mortgage finance, improvements could be seen in the property market so far in 2012. These were assisted by low European Central Bank (ECB) rates, Government measures to improve mortgage interest relief, and modest signs of economic recovery. He cited as examples the CSO’s announcement of improvements in consumer confidence and the recent launch by NAMA of its 80:20 Deferred Payment Initiative. Ken also revealed that activity on myhome.ie has improved considerably in recent months, with higher numbers visiting the site, and a higher proportion of those visits converting into enquiries. Finally, he
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From left: Tony Collins, JC Collins Insurances Ltd; Tom Lynch, Property Services Regulatory Authority; Ken O’Flaherty, myhome.ie; and, Ed Carey, Chairman, Residential Agency Professional Group.
introduced initiatives that myhome.ie is taking to further improve its service, including a rebranding and redesign of the site, greater use of social media and mobile phone and iPad apps, and the launch of the ‘on view’ facility. The final speaker of the morning was Tom Lynch, Chief Executive of the Property Services Regulatory Authority (PSRA). In a very interesting and timely update, Tom stated that he was “highly confident” that the Authority would be licensing property services providers (PSPs) by the July 6 deadline. He expected that the relevant statutory instruments would shortly be approved, clearing the way for full implementation of the legislation. Tom outlined the functions of the PSRA, placing particular emphasis on its role as licensing body for PSPs. He also discussed the forthcoming residential property price register, which will be up and running by September 2012, and the commercial leases database. He went into some detail about the new licensing system, including who should be licensed, and how they need to go about applying for a licence. He placed great emphasis on the fact that breaches of the new legislation will be treated as criminal acts; the Authority has extensive powers of audit and inspection, and powers of sanction that include suspension or revoking of licences and, in serious cases, prosecution. He referred members to the new guide to the legislation, which is available online (see article on page 32 for further information).
Rural briefing For the afternoon session, John Dawson, Chair of the Rural Agency Professional Group, introduced four excellent speakers. Declan McEvoy, Head of Taxation at IFAC Accountants, presented valuable information on farming business taxation. He gave an overview of the capital tax regime and of income tax benefits, including changes to stamp duty, capital acquisitions tax thresholds and capital gains tax. He also advised on anomalies with regard to retirement relief, land leasing exemptions and the tax status of farms that become limited companies. He offered useful advice on tax planning, for example the benefits of moving assets to the next generation while positive tax reliefs are still available. He spoke at some length on the anomalies in the system as regards land mobility
News
There was an excellent turn out for the two Professional Group meetings.
From left: Thomas Ryan, Irish Farmers Association; Tom Cannon CIArb; Ivan Grimes, Department of the Environment, Heritage and Local Government; John Dawson, Chair, Rural Agency Professional Group; Roland O’Connell, President, Society of Chartered Surveyors Ireland; incoming Rural Agency Group Chairman Ann Carton; and Declan McEvoy, IFAC Accountants.
within families. A number of anomalies exist that make it difficult for such transfers to take place without significant tax liability arising, and Declan reiterated a view held by the Rural Agency Group, that there is a need for changes to the system. Finally, he discussed the Commission on Taxation Report, pointing out that all changes in taxation since 2009 are a result of this report, so anyone who is looking to see what taxation changes are coming down the line, should consult it. Thomas Ryan, Environment and Infrastructure Executive with the Irish Farmers Association and a member of the Rural Agency Group, spoke next on ‘New land improvement regulations – things to know when selling land’. Thomas summarised the main elements of the new regulations for farmers seeking to restructure land and holdings, use uncultivated or semi-natural land for intensive agriculture, or carry out certain land drainage works on agricultural lands. There are now very specific thresholds, beyond which the landowner must apply for screening to the Department of the Environment, and possibly obtain an environmental impact assessment. He also outlined the stringent thresholds with regard to wetlands under new planning regulations, pointing out that almost all landowners would have to apply for planning permission to carry out work under these thresholds. These regulations will place new responsibilities on farmers selling or buying land, and there was some discussion on this, including during the question and answer session, where issues such as whether compliance with this legislation would become part of conditions of sale, and whether the law can be changed so that thresholds apply to the person farming the land, as opposed to the owner, were raised. Ivan Grimes, Principal Officer responsible for Water Services in the Department of the Environment, Heritage and Local Government, addressed the meeting on the subject of the Water Service (Amendment) Act 2012 and new regulations for houses with domestic waste water systems, i.e., septic tanks. Ivan outlined the circumstances under which the EU ruling came about, pointing out that Ireland has no choice but to legislate, and already faces punitive fines, as well as loss of reputation. He then explained the implications of the new regulations, whereby all households with a septic tank must register, and may be inspected (inspections will at first be
targeted to areas where drinking water sources or habitats are likely to be or have been impacted upon by discharge from domestic waste). Inspectors will target both registered and unregistered systems, with the hope that the new system will result in improved maintenance and better environmental awareness. The next step of the process is that a registration system will be launched (online, by post and at counters at local authorities), training for inspectors will commence, and an information and awareness campaign will begin to make sure that information made available to householders on all issues is very clear. The meeting was briefly addressed by new Society of Chartered Surveyors Ireland President Roland O’Connell, who congratulated delegates on their commitment to continuing professional development, and said that he looked forward to working with members in the coming year. The final speaker of the day was Tom Cannon, a dairy farmer and accredited mediator. Tom gave a detailed presentation on mediation and arbitration in relation to agricultural land. He listed the various stages of alternative dispute resolution (ADR), from mediation to arbitration, and discussed what each stage involved. He stressed the confidential, voluntary, and non-legal nature of mediation, which he said is a cost-effective and accessible way to resolve disputes, once both parties are willing to engage in the process, and a competent professional mediator is engaged. Tom listed instances where mediation might be useful, such as family succession, setting up and dissolution of partnerships, commercial disputes and financial problems. He stressed the importance of collaborative mediation, where the mediator works with relevant legal or other professionals to reach the best possible conclusion for all parties. Like mediation, arbitration is confidential, accessible and cost-effective, but it is also binding and enforceable. Like other elements of ADR, it benefits hugely from having an arbitrator with relevant professional knowledge of the issues at hand. Arbitration can be helpful in matters regarding compulsory purchase orders, EU milk quota leases, or building contracts, among many others. All of the presentations from this meeting are available on the Society’s website – www.scsi.ie.
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News
Introducing the Professional Groups In this issue, RORY LAVELLE introduces the Valuation Surveying Professional Group, and JOHN DAWSON describes the work of the Rural Agency Professional Group.
Valuation Surveying Professional Group
Rural Agency Professional Group
Membership of the Valuation Surveying Professional Group is made up of professionals working in all areas of property valuation. The Group also includes surveyors with specialist expertise in rateable valuations, rent reviews/landlord and tenant work, and compulsory purchase orders. The work of a valuation surveyor involves carrying out property valuations for various purposes, including valuations for secured lending for banks, company accounts, tax purposes, court work and general advice. In recent years, valuation surveyors have been employed in undertaking property valuations arising from the transfer of loans to NAMA. These valuations must be compliant with RICS Valuation Standards, more commonly known as the Red Book. This Standard is now mandatory for all members. One of the most important roles of the Valuation Surveying Professional Group is the provision of CPD related to Red Book compliance. A new edition of the Red Book is due, so updates for members, both in the Professional Group and in the Society as a whole, are very important in order to make members aware of the levels of compliance required and any changes. The Group also worked with the RICS to produce the Irish and residential chapters of the Red Book. In the coming months the Group will be closely involved in the launch of the RICS Valuer Registration Scheme in Ireland, which will reinforce professional standards by requiring all valuers to be registered. The Group also expects to have a role in disseminating information regarding changes to the Valuation Act that will, among other things, change the manner in which the national revaluation process for commercial rates is conducted. Obviously we will work with colleagues in the residential professional group on whatever scheme of valuation is decided on by Government for the calculation of the new property tax. Valuation surveyors interact with residential and commercial colleagues on property valuations, and also work with quantity surveyors on new developments.
Established in May 2011, the Rural Agency Professional Group currently has a committee of 13 members from a range of professional areas, including expert valuers in forestry, experts in land improvement regulation, expert witnesses, and residential and commercial agency Chartered Surveyors. Many come from a farming background, which gives them a valuable insight into the important issues around land sales and letting. Chartered Rural Agency Surveyors have a high level of expertise in farmland, forestry and rural property – including extensive technical knowledge in land valuation – at a local and national level. The Rural Agency Professional Group is very involved in engaging with Government on issues concerning land and property in rural Ireland, particularly issues that affect land value. Of current interest is the issue of CAP reform and its implications. The Group is also concerned about land mobility, and argues strongly for reform of policy and legislation on land transfer within families, particularly with regard to tax liability and entitlements. The Group is also involved in raising awareness among colleagues about the implications of the ending of milk quotas in 2015 for land sales and demand. The Group has hosted two high-profile CPD events since its formation. November’s seminar included presentations from the Minister for Agriculture, Food and the Marine, Simon Coveney TD, Editor Matt Dempsey and Shirley Busteed of the Irish Farmers Journal, Shay Arthur from the Property Registration Authority, and Teagasc Director Professor Gerry Boyle. The seminar on May 16 featured presentations from Declan McEvoy of IFAC Accountants, Thomas Ryan of the IFA, Ivan Grimes of the Department of the Environment, and Tom Cannon CIArb. The members of the Rural Agency Professional Group can offer support and advice to colleagues on a range of issues related to land and planning, from where to go for soil samples, to providing tax advice for investors, advising on how to approach the purchase of land that is in dispute, short-term letting agreements for tillage and grazing, and long-term leases.
Rory Lavelle
John Dawson
Chairman, Valuation Surveying Professional Group.
Chairman, Rural Agency Professional Group.
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News
Award for Rentview.com Rentview has received the silver award at the Online/Digital Start-up of the Year Awards. The event honours the best emerging online businesses in Ireland. Having officially launched in February, Rentview is currently being used by 40 agencies across the country, and is on target to reach 10% of agencies by the end of 2012. According to Andreas Riha, joint founder of Rentview with Colin Napper: “It was a tremendous achievement for us as there were over 300 start-up entrants”. Both Andreas and Colin worked in property management prior to developing the application. They understood the market and developed an application that addresses agents’ needs. Rentview's transparent cloud-based application allows estate agents to manage their rental portfolio with ease and allows access to both landlords and tenants. The application aims to improve efficiency, reduce Andreas Riha and Colin Napper, founders of Rentview.com, receiving the silver award in The Start-up Awards category of the Online/Digital Start-up of the Year Awards. administration time and increase revenue.
Volume 2, Number 2, Summer 2012 | SURVEYORS JOURNAL |
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News feature
Check. They’re Chartered – bringing our standards to public attention AINE MYLER and CONOR O’DONOVAN present a brief overview of the recent awareness campaign for members to promote the professional standards and expertise of Chartered Surveyors.
Pictured at the campaign launch are (from left): Society President Roland O’Connell; Keith Lowe; and, Felicity Fox.
Why – did we need an awareness campaign? Because that’s what our members asked for! Following the merger last year of the SCS and IAVI, we surveyed members about their needs from and expectations of their new professional organisation. The resounding answer from all professional groups and regions within the Society was the need to raise the Society’s profile to become the flag bearer for professional standards across the industry.
(Residential Agency), with Society Director General Ciara Murphy and Communications Director Conor O’Donovan from HQ, was formed. The group instigated a rigorous tender process, from which Atomic – who also work with Chartered Accountants Ireland, KMPG and Rory McIlroy, among others – emerged as the successful agency. From the outset, they displayed an innate understanding of the challenge of marketing a diverse and multisectoral professional organisation such as ours.
What – was the campaign going to be about?
How – did the campaign achieve coverage?
Reassurance and the promotion of professional standards, and the benefits to the consumer of using a Chartered Surveyor. With multiple practice areas, the challenge was to create a cohesive, understandable and meaningful campaign, which would speak to our target audiences of our own members and their clients, business, finance, other professional organisations, potential new members, students and the wider public. The concept of the campaign was brought to the Council and the Board for discussion, and the benefits of the strategy for members, the Society and the public at large were recognised and supported by all.
With the use of good old-fashioned direct contact with newspapers, radio stations and online companies. Needless to say, one of the greatest tasks of the campaign was to make our budget stretch, and it is without doubt a testament to the relationships forged over the years by our members with the various media outlets, that we managed to achieve incredible coverage for a fraction of rate card price. We would therefore like to take this opportunity to thank all of our media partners for their support and good will.
Who – was involved in the campaign? Members just like you, with a lot of help from HQ staff and a professional advertising agency. A very enthusiastic and representative subgroup, including Kevin Hollingsworth (Building Surveyors), Andrew Nugent (Quantity Surveyors), Aine Myler and Rowena Quinn (Communications Committee), and Ed Carey
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When – did the campaign begin and when does it end? The campaign ran for seven weeks from the middle of April until the beginning of June on radio and in the press – the online campaign will continue until July. You will have seen the press ads, which focused on four professional groups – Residential Agency, Commercial Agency, Quantity Surveying and Building Surveying. We decided to use real members/Chartered Surveyors in the advertisements for authenticity and as ambassadors for our Society.
News feature
Where – can I see all the material that was created for the campaign? Just follow the link http://www.scsi.ie/about_us/newbranding/brandpromotion: you may see some faces you know! The members included in the advertisements gave freely of their time and overcame their inhibitions to help promote the professional standards of the Society on behalf of all members. All of the advertisements and marketing materials for members to use are available to download from the website.
I saw some ads in members’ own advertisements and on MyHome and Daft. Is there anything members can use in their own practices? Firstly, we would like to warmly thank the members’ firms who incorporated the awareness campaign statement “Check. They’re Chartered” into their own print advertisements, websites and email signatures during the campaign, all at their own expense. With the help of MyHome.ie and Daft.ie, all properties uploaded by members of the Society are ‘tagged’ with the “Check. They’re Chartered” logo – providing the consumer with the reassurance of professional standards and regulation. We encourage all members to use all of the available material, which can be tailored for your own use by including your photograph, and by using “Check. They’re Chartered” in all your promotional brochures, emails, websites and online. If you’re not sure how best to utilise the material, contact HQ and we will be happy to advise you.
Will this campaign run again? With members’ help, the awareness campaign can continue indefinitely by incorporating the material into your press ads, websites and emails. Like every professional organisation, the Society has to stay within its budget, which has been constrained during these challenging economic times, but the innovative and creative use of all available member channels to collectively promote the professional Chartered standard will go a long way to ensuring the visibility of the Society in the coming months. In the meantime, the recent launch of the Society’s House Rebuilding Costs App for iPhone and Android phones, and the weekly Property Clinic in The Irish Times, provide fantastic opportunities to reinforce the professional standards of our Society and its members.
Aine Myler Aine is Chair of the Society’s Communications & Events Standing Committee.
Conor O’Donovan Conor is Communications & Marketing Director with the Society of Chartered Surveyors Ireland.
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Interview
New standard bearer
Standards and engagement are likely to be at the heart of the O’Connell presidency of the Society. PAUL O’GRADY interviewed Roland O’Connell for the Surveyors Journal.
Roland O’Connell entered the property industry at the start of a very deep recession. It was 1981 and he had just completed his foundation certificate in property studies when he joined Osborne King Megran (now Savills). He did all the things that new entrants to the business do: brochures, letters, sign boards and plenty more. John McFarlane was the managing director of the company and he set high personal standards. Another director at the time, Ian French, observed that it was a good time to learn because the directors had more free time to tutor the young staff. During the 1980s, Osborne King Megrane merged with Hamilton & Hamilton to become Hamilton Osborne King, and then came a lift in the market. “It was very exciting to see a proper functioning market,” observes Roland, who by this time had moved through commercial property to the office market. “Inward investment brought growth and the time was marked by the arrival of technology companies in Ireland.” Merrill Lynch also opened offices in Dublin and despite a little dip in the early 90s, Roland says there was good activity right through to 2000. “There was a slowdown from 2001-2003, but the office market, like much of the rest of the economy, was busy from 2003 to 2008. The Lehmann Bros. collapse marked the start of a very difficult time since then, although there are small but continuing signs of improvement now.” In 2006, Savills acquired Hamilton Osborne King and Roland is Director of Offices for Savills. Continuing education is a theme of Roland’s presidency, and it is an area he took seriously from a young age. He studied property economics through the correspondence course from the University of Reading at night, while working in Osborne King Megran. Not long after qualifying, he got a call from Alan Cooke in the Irish Auctioneers and Valuers Institute (IAVI) asking him to serve on a committee. He accepted and it has had two major life consequences for him: he met his wife through the Society; and, he has now risen to the highest office of the Society, which merged with the Insititute.
Goals set Roland was deeply involved with the negotiations between the bodies prior to the merger and is, therefore, very satisfied at how successful the merger has proved to date. He says: “The merger has worked very well. The members, officers and executives have combined to ensure the smooth functioning of an efficient and effective single organisation. My primary goal as
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Interview
President is to ensure the continuing successful development of this superb Society – one which while historic, also has the freshness of a new organisation. The merger has provided a significant boost to the dynamic of the Society – one which the previous bodies, on their own, would not have achieved”. The new President’s three other goals for his year in office are interrelated: “I want to actively encourage younger members to get involved in the Society and to promote more engagement with the Society by members, in general. And given that the construction and property sectors have suffered such a difficult time, it is unsurprising that we have seen a lot of people emigrate to find work. I want to ensure that we don’t end up with a generational gap in the professional expertise provided by members of the Society. This would present real difficulties in areas such as expert witnesses and arbitrators if we do not ensure that we have those skills in every relevant age bracket of our membership”. His final objective is clear: “We need to encourage more school leavers to enter the business. There has been a drop in the number of applicants to enter third-level courses that function as entries into surveying. However, I believe that in four years time, we are going to need newly qualified staff. And the equation is very simple: if we don’t get more school leavers entering our courses, we are not going to have the staff necessary to run our businesses”.
always exceeded statutory requirements. So the question is not why would you be a member – the correct question is: why would you not aspire to membership?”
On standards… “The Society has always led by setting standards for members that are well in excess of any statutory requirement, and the Society will continue to do that – even with the advent of the Property Services Regulatory Authority and the appointment of the Society as the regulatory body for building and quantity surveyors.”
On NAMA… “NAMA has a very difficult job, made more difficult by the fact that it has a political dimension and operates in a goldfish bowl type of environment. It is dealing with an awful mess and while we are sympathetic, you would like to see things move more quickly. We would especially like to see more stock brought to the market.”
Living on an island
Government performance Asked his opinion of Government performance to date, Roland is quick to point out that the Society has been on record as saying it is in favour of water and property charges as it views them as being necessary for the financial support of local authorities and water providers. Against the very real political difficulties posed by introducing water and property charges, the President feels that it has been refreshing to see the emphasis on job creation. “There is some reassurance that the Government does appear to be aware of the critical importance of increasing the numbers in employment. That is encouraging. On the other hand, there is also a sense that they haven’t bitten the bullet yet on several contentious issues. This would appear to be particularly true in relation to cost cutting. It’s not clear to the public yet that the Minister for Public Expenditure, Brendan Howlin, is getting any greater value on our behalf. And on construction, there is a need for long-term planning to ensure adequate infrastructure and better value for the country. I would really encourage the Government to talk to us and other interested parties about the benefit of long-term planning of Government construction projects.”
Get involved Roland O’Connell has a clear message to all members: “Get involved!” He continues: “We are here to help people and to improve standards. I would encourage all members to get involved in some way with the Society and to give us your feedback”.
On membership… “Customers are demanding ever-higher standards from Chartered Surveyors. The Society is the leading professional body in construction, land and property, and sets standards that have
Roland O’Connell has, in this interviewer’s humble opinion, the most unusual answer to the stock question: where were you brought up? The answer, in Roland’s case, is Lambay Island. Lambay, for those who might not know, is an island in the Irish Sea about four kilometres off-shore from Rush. His father was the farm manager for Lord Revelstoke, whose family had owned Barings Bank. Roland and his siblings grew up in something of a paradise: no cars, endless exciting places to play and things to do, and the only danger they were aware of was the sea. It was, he says, “idyllic”. He and his two brothers and three sisters were very close as a result. School, of necessity, had to be of the boarding variety and at seven years old, he and one of his brothers went first to Killashee for primary education, and then onto Clongowes Wood, both in Kildare. (The O’Connell family left Lambay in 1977 to move to their own farm in north County Dublin.) He is married to Caroline O’Shea, who is also a Chartered Surveyor, but Roland insists that they never talk shop. They met at young professionals’ events and have two children: Karen who is 18; and, Kate who is 14. Roland is a big rugby fan (a Leinster season ticket holder) and has always been interested in horse racing.
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Economic overview
The cat’s stopped bouncing PETER STAFFORD summarises the results of Society research into the current size of the surveying profession in Ireland.
Quantity surveyors and building surveyors are familiar with the art of measuring and costing; it is the bread and butter of their professional lives. What is less often measured is the size and value of their professions. In January 2012, the Society of Chartered Surveyors Ireland undertook a major survey of the state of the Irish construction industry. The aim was to present an authoritative and clear account of the drivers for change in the industry. Every economic commentator in Ireland has recognised that the construction sector was the first to enter recession and has been the hardest hit by the crash. Nonetheless, construction remains one of the most misunderstood forms of economic activity.
A twofold report The approach taken by the Society was twofold. Firstly, the Society hired DKM Economic Consultants, who undertook a detailed analysis of the main sectors of the construction industry – residential building, commercial and industrial building, and civil engineering – in order to assess their current capital projects and future spending plans. The second part of the report was based on a detailed in-house survey of quantity and building surveying practices. This survey asked members of the Society about their activity levels in terms of changes in turnover and employment. It also asked about client sentiment and the future pipeline of work. The report tied these two strands together to understand the roles of the diverse construction professions, and the role of the industry within the economy. The final report was produced in April 2012 and its results were sent to members, political leaders and other industry professionals.
Results The conclusions to our report were stark, if not unexpected. It is generally accepted that in a healthy economy, a construction
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industry should account for around 12-15% of economic activity. This gives it the size and capacity to deliver for a range of private and public clients without ‘crowding out’ other forms of economic activity. The Society’s report showed that in 2007, during the height of the Celtic Tiger, construction output reached twice its optimum output, as activity hit €37bn, equivalent to 23.6% of the State’s economic activity (Figure 1). This was clearly unsustainable. What was also unsustainable was the lack of diversity. In 2006, for example, 49% of all construction activity came from new private house building (€22.3bn of a total output of €34.8bn). A sudden decline in the demand for new residential property had a more serious impact on the wider industry than if it had been more balanced between civil engineering, public works and private developer-led works. As Figure 2 shows, new house building has declined by 91% from the peak, while non-residential and civil engineering works have fallen by 47% – this ‘drag’ from the house-building sector partially explains why the total industry has shrunk in output by 77% from its peak. This year, total output of the sector is likely to fall to €7bn, half its optimum output of €15bn. In mid 2009, the industry reached its optimum size, after two years of very painful contraction, but has continued to decline so that by 2012 construction output has undershot its optimum performance by 50%. The causes and consequences of this decline are explored in the report.
Reasons The report shows that there are many reasons for this change. In 2010, as private sector work dried up, the State became the construction industry’s largest client. Since then, as the recession has continued, public capital expenditure has fallen, resulting in fewer public building and civil engineering works reaching construction stage. Indeed, the report suggests that investment in public infrastructure such as roads and transport will fall from €4.4bn in 2010 to €2.9bn this year. Overall, the State’s contribution to the Irish construction sector is likely to account for
Economic overview
Peak Quarter 05/07 2011Q4 Output current prices €6bn
140
Employment (000s,) right hand scale 45
400 369
120
40
350
35 30
303
300 250
80
21.1%
25
-46% 200
191
20 15
100
23.6% of GNP
154
Optimum output level €15bn
151
140
-48% 60
150
40
13.6% 100
10
9.1% 7%
5 0
6%
50 0
2007
2008
2009
2010
2011
-77% 20 -91% 0 All B&C
Residential
Non-residential
Civil engineering
2012E
FIGURE 1: What is the optimum size of the construction industry?
less than €3.8bn – 51% of total output. Thus, because of the important link between new construction output and Government spending plans, the international economic situation, as well as the continued presence of the EU and IMF in Ireland, will have a large impact on the future of the sector.
The effect on surveyors Within the private half of the industry, work by building and quantity surveyors for commercial clients has also declined, largely because of a lack of finance. Some 25% of building surveyors noted that in 2012 their clients had cancelled or severely delayed commencing projects because of an inability to secure funding. Those building surveyors working for residential clients saw a similar pattern – 22% said that lack of finance had led to the cancellation of home repair work.
FIGURE 2: Output of the construction industry from peak to 2012.
Employment Overall, employment in quantity surveying and building surveying practices has halved since the peak of the industry, broadly in line with the downturn in the sector. Job losses have been more severe among junior and student surveyors than among senior surveyors, and it is evident from members’ responses that the bulk of the losses took place early on, when the recession in the industry first hit. Since then employment has plateaued. Looking into the remainder of 2012, projections from members suggest that employment will remain flat, but those companies with a healthy pipeline of future work predict taking on more staff later in 2012 and into 2013. Others, however, have reported that as work is completed, their pipeline of work does not look like it can sustain new employment.
Conclusions The next 12 months Looking to the next year, it is extremely unlikely that over 5,000 residential units will be built in Ireland, the vast bulk of which will be one-off self-build projects. Until consumer sentiment towards the property market improves, there will be no developer-led activity. This lack of new stock will undoubtedly have further negative consequences for the wider property market, especially in areas where there is a lack of good quality property for sale. Similarly, while the perception of an overhang in the commercial and industrial market exists, it is unlikely that new building will take place. New developments will be driven by foreign direct investment and small-scale domestic investment.
The purpose of producing the report on the state of the Irish construction industry was to understand more about the underlying factors that shape the industry, and therefore the chartered surveying profession. As the public sector now accounts for over half of the industry, changes in public spending plans and the wider economy are more important to the sector than ever. The industry is half its optimum size, but it arguably has more diversity within it than when it was dominated by the new housing sector. The challenge for the industry and for government is to grow each of those component sectors, to promote diversity and dynamism in an industry that can assist economic recovery.
The state of the profession As noted earlier, the report was supplemented through a survey of quantity surveying and building surveying practices operating in Ireland. This survey only gives a snapshot of a moving profession, but it gave the Society a detailed understanding of how the professions fit into the wider industry.
Peter Stafford Peter is Director of Policy & Public Affairs with the Society of Chartered Surveyors Ireland.
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Construction
To notify or not to notify? In the current difficult trading environment, insurers are seeing an increase in the level of claims and notifications being made under professional liability insurance policies, according to BREEGE LYNN and KEVIN FINGLETON.
Many professional firms often raise the question of when they should report claims or matters involving customers’ complaints under their professional indemnity (PI) coverage.
Notification n
n
Professional indemnity policies are written on a ‘claims made’ basis. This means that the policy that will respond to a claim and govern the terms of cover, will be the policy in force when the claim is first made against you and notified to insurers – or when a circumstance that might give rise to a claim is first notified to insurers and accepted. It is important to understand that it is the existence of (i) a claim
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n
n
or (ii) circumstance that is important – and not whether the claim or potential claim has any merit. Whether you will ultimately be liable in respect of the claim is not important for notification purposes. PI policies cover legal costs to defend you, so it is crucial to advise insurers at an early stage of becoming aware of a potential circumstance that might give rise later to an actual legal claim developing. Insurers closely monitor the issue of date of awareness and reporting requirements as part of their due diligence in investigating a notified matter submitted to them. Most policies will define what constitutes a ‘claim’, and claims are not usually difficult to identify, e.g., a letter from a solicitor
Construction
n
n
n
or a letter containing a threat of legal action from a client. A ‘circumstance’, however, is not typically defined and is left to the firm’s own judgement. A circumstance can be – – an indication or intimation of an intention to make a claim against the firm; – direct or indirect criticism about the firm’s performance or services provided, or a dispute about performance or services; – an awareness by the firm of a failure in performance or services; or, – a real doubt about the efficacy of the firm’s performance or services that might impact on their clients. The requirement to notify is ‘condition precedent’ to liability under the policy – that is, if you do not comply with the condition, the insurer can deny any liability it might have solely because the condition has been breached. Therefore, if you delay in notifying insurers of a circumstance or claim, it is possible that you will be denied cover under the policy entirely. In other cases, if the delay has caused ‘prejudice’ to the insurers, they might be entitled to reduce their indemnity to the extent of that prejudice. It is therefore important to implement ‘notification procedures’ within your practice. If you are uncertain about whether you ought to notify a circumstance (or claim) you should contact your insurance advisers to discuss in more detail.
premium for the arrangement of insurance, will then, when that insurance is required, deny themselves the benefit of the cover by failing to co-operate with their insurers. Once a case has gone down the legal route, the issue of continued service for the client may be problematical. A careful discussion with insurer’s solicitors will often be required to assess the issue. In our experience, notifying a circumstance does not lead to an increase in premium. However, delay in notification of either a claim or circumstance can create undue worry and concern down the road as insurers assess their coverage position. A key standard to apply in the firm is ‘Notify, Notify, Notify’. This is the gold standard that will serve you and your firm well in the future.
Breege Lynn Breege is Senior Vice President, Consumer Commercial Practice, Marsh Ireland.
Kevin Fingleton Kevin is Senior Vice President, FinPro Practice, Marsh Ireland.
Communication with third parties n
n
n
It will always be a condition of your PI policy that you do not admit liability to, or enter into any settlement with, a third party without the consent of your insurers. It is important, therefore, to avoid becoming involved in discussions with any third party – or potential claimant – about the merits of a claim against you. Any formal letters of demand should be merely acknowledged, with a statement that the matter will be investigated and that a further response will follow. Any correspondence between you and the (potential) claimant should be given to your insurance broker when notifying a claim or circumstance. Until solicitors are appointed by insurers to act on your behalf, insurers might require you to communicate directly with a claimant. Insurers should, however, approve any correspondence you propose sending. Draft correspondence should be sent to your insurer or your insurance broker, who will seek such consent on your behalf.
Co-operation All policies contain a condition related to the insured having to cooperate with insurers in relation to any matter notified under the policy. This continual obligation includes providing additional information, meeting with appointed solicitors and experts, and access to files, etc. – all within a reasonable time of the request. The scale of information required by insurers can be extensive, as their background research and assessment of paperwork and procedures can be lengthy. We have seen claims fail to be covered or delayed where insured parties have not assisted insurers or have delayed in their response to queries. It is difficult to understand why a firm, having paid the
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Construction
A bad Act KEVIN HOLLINGSWORTH outlines serious deficiencies in proposed changes to building control legislation.
A change to the way in which the building control system in Ireland is administered has been needed and requested by all property professionals for a considerable time. The Building Control (Amendment) Regulations 2012 is the Department of the Environment, Community and Local Government’s attempt to attend to the deficiencies in the current system, and is widely regarded by property professionals to be ill-conceived, uninsurable and unworkable. So great is the concern regarding this Act, that prior to making the Society’s submission to the Department on the specifics of the legislation, the Society, the Royal Institute of Architects of Ireland, the Construction Industry Federation and the Association of Consulting Engineers in Ireland met and wrote a joint letter raising our concerns and requesting an extended consultation period and further round table discussions on the matter. A parallel process for the preparation and agreement of the proposed code of practice referred to in the draft legislation should also be undertaken during the extended public consultation period, so that the code of practice can be in place prior to finalisation of certification requirements envisaged under the draft amendment regulations. Not having a completed code of practice prior to endorsing new mandatory inspection and certification obligations is inconceivable and unworkable.
Why the proposed legislation doesn’t work Some of the specific issues regarding the legislation are outlined below: n The legislation requires full design drawings to be submitted at Commencement Notice. Full sets of detailed construction drawings are not and will not be available at Commencement Notice stage. The construction detail of many building elements is not finalised at Commencement Notice stage, nor is it practical to suggest that they can be finalised at this stage.
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n
n
The current draft legislation does not allow for partial/phased completion certificates. Many buildings are completed to shell and core stage and then handed over to a prospective tenant or new owner to undertake their fit out. The legislation needs to account for this common occurrence in the construction industry. Mechanism for Change of Inspector/Certifier for Project must be included in the legislation or code of practice. Even with the best will in the world, sometimes a change may be necessary due to accident, illness or disagreement. A mechanism must be established that will enable the appointment of an alternative certifier for a development, and specifiy how any new appointee can carry on the work of the previous certifier. Domestic extensions are currently exempt under this draft legislation. Domestic work will most likely form a considerable sector of the construction industry for some time and the general public are the people who require most protection. We believe that any regulations should cover all construction work over carefully considered minimal thresholds and not just new buildings.
Certificate of Compliance Of greatest concern to would-be certifiers is the statement on the draft Certificate of Compliance (at both Design and Completion stages): “I certify… that the proposed design/building or works as completed is/are neither defective nor contravene any requirements of the Second Schedule of the Building Regulations”. This statement implies strict liability, which is unworkable and uninsurable. If any registered surveyor, architect or chartered engineer signs a certificate with this statement included, he/she is
Construction
stating that they have inspected all sections of the works. This means that they must be present at all times to ensure that there are no defects in the works. This will result in a massive cost to any client. It is also highly unlikely that any professional indemnity policy would cover such a far-reaching scope, and if it did it would most likely cost more than the building is worth. As stated in our previous submission on The Building Control System Review and Recommendations 2011, milestone inspections will need to be undertaken by the certifier, such as: 1. 2. 3. 4. 5.
Prior to pouring foundations. Prior to pouring the ground floor slab. Upon reaching wall plate level. Prior to lining/closing up the walls internally. Upon completion of finishes.
On completion of the works, a Certificate of Compliance will be issued and should include the following: n Fire Safety Certificates: inspection by the fire safety consultant who prepared the Fire Safety Certificate application should be required during the construction stage, and sign-off when construction is complete; n Air Tightness Certificate; and, n BER Certificate.
building control officer is only required to inspect 15% of developments. It is a common perception among professionals that this requirement is not met, and it is hard to see how it could be met with some local authorities only retaining one employee to act as building control officer on a job share basis, e.g., half an employee. We propose that building control officers should have a far greater role, carrying out, on up to 100% of developments, at least one of the milestone inspections. The cost of this could easily be borne by a reasonable increase in the Commencement Notice charge. Having a building control system without an active role for the building control officer is not wise. There are some things that a government should retain an active role in, and ensuring that the inhabitants of the nation have safe and functional buildings is one of them. It is not a coincidence that the move away from the days of the bye laws inspections to self-regulation has coincided with the drop in the standard of construction. The Society has now submitted its view on the draft legislation to the Department of the Environment, outlining the above and other views in more detail. Following on from this, the Building Surveying Professional Group will also be making a separate submission on recommendations to the Central Bank that they should compel all lending institutions to ensure that all of their lenders comply with any new building control legislation. In my opinion it is essential that the purse strings of this country play a leading role in building better homes and a better future for the people of this country.
Conflict of interest and local authority involvement The proposed new building control system also retains one major flaw from the current one: conflict of interest. The building owner will still be the paymaster of the certifier. This is an inherent flaw of any such self-certification system. On a similar point, throughout this legislation there is one notable absence: a strong role for the local authority apart from as a recipient of information. At present the
Kevin Hollingsworth Kevin is a Chartered Building Surveyor with McGovern Surveyors and Chairman of the Building Surveying Professional Group of the Society of Chartered Surveyors Ireland.
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Land
Survey Ireland adds to geomatics knowledge This year saw the welcome return of the Survey Ireland conference, says AUDREY MARTIN.
Over 100 surveying professionals attended the DSIS Survey Ireland exhibition.
Survey Ireland is an annual conference aimed at geospatial professionals, survey practitioners and survey engineers involved in all aspects of surveying. The conference, which was previously organised by the Irish Society of Surveying Photogrammetry and Remote Sensing (ISSPRS), ran from 1978 until 2008. During these three decades Survey Ireland attracted many high-profile national and international speakers and companies. Survey Ireland became the national survey event and provided an important networking forum for geomatics surveyors and associated professionals. In recent years, however, due to the economic climate and the significant increase in conference overheads, Survey Ireland became unsustainable and was cancelled. The loss of the annual Survey Ireland conference was recognised by the Department of Spatial Information Sciences (DSIS) at the Dublin Institute of Technology (DIT) as a significant gap for surveyors in the context of continuing professional development (CPD). With this in mind, and as part of the DSIS response to industry needs, a scaled down Survey Ireland conference was held in March in DIT, Bolton Street. The Survey Ireland conference formed one of three geospatial events that took place during the DSIS Survey Week, which took place from March 12-15, 2012.
n
elearning
The DSIS Survey Week culminated on March 15 with the Survey Ireland conference and exhibition. The programme for the conference included a number of high-profile speakers from a diverse range of surveying perspectives, both academic and professional, which
terrestrial reference frames: application to the realisation of the European Reference System (ETRS89); n 3D data in urban environments; n open standards and open source web mapping; and, n radiometric performance of digital photogrammetric cameras and laser scanners. These courses are specifically designed for knowledge transfer from the research to the production domain, and this event attracted an international audience of over 40 high-profile academics, researchers and professionals. Details of EuroSDR’s educational programmes can be found at http://www.eurosdr.net/eduserv10. On Wednesday, March 14, a DIT/EuroSDR colloquium entitled ‘Towards a sustainable GeoSpatial location framework’ celebrated the ten-year link between EuroSDR and DIT. The colloquium enabled over 60 European and Irish experts to share their views on the technological, educational and organisational issues related to the provision of sustainable geospatial location framework data at both a European and an Irish level. Details of the DIT/EuroSDR colloquium can be found at http://www.eurosdr.net/dit.
Conference During the first two days of Survey Week, the 2012 pan-European Spatial Data Research organisation (EuroSDR) launched four short elearning courses aimed at the industry:
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Land
reflected the full range of the professional geomatics surveyor’s activities. It also included a number of high-profile service providers, who exhibited the newest developments in survey hardware. The conference opened with a keynote presentation on the developments and future of the geomatics discipline by Emeritus Professor Ian Downman, immediate past president of the International Society for Photogrammetry and Remote Sensing. Professor Downman provided an ideal context for the broad scope of presentations given at the conference, covering the diversity of geomatics disciplines.
The Survey Ireland conference formed one of three geospatial events at DSIS Survey Week. The next presentation, by Dr Eugene McGovern FSCSI FRICS (DSIS, past chair of the Society of Chartered Surveyors Ireland Geomatics Professional Group), reported on the results of the recent Societysponsored research into Network Real Time Kinematic (NRTK; ‘NRTK in Ireland 2011’, Society of Chartered Surveyors Ireland) and was keenly received by the audience with a number of directed questions into the accuracy of NRTK. This study is the first in the public domain to evaluate the performance of NRTK services in Ireland and provides guideline information for geospatial practitioners. Colin Bray MSCSI MRICS, General Manager of Mapping Technology for Ordnance Survey Ireland (OSi), presented an overview of OSi survey infrastructural developments that will affect survey measurements in the near future. These included an approximately 20% densification of the current Continually Operating Reference Stations (CORS) situated around the country and the introduction of a new geoid model (OSGM12) for Ireland this year.
Risk analysis and data capture Following the coffee break, Ben King FSCSI FRICS, current Chair of the Society’s Geomatics Professional Group, presented a paper on survey risk analysis. Ben has over 23 years of geomatics experience working on various infrastructure, building, restoration and software development projects, and is currently the Survey and Corporate Business Planning Manager with the Railway Procurement Agency (RPA). This paper was very warmly received, as it highlighted an area that is often neglected in terms of project risk management and illustrated the consequences in terms of cost that survey errors propagating through a large-scale project can entail. Questions on this topic clearly indicated that this area needs to be developed in terms of CPD events for surveyors and conveyed to related professionals in large-scale projects. One area of interest to all chartered surveying professionals is that of building information management (BIM). This topic, and the enabling role of geomatics in capturing the necessary geospatial data required to produce and exploit BIM, was addressed by Mark Hudson MSCSI MRICS. Mark is a Chartered Surveyor and director of Coastway, which has been in operation since 1999.
The focus of the conference remained on laser scanning data for BIM products after the lunch break when Simon Tritschler, Survey Manager with DPS Engineering, delivered a paper on the data requirements and related problems of the huge data sets generated when undertaking complex laser scanning operations. Simon is a graduate of DSIS Geomatics and has a wealth of experience in sales, support and training in state-of-the art survey equipment. Organisation of large data sets is also significant when undertaking mobile mapping surveys for road and pavement management, whereby the data is generated from laser scanning technologies such as Lidar. Hundreds of kilometres of roads can now be surveyed in very short periods of time. However, the accuracy and the extraction of data from these data sets remains a hot topic in research. Conor Cahalane, a DSIS Geomatics graduate with a background in surveying, remote sensing and GIS, is currently based at the National Centre for Geocomputation at NUI Maynooth, and delivered an interesting research paper focusing on mobile mapping system performance.
Emeritus Professor Ian Downman’s keynote presentation provided an ideal context for the conference. The final paper of the day was also delivered by a DSIS Geomatics graduate – Declan Byrne. Declan is Lead Geoscientist (Geodetics) in Tullow Oil, where he works within the Geophysical Technology Group based in Dublin. He has managed the geodetic aspects of many Tullow Oil sites internationally, most recently in Uganda. Declan provided a valuable insight into the varied areas of geodetic project management and the geomatics requirements in this area. The Survey Ireland 2012 conference attracted over 100 survey professionals from a wide range of private practices, Government departments and academic institutes. The papers presented highlighted the diverse range of professional skills required by a geomatics surveyor and focused on recent developments in terms of survey infrastructure and new technologies. In addition, the survey exhibition, which ran for the entire day, enabled survey and service providers to showcase their equipment. All proceedings from the conference can be found at http://www.eurosdr.net/dit. It is clear from the DSIS Survey Week that an annual forum for the interchange of ideas and knowledge, and which can highlight forthcoming educational and CPD initiatives, is required for geomatics professionals. Hopefully, this gap in the market will be filled again next year.
Dr Audrey Martin FSCSI FRICS Audrey is a lecturer in the Department of Spatial Information Sciences, Dublin Institute of Technology, Bolton Street, Dublin 1.
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Land
Dairy tale SHIRLEY BUSTEED examines the issues for agricultural land sales and ownership arising from the proposed abolition of milk quotas in 2015.
No clear answer Processing capacity, access to markets and the price of milk will dictate production levels post 2015.
Selling agents around the country who handle the sale of land will be acutely aware that there is a welcome injection of confidence in the agricultural land market at the moment. One of the primary factors driving this renewed confidence is farmers who are planning for future expansion, in particular dairy farmers. The question I have been asked is: Will the abolition of milk quotas in 2015 change the pattern of ownership of agricultural land in Ireland? There is no hard and fast answer to this question. Why? Because we do not know what format the abolition of milk quotas will take (if any). Under a quota-free regime, it would be difficult to envisage a situation whereby every dairy farmer in the country would be permitted to produce as much milk as resources physically allow. Remember that the rest of Europe will also be eager to increase milk production. Willingness among producers will be in abundance, but access to markets and processing capacity will ultimately dictate supply. We have already witnessed a somewhat carefree attitude by some Irish dairy farmers over the past three to four years, when they doubled – and in some cases trebled – milk output beyond their quota boundaries. Such a move has led to a superlevy situation for the 2011/2012 milk year, with Ireland estimated to be 0.69% over quota. Many farmers got away with this in the past, but a superlevy fine in the region of €11 million is expected this year, which ultimately farmers will have to endure. It’s clear that the drive to expand and increase output is not lacking among dairy farmers, but how would current milk processing facilities cope with a 50% increase in supply? The cost of building a new plant or expanding an existing processing plant has to be borne by somebody. I think it would be naive to believe that the processing plants would absorb all the cost.
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In New Zealand, dairy farmers have to buy a certain number of coop shares before they can supply milk. The number of shares acquired dictates the volume of milk that a farmer can supply. It’s clearly not a ‘free-for-all’ situation. Commercialism could lead to far more restriction than quotas.
A new challenge It will be a new challenge and experience for Irish dairy farmers to operate under a quota-free regime. They will have to compete at a global level and will be more vulnerable to price fluctuations. In 2009, the majority of Irish dairy farmers found themselves in a situation they hadn’t experienced for a long number of years. An oversupply of dairy products around the world caused the price of milk to fall below 20c/litre in Ireland. This, coupled with the appalling weather that year, saw some farmers living on the breadline. Many struggled to survive at 20c/litre. What will the price of milk be post 2015? The future price of milk, coupled with processing capacity, will ultimately dictate the extent of the expansion that Irish dairy farmers will undertake post 2015. In the event of a price reduction, some businesses deal with this by successfully endeavouring to increase their productivity in a bid to offset a drop in output prices. But for the majority of the 18,500 dairy farmers in this country, there won’t be the capacity for substantial economy of scale.
The land factor Milk quota was the limiting factor for expansion. In the future, this is likely to be replaced by access to land and legislative restrictions such as nitrates regulations and carbon constraints. Expansion
Land
costs money and if it involves the purchase of land – even at current prices – the capital requirement can multiply significantly. In 2011, just 0.3% of the total land area of Ireland arrived on the open market. This represents fewer than 50,000 acres annually. It can take two to three generations before land is offered for sale in a particular area. This means that turnover is extremely low and only represents a once in a lifetime opportunity for a proportion of farmers. For the majority, the opportunity to buy land will never arise in their lifetime. So even if each of the 18,500 dairy farmers in the country had the capital in their pockets to acquire land, there wouldn’t be enough offered for sale locally. Dairy farmers need land to either adjoin them or be close by.
Selling with quota In my view, selling land with milk quota attached hasn’t generated a major premium since 2003/2004. During the peak of 2006, a significant amount of land made €20,000/acre with or without milk quota. Since the recession, limited access to funding has fundamentally affected how much a farmer can afford to pay for land. In some cases, extras such as farm buildings, road frontage, a farmhouse, entitlements and even milk quota (depending on the volume) haven’t had a significant bearing on what a farm makes. They are almost perceived as part of the package at no additional cost. While the country had been under quota for a number of years, some dairy farmers knowlingly went ahead and over produced without incurring a superlevy fine. Clearly, the acquisition of milk quota to stay within their own boundary wasn’t a priority for these guys. That is, until now: I believe the superlevy situation this year has
opened their eyes, which may influence the price of dairy farms and land in the future. In the past two years, favourable commodity prices have allowed many farmers to get back on their feet and possibly put them in a position to buy land. The notable lift in average prices in certain parts of the country reflects the sharp rise in the demand for land since the start of 2012. The reality is that few dairy farms tend to come on the market, which makes it difficult to get an accurate indication of price trends. In 2010 and 2011, around 10 dairy farms were offered for sale annually. In 2010, a 135-acre residential holding with 137,000 gallons in north Cork averaged almost €10,200/acre. In 2011, a 79acre non-residential farm with c.80,000 gallons in Co Meath averaged €9,400/acre. These are not premium prices (there were a couple of exceptions such as €13,500/acre in north Kerry). Given the stringent criteria to borrow money, only farmers who have strong capacity to repay will be in contention to buy land at the moment. That is unless they have other capital reserves such as funds from the sale of development land or compensation from a compulsory purchase order. A number of dairy farmers around the country, however, find themselves with depleted capital reserves as a result of poor off-farm investment projects that have failed to accumulate a return. Farmers aren’t the only buyers of land. There are other cash-rich buyers who are beginning to express a serious interest in agricultural land as a ‘safe investment’, which may impact price. Given the strong attachment to land here, there is unlikely to be enough land offered for sale to fuel a massive expansion frenzy in this country – long-term leasing or rental agreements may be the only real options available.
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Land
The situation in short
Conacre
n
The CAP proposals are having a clear impact on the price of conacre. The need to have access to land to draw down entitlements coupled with the perception that this year (and subsequent years) might be a reference year, is putting additional pressure on an already tight supply. A significant number of landowners retained their land this year and didn’t make it available for renting. As a result, any land that was rented or leased for the first time this year made a premium, with €250-300/acre paid in some regions. Apart from the CAP proposals, the requirement to meet the nitrates regulations, coupled with the desire to expand – especially among dairy farmers – is also adding to the drive for conacre. Conacre may be the only route to expansion for some farmers but the exorbitant prices paid here could be prohibitive.
Processing capacity, access to markets and the future price of milk will dictate milk production levels post 2015. Only dairy farmers who have the repayment capacity from farming, or those with other reserves of cash, will be contenders to buy land. Only 0.3% of the land area of Ireland was offered for sale in 2011. Limited supply will curtail a major expansion frenzy in this country. Long-term leasing or land rental may be the only real options available to some farmers. The current CAP proposals are having a significant bearing on the price of conacre.
n
n
n n
Efficiency is key In the meantime, farmers can undertake a certain amount of expansion at minimal cost using the resources they have, by increasing cow numbers, expanding the milking parlour/cubicle shed, harvesting more silage, etc. However, once a farmer starts increasing numbers to 120 cows or more, extra labour is required, and this can significantly erode the profit margin. Ultimately, profit for the dairy farmer will be determined by the price of milk post 2015 and the costs of production. I believe, however, that we must not lose sight of the importance of the family farm. The family farm has supported and provided a decent living for farming families for generations. Scale and expansion does not always lead to more profit and a better quality of life.
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Given that Ireland has an abundance of one of the cheapest (grazed grass is three times cheaper than cereals) and most nutritious energy sources in the world, Irish dairy farmers are in an advantageous position to compete with the best milk producers around the world. Efficiency will be the key.
Shirley Busteed Shirley Busteed is Property Editor of the Irish Farmers Journal.
Property
Is receivership for you?
GAVIN MOONEY and CLIODHNA JUDGE discuss types of insolvency, and explain how a Chartered Surveyor might take on the role of receiver.
Opportunity for Chartered Surveyors Although a receiver may be drawn from a company or a partnership, the receiver acts in his or her own name. Hence, if a Chartered Surveyor is appointed as receiver, he or she can hire a solicitor to advise on legalities and an accountant to assist with financial reporting. In general, competitive professional rates can be earned as a receiver, but excessive fees or expenses may be open to challenge by the borrower (whose agent the receiver is) or the lender (if the borrower has no assets). If a Chartered Surveyor is hired by a liquidator or an examiner or a
receiver, his or her duties differ, from those that would arise were he or she retained by a solvent customer. The receiver hires a Chartered Surveyor to advise or to act as agent, in which case achieving the best price within instructions generally applies. If the Chartered Surveyor is the receiver, he or she becomes the principal, which means that there is no party from whom to seek instructions, and responsibility for decisions rests with the receiver. This can be onerous, but as with most things commercial, insurance is available.
Introduction It is no surprise that recessionary times lead to an expansion in insolvency opportunities. Each time a company or borrower gets into financial difficulty, there is some form of insolvency practitioner waiting to advise the unpaid supplier, chargeholder or preferential creditor on how best to seek maximum advantage and secure optimum priority when the diminished assets become available for distribution. Perhaps the most readily understandable insolvency role is that of liquidator. Quite simply, a liquidator is appointed (by the company’s shareholders or creditors or a court) to wind up a company, which literally means converting all of the company’s assets to cash, and distributing that cash in accordance with strict statutory rules.
Another role is that of examiner. An examiner may be appointed to an insolvent company if the High Court can be persuaded that there is a core business capable of rescue. The principal interest is in saving jobs, and the mode by which this is achieved is by reducing company debts to a level where fresh investment can be raised. If the terms of debt reduction mean that creditors fare better than they would in a liquidation, the restructuring can be forced upon certain creditors. Receivers, although habitually classified with liquidators and examiners as insolvency practitioners, occupy a very different space in the world of debt recovery and management.
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Property
Choice of receiver The principal distinguishing feature of receivership in the context of insolvency is that, unlike liquidation or examinership, it is not confined to companies and draws its existence from entirely different bases. Receivers are appointed (by deed, by a court or pursuant to statute) to manage an asset or a collection of assets, which are the subject of a charge, with the express purpose of protecting the value of that asset or those assets for the holder of the charge. It is generally accepted that accountants are, in most circumstances, best suited for appointment as liquidators or examiners, given the onerous financial record keeping and returns demanded of them. Further, if a lender has a charge over the “assets and undertaking” of a company (usually a “floating charge”), in the event of default by the company, the floating charge crystallises and becomes a fixed charge over all the charged classes of assets of the company on that day. As this typically includes all the assets of the company (including fixed assets, stock and debtors) the lender generally appoints a receiver and manager whose task it is to run the business of the company in the interest of the lender, until the lender decides on its course of action. Again, accountants are obviously suitable for appointment as this type of receiver and manager. In many ways, because it deals with the entirety of the assets of a company, receivership following crystallisation of a floating charge has a lot in common with liquidation and examinership. There is, however, a completely different class of charge from a floating charge, which is asset specific, and in many cases the appointment of accountants as receivers simply adds an additional layer to the costs, which are usually borne by the chargeholder in seeking to protect itself. Asset-specific charges are generally called fixed charges and, when held over property, are simply old-fashioned mortgages as understood before the Land and Conveyancing Law Reform Act, 2009. It is because of the very targeted subject matter of such charges that receivers appointed when the borrower is in default can be specifically chosen to maximise recovery and minimise costs. Clearly, if the charge was over shares of a public company, a stockbroker may be the most appropriate receiver, and if the charge was over real estate, the most obvious and appropriate receiver would be a competent Chartered Surveyor. (Lest anyone believe, however, that the appointment of Chartered Surveyors as receivers is a phenomenon of the current recession, 19th century law books and reports abound with examples, and indeed, if any readers care to Google the Irish case of Lyster v Burroughs, a very old but practical example of a court appointment can be examined.) Of course, depending on the type of property that was the subject of a charge, the individual skill set of Chartered Surveyors may also require consideration prior to appointment: empty industrial units may need to be sold at best price as quickly as possible; partly occupied office buildings may require expert tenant management and letting skills for any vacant parts; and, development land may require a specialist surveyor with experience of site assembly and planning permission.
Receivers occupy a very different space in the world of debt recovery and management.
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General powers and duties of fixed charge receivers
Prior to seeking an appointment, any potential receiver should carefully consider the duties accompanying it. Regardless of the asset over which the charge was held, or the professional background of the appointee, all receivers have essentially the same primary function, i.e., to realise the assets within the scope of the security for the benefit of the chargeholder. If a receiver is appointed by the court, his or her powers will be outlined in the court order. Where the receiver is appointed under a mortgage deed, loan document or other security instrument, the legal nature of his or her relationship to the borrower and the security holder is governed by contract, and Section 108 of the Land and Conveyancing Law Reform Act, 2009. If a receiver is appointed under the National Asset Management Agency Act, 2009, his or her powers and duties are set out in that Act (see Part 9, Chapter 3 and Schedule 1). In the absence of contrary provision, a receiver is regarded as the agent of the lender. In practice, however, there is usually an express stipulation in the security (and at Section 149 of the NAMA Act) that the receiver is the agent of the borrower over whose assets he is appointed. This is important for the receiver and parties dealing with him or her: that contracts made by the receiver are not underwritten by the lender, and personal liability rests on the receiver for debts and contracts incurred by him or her after his or her appointment and for 1 torts, negligence or omissions in the performance of his or her duties. In reality, however, a receiver will typically seek indemnification in this regard from the borrower’s assets, if there are any. In addition, receivers appointed over assets of a company have incidental duties pursuant to the Companies Acts and must, for example, send a statement to the Office of the Director of Corporate Enforcement (ODCE) as to their opinion on the company’s solvency at 2 the end of the receivership and deliver abstract reports to the 3 Companies Registration Office every six months. On request, a receiver may be required to furnish certain information, such as his or her books, to the ODCE, and comply with any reasonable requests of 4 that office. Failure to do so is an offence. 5 There are also tax implications. Section 3(7) of the VAT Act, 1972, requires the receiver to make VAT returns and to account for any VAT due on the supply by him or her of goods owned by the accountable person, i.e., the borrower, regardless of whether the business 6 continues to be carried on. Section 9(2A) stipulates that a receiver must register for VAT within 14 days of the disposal of goods. Receivers are also responsible for accounting for tax on a chargeable 7 gain arising on the disposal of a capital asset, which may need to be 8 done on an apportioned basis. Where the receiver is a member of a professional body, there is a statutory duty on that body to report to the ODCE should they have grounds to believe that the receiver has failed to keep appropriate 9 records or has committed an offence under the Companies Acts. Failure to do so is in itself a criminal offence.
Property
In general, identifying the parameters of the receiver’s role should not be very difficult, but if any of the foregoing causes unease, perhaps it would be unwise to volunteer
Work and pay It must be noted that receivers are individuals, not firms. Although a receiver may be drawn from a company or a partnership, the receiver acts in his or her own name. In general, a receiver can engage such staff as he or she believes are necessary to discharge his or her duties, and is empowered to take such advice as is necessary. Hence, if a Chartered Surveyor is appointed as receiver, he or she can hire a solicitor to advise on legalities and an accountant to assist with financial reporting. In general, competitive professional rates can be earned as a receiver, but excessive fees or expenses may be open to challenge by the borrower (whose agent the receiver is) or the lender (if the borrower has no assets). If a Chartered Surveyor is hired by a liquidator or an examiner or a receiver, his or her duties differ from those that would arise were he or she retained by a solvent customer. The receiver hires a Chartered Surveyor to advise or to act as agent, in which case achieving the best price within instructions generally applies. If the Chartered Surveyor is the receiver, he or she becomes the principal, which means that there is no party from whom to seek instructions, and responsibility for decisions rests with the receiver. This can be onerous, but as with most things commercial, insurance is available.
9. S.58, CLEA, 2001. 10. Bula v Crowley [2003] 1 IR 396. 11. McKechnie J in Ruby Property Co Ltd v Kilty, 31 January 2003, unreported, HC. 12. Burgess v Auger [1998] 2 BCLC 478
Gavin Mooney BL Gavin has been a practising barrister since 1998, specialising in commercial, construction and property law. Prior to qualifying as a barrister, he obtained a Bachelor of Commerce degree and a Masters in Business Studies form UCD, and worked in property management in Ireland and the UK, and with the Revenue Commissioners.
Cliodhna Judge BL Cliodhna is a practising barrister. She graduated with a BA in International Business and Languages, and worked in corporate, commercial and retail banking for 15 years. She also has a Masters in Business and Information Technology from Smurfit Business School, and a Diploma in Accounting and Finance from the ACCA.
Duty of care Even where the receiver is deemed to be an agent of the borrower, in all cases his or her primary duty of care is to protect the interest 10 of the entity that appointed him or her. The receiver will owe a duty to the borrower to the extent that there is some element of borrower’s equity in the asset after the loan is discharged. This duty also extends to any guarantor of the borrower’s debt, so the main aim should always be to properly market the asset and obtain the best price. Apart from that, no duty is owed to individual creditors of 11 12 a company or to individual directors, shareholders or employees.
Summary The intention of this article is to give an overview of the general insolvency landscape, identify where receivers fit into it, and suggest where in receivership the best opportunities lie for Chartered Surveyors. It must be remembered, though, that being a receiver is very different from acting as a traditional agent for the sale or management of property assets, and given its history and the diverse sources of the rules governing the role, it is not for everyone.
References 1. 2. 3. 4. 5. 6. 7. 8.
S.316(2), CA 1963. S.52(a), CLEA, 2001, inserts s.319(2A) CA 1963. Ss 319, 321, CA 1963. S.323A CA 1963, as inserted by s.53, CLEA, 2001. Inserted by s.78, FA 1983. Inserted by s.80, FA 1983. S.571 TCA 1997. S.571(2), (3), (4) TCA 1997.
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Property
Licensed to act The SURVEYORS JOURNAL looks at some of the key issues for property professionals in the new Property Services (Regulation) Act.
The Property Services (Regulation) Act, 2011, will bring into effect significant changes in licensing and practice for auctioneers, estate agents, property managers and other property professionals. The Act formally establishes the Property Services Regulatory Authority (PSRA), which will be the new licensing body under the Act. Professionals covered by the Act include auctioneers, estate agents, letting agents and management agents (typically engaged by owners’ management companies). These professionals will be known as property services providers (PSPs) under the new Act. Approximately 50% of the Society’s membership is affected by this major change to regulation.
Background to the Act On December 20, 2011, President Michael D Higgins signed the Property Services (Regulation) Act 2011 and established the PSRA. Under the Act, the functions of the Authority may be summarised as: n to issue and renew licences to property services providers; n to establish and maintain a register of licensees; n to specify and enforce qualification standards (e.g., education and training standards) and other requirements (e.g., the nature and minimum levels of professional indemnity insurance, client accounts, client contracts, etc.); n to specify and enforce standards to be observed in the provision of property services by licensees; n to establish, maintain and administer the Property Services Compensation Fund; n to establish and administer a system of investigation of licensees and other persons providing property services; n to promote the development of codes of practice; and, n to promote public awareness and disseminate information in respect of property services.
Licensing of property services providers Arguably the most significant of the imminent changes are the new requirements regarding licensing. All professionals who fall under the classification of PSP (full details of the definitions of the various categories of professional are available on the Authority’s website –
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www.psr.ie) must be licensed by the Authority to carry out their work. The Act defines four separate types of property service: n the auction of property other than land; n the purchase or sale, by whatever means, of land; n the letting of land; and, n property management services. A separate licence will be issued for each of the four categories. However, a PSP may, if all the licensing requirements are met, hold a single licence covering one or more of the different categories. In addition to each business being licensed, the law now requires that each person who provides property services must also obtain a licence. The Authority has devised four application forms, for a company, a partnership, a sole trader (independent contractor), and an individual (employee). Preliminary details regarding registration fees, contributions to the Compensation Fund, and other aspects of the Act are set out in the authority’s ‘Guide to becoming a Licensed Property Service Provider’ – www.npsra.ie/website/npsra/npsraweb.nsf/page/ publications-guidance-en.
Concerns Members of the Society of Chartered Surveyors Ireland who would formerly have obtained their licence from the District Court under the Auctioneers and House Agents Acts 1947 to 1973, are by now aware that these licences will expire on July 5, 2012, to be replaced by licences obtained under the new Act. Understandably, there has been some concern among members about how the new licensing system will operate. The Authority recently wrote to existing licence holders, stating that it expects “that the licensing of PSPs will be carried out to coincide with the expiry of the current licences … in July 2012”. Upon receipt of this letter a number of members contacted the Society advising that they had already commenced the District Court application process for the renewal of licences for July 2012/13. The Society contacted the Authority to find out if the
Property
current licence holders would have to engage in a district court application process this year and the PSRA’s response was: “while it is a matter for the Minister to make the necessary order for the commencement of the statutory provisions, I would be confident that the Authority will be in a position to take over the licensing from the Revenue Commissioners with effect from the commencement of the 2012/13 licensing year on July 6, 2012.” This position was reiterated by the Authority’s CEO, Tom Lynch, in a recent address to members of the Residential Agency Professional Group, when he stated that he was “hugely confident” that the Authority would be in a position to issue licences from July 6.
PSRA CEO emphasises new legal situation In his presentation, which took place at the Residential Agency Professional Group’s CPD briefing on May 16 in The Heritage Hotel, Portlaoise, Mr Lynch particularly emphasised to members that the Act places licensing, and the responsibilities of the PSP, on a new legislative footing, where breaches of the Act are now criminal acts and will be enforced as such. The Authority can impose fines and other sanctions, such as suspending or even revoking licences. Certain breaches of the legislation, such as hindering an investigation or practising without a licence, can even result in imprisonment. Mr Lynch’s presentation is available to members via the SCSI website. While the Authority is confident that licensing arrangements will be in place on or before July 6, and that all relevant information will be available on the Authority’s website, there will be a transition period while new applications are being processed. Mr Lynch assured members that if they are legally providing property services prior to July 6, and they submit their application form prior to that date, they can continue to practise until the new licence is issued, and notice of receipt of the application form will be issued as confirmation of this.
Guide To assist and inform professionals who are affected by these changes, the PSRA has issued a ‘Guide to Becoming a Licensed Property Services Provider (Auctioneer/Estate Agent, Letting Agent or Management Agent)’, which is available on the Authority’s website. The guide outlines the requirements and qualifications necessary to obtain a licence, including: n property services covered by the Act; n property services providers covered by the Act; n who needs to be licensed; and, n how to make an application for a licence. Part II of the Guide, which will contain detailed information on completing the application forms, has been omitted for the time being, and will be included as soon as the Authority is in a position to invite licence applications. The Society will continue to actively engage with the PSRA and update members on any developments. Society Director of Regulation Brian O’Driscoll says: “Any queries in relation to the PSRA should be directed to the PSRA in this first instance. If members require any clarification on regulation matters generally, they should contact the Society at regulation@scsi.ie”.
Minister appoints Authority On April 3 the Minister for Justice, Equality and Defence, Alan Shatter TD, signed the first Commencement Order and the Establishment Order under the Act and appointed the 11 members to the Authority: Geraldine Clarke (Chair) is a solicitor with Gleeson McGrath Baldwin Solicitors in Dublin. Carol Boate is an Advocacy Division Manager with The Competition Authority. Edward Carey is Managing Director, Property Team Carey Auctioneers, Enfield, Co. Meath. He is a former President of the IAVI and is currently Chairman, Residential Agency Practice Group, Society of Chartered Surveyors Ireland. Patrick Davitt has worked in auctioneering for over 30 years. He has been a member of the Institute of Professional Auctioneers and Valuers (IPAV) since 1983 and a Fellow of the Institute since 1985. James Doorley is Assistant Director of the National Youth Council of Ireland with responsibility for Advocacy and Representation. Deirdre Fox is Chairperson of the board of an owners’ management company. She established the Apartment Owners Network in 2008 to provide a voice for members of management companies. Martin Hanratty lectures in the DIT School of Real Estate and Construction Economics, and is Head of the Department of Real Estate, DIT. He is a member of the Society of Chartered Surveyors Ireland Surveying Courses Accreditation Committee. Josephine Henry is an Advocate Planner for Inner City Communities with Community Technical Aid (CTA) Dublin. Paul Mooney is a Director/Partner in Strathmore Ivernia Ltd. He is a member of the Society of Chartered Surveyors Ireland, and an accredited mediator with Mediation Forum Ireland. Myles O’Reilly operates a consultancy practice, O’Reilly Consultants, offering advice on management, competition and fair trade issues. Regina Terry is a Principal Officer in the Civil Law Reform Division of the Department of Justice and Equality.
For further information on the Act, and on the PSRA, log on to www.psr.ie. To download a copy of the ‘Guide to Becoming a Licensed Property Services Provider (Auctioneer/Estate Agent, Letting Agent or Management Agent), log on to www.npsra.ie/website/npsra/npsraweb.nsf/page/publicationsguidance-en. To access presentations from the recent Residential and Rural Agency Professional Group CPD meetings, log on to www.scsi.ie.
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The last word
Land locked FRANK HARRINGTON offers an opinion on the issue of land mobility in Ireland.
At a time when the national economy faces major challenges, the Irish agricultural sector has been one of the few shining lights of the economy. According to Teagasc, Irish food and drink exports grew last year by 12%, giving a 25% increase in two years, and were valued at a record €8.9 billion. The Government's target is to grow this figure to €12 billion by 2020, which means continuous growth between now and then. The performance of the sector has led to strong demand for agricultural land. There has been a perception that the demand has arisen largely from farmers who are cash rich due to development land sales and compulsory purchase orders (CPOs), and while this has no doubt accounted for a considerable number of purchasers, they only represent part of the market. A recent lending demand study prepared for the Department of Finance reported that approximately 50% of respondents from the agricultural sector are seeking credit for business expansion. Anecdotally, banks are reporting that up to 50% of the loans provided to the agri sector have been for land purchase purposes.
Price will drive growth Ultimately, the price of agricultural outputs will dictate the continued growth of the sector and the demand for agricultural land. Detailed analysis of output prices is beyond the scope of this article. However, while output prices are notably volatile, and there are concerns over certain sectors, the long-term outlook for Irish agriculture is generally positive. In addition, the abolition of milk quotas in 2015, the relatively small size of Irish farms and the renewed interest in farming from young farmers suggests that the outlook for demand for Irish farmland is positive.
Demand outstrips supply On the supply side, a recent survey conducted by the Society highlighted the lack of farmland for sale. One respondent stated: “There is a lack of supply of good quality agricultural farms yet there is strong demand for these farms”. What impact has this had on the market for agricultural land? Price stability and, in some cases, growth has returned to the agricultural land market. The Society’s survey highlighted growth rates of up to 5.35% in 2011. It is also noticeable that growth rates in 2011 were most pronounced, in all regions and farm types (with and without entitlements), in larger farms (over 100 acres). This is not unexpected. Due to the historical patterns of Irish land ownership stemming from the land war of the late 19th Century, large farms have been in relatively limited supply right up to the
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present day. In modern day agriculture, all sectors of the industry are conscious of economies of scale and the Government’s prediction that the abolition of quotas in 2015 is likely to lead to a 50% increase in milk volumes has increased the awareness in the dairy industry. As such, on the rare occasions that large farms come on the market, they are in particular demand. But how can the agri sector expand its operations if there is a shortage of supply? With difficulty. This has been recognised by the Rural Development Programme Ireland 2007-2013, which reported that: “One of the major obstacles to increasing farm size is the low level of land mobility”.
Mobility is a long-standing problem Land mobility is the share of agricultural land that changes hands in a particular time period. Land mobility is needed for good adjustment of land structures to changing requirements of the industry. In Ireland land seldom changes hands and this presents challenges for the sector. Minister Coveney, speaking at the Autumn 2011 rural practice event, acknowledged that land in Ireland only changes hands once every 400 years compared to once every 70 years in France. What accounts for this limited mobility? The perception that all Irish farmers think like ‘The Bull’ McCabe is simply untrue. According to John Dawson, outgoing chair of the Society’s Rural Agency Professional Group, it is primarily because of taxation. He believes: “The answer requires changes to Capital Gains Tax and Capital Acquisitions Tax, particularly where leasing of land is concerned, for transfer and sale purposes”. While it can be argued that the traditional conacre system provides the ultimate in land mobility, it lacks the security for the farmer to invest heavily in their farm. Leasing fills part of the void but the uptake, despite incentives, remains relatively limited and in my view this remains an important challenge facing the sector. In summary, the outlook for the agricultural land market remains positive; however, there remain issues facing the market that need to be addressed. Ireland’s strong agri sector does not face the major issues that Parnell and Davitt faced in the 1870s, but raising awareness of the issues facing the sector and resolving them remain as important as ever if we wish to continue the success story.
Frank Harrington MSc (Surv) MSCSI MRICS Frank is Director of Professional Services with Smith Harrington Chartered Surveyors.
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