New AIPP Annual 'Investor Advice' Document

The AIPP (the UK based Association of International Property Professionals) has released its latest 'Green Cross Code' document, outlining what overseas property buyers should, and more importantly, should not, do when looking to purchase a property

The association certainly has been busy with positive initiatives recently. On top of a new newsletter promoting stories of a positive nature in the overseas property market, the AIPP has just recently also released a new version of its annual consumer guide, entitled ‘Buying Overseas Property Safely’.

There are a number of informative pieces in the guide, including the ‘top five’ pitfalls to avoid. Being honest, the pitfalls to avoid in purchasing an overseas property seldom, if ever, change, but there is no harm in having a look at some of them from time to time in any case. The ones who have made it to AIPP’s top five are, unsurprisingly, led by the need for an independent legal representative. If you avoid this step you’re simply looking for trouble so there is no surprise that it floats to the top of nearly every ‘How to’ or ‘Things to Avoid’ list when it comes to overseas property.

The guide also warns about the dangers of signing contracts too early, advice specifically aimed at stopping clients from signing binding contracts at property exhibitions. While you could argue that this particular problem is hardly critical at the moment, considering the paucity of property exhibitions these days, it’s good to know for future reference nonetheless.

The whole area of having a developer in breach of contract, one which is certainly a live issue at the moment, is also raised. The guide points out that, without sufficient legal input from your end you may get a contract that protects the interests of the developer, but not yours. The advice is to have your solicitor check through conditions of the contract, the type of guarantee of property delivery - if any - that is involved, and the circumstances in which you will be entitled to compensation. The advice is, admittedly, a little late for a lot of buyers, but it is still an area about which people should be aware and it is important to check out your contract’s provisions if you have not already done so.

Unreleastic budgeting is also addressed. Again, this advice is a bit late for many people, but will be very apt for others who are considering purchasing property, investment or otherwise, at lending rates that are currently as low as they can get. For such mortgages the only way is up, so investors should be very wary of this when making their calculations.

Finally the ‘5 Pitfalls to Avoid’ piece finishes with the ownership of land. It seems pretty obvious, but you’d be surprised how often it causes huge problems. Avoiding pitfall number one should normally suffice, but it is still important to note that the person who claims to be selling a piece of land or property, doesn’t necessarily always have the legal right to do so.

For further information on the AIPP guide visit www.aipp.org.uk.

AIPP Criticised by OPP

The latest edition of OPP has a piece on the Association of International Property Professionals (AIPP) which, it claims, has been the source of much criticism from within the overseas property industry.

The AIPP was set up in 2006 in answer to criticism that the industry wasn't regulated. Well the industry still isn't regulated effectively (organisations like the AIPP and FOPDAC are essentially self-regulating vehicles formed within the industry, neither has any statutory function and cannot, thus, take any other action against members except to fine or expel them). This isn't the fault of either organisation, government have simply not been accommodating enough to broach an issue which has been crying out for attention. The Irish government briefly flirted with launching the NPSRA but the legislation is currently floundering in a morass of red tape from which it may never emerge.

The criticism stems from the amount of negative publicity attracted both Bulgarian Dreams and Seven Continent Investment (7CI). The former was expelled from AIPP last year, and has been the subject of two BBC Watchdog programmes over the past weeks. The latter went into voluntary liquidation recently. The inference is that the vetting procedures in AIPP are not all that they may be. The AIPP response would lead you to believe that companies which may not be able to get into the organisiation, or which may have no desire to even try, are taking advantage of a situation which currently suits them, making the argument that non-statutory regulatory bodies are a waste of time and money.

Here is the article from OPP:

The Association of International Property Professionals (AIPP) has come under criticism from some sections of the overseas property industry after several media reports highlighting alleged improprieties of current and former members of the industry trade body.

Several agents have contacted OPP with concerns over the AIPP’s vetting of members, citing the investigation of former member Bulgarian Dreams by the BBC’s Watchdog programme and Worldwide Destinations, which has been the subject of several negative newspaper reports in recent months. Both of these companies have been expelled from the AIPP.

Following reports by property portals The Move Channel and Global Edge, the AIPP has also come under fire following allegations of improper conduct by investment agency Seven Continent Investment (7CI) which went into voluntary liquidation earlier this month. However, its director, Alistair Powell, who is on the board of the AIPP, told OPP that it had begun legal proceedings against at least one of the portals. “We are unable to respond and defend the allegations that have been published at present as we are following due legal process”, he said. “Once the standard liquidator's report has been finalised, 7CI and its directors will be happy to comment in full. The directors of 7CI view attempts to disrepute the company and its directors, either indirectly or directly, extremely seriously and appropriate legal action has been taken through its commercial litigators”. The AIPP said that it “never reveals details” on whether official complaints are made against a member and confirmed that 7CI are currently members of the trade body.

Nonetheless, negative coverage about AIPP members over recent weeks has drawn criticism from some in the industry.

Commenting on the reports regarding 7Ci, Heath Golding, MD of agency Asset Property Brokers, said: “The fact that Alistair Powell is, I believe, on the board of directors, makes us question the credibility of the AIPP. So for now we are still of the opinion that the AIPP is not a company which we fully acknowledge within this industry. If they were a government recognised body, things may well have been different.”

Stuart Law, chief executive of investment agency Assetz, added: “This is really an indictment of the vetting process of the AIPP,” he said. “Are they putting subscription monies before vetting potential companies? Are they close enough to the industry to hear about what is going on? We have heard things for months. We aren’t saying that the AIPP has failed, just that questions need to be asked.”

AIPP hits back

Addressing these concerns, Paul Owen, the AIPP’s chief executive, told OPP: "Alistair Powell is on the board due to the same mechanism as every other board member,” he said. “All people working for member companies are entitled to put themselves forward to sit on the board, members vote on this and the results are given at the Annual General Meeting (AGM).

“From a broader perspective, this is certainly not an indictment of the vetting process when evaluating potential members, but it is not perfect. If a company meets the criteria of AIPP then they are in. If they do not, they are out.”

Owen revealed that the trade body was “party to lots of information”, but was reliant on complaints to come in before it could take action against one of its members. “If we had a remit to act on every story we hear, we would need a staff of 20 people just to go through these; action requires proof. However, at present we are reactive rather than proactive in assessing what is going on in the market. Recently though, we received an anonymous email about one of our members and we felt the allegation was so serious that we put it directly to the member who refuted it.

“The AIPP is not perfect and has never claimed to be. What I find silly about some of the arguments out there is that you wouldn’t get rid of the police just because they didn’t stop every crime. There are a whole new set of challenges in the market and we are working out ways to deal with this. The British travel trade body ABTA was in existence since the 1950s, for example, but only made a name for itself in the 1970s when a lot of Brits had problems with tour operators collapsing. It is in these difficult times that the industry needs to highlight good practices and there is a real chance with the AIPP to build on this.”

The trade body’s chief executive recognised some of the complaints made against it, but asked those that were “standing on the outside and throwing stones” to work with the AIPP and not against it to help make the market a more transparent place. Owen also revealed that the board is examining a proposal to strengthen its escrow requirements for members and that the “rules might get tougher” as of its AGM on March 19th.

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For a list of upcoming overseas property exhibitions around the country click here.

When is a Governing Body not a Governing Body?

The Irish overseas property industry is completely unregulated then? Well not completely, but almost at the moment. If you take a look at our piece on the newly created NPSRA (and a bit of a blog on it previously) you'll have noted that there are moves afoot, intended to make the Irish property industry a whole lot safer for the consumer. Let's hope the NPSRA is successful and give it all our support to enable it to do its job properly.

On that issue, however, you may have noted that there are a number of 'associations', 'federations', 'organisations' or 'unions' to which various developers and agents are often aligned. It is, of course a perfectly pertinent question to ask, "what validity do any of them have and what exactly do they do?". Well, some of them do absolutely nothing, apart from acting as a means of promoting those in their organisations, others do perform some form of regulatory function, except with limited recourse to actions against their members. The NPSRA is the only statutory body that we are aware of to take on such a function, and that's not in full operation yet as it needs to have final laws passed to enable it to perform the functions envisaged for it.

Of the more common bodies you'll find in the overseas industry both the Federation of Overseas Property Developers, Agents and Consultants (FOPDAC, which has recently teamed up with the NAEA in the UK) and the more recently formed Association of International Property Professionals (AIPP) are pretty well known and both are fairly highly rated in the industry. Both have 'vetting procedures' and 'codes of conduct' to which members are obliged to comply, otherwise they face expulsion. Unfortunately for both, this is as far as they can go, there is no means of preventing the offender from being involved in the overseas industry. Until the legal advent of the NPSRA here, there still is no body that can essentially 'shut down' a rogue agent.

Another organisation we have come across is the EEAU which doesn't seem to be held in the same esteem as the others mentioned. Apparently the organisation was thought to have disbanded a few months back but seems to have bounced back from what would normally be seen as a terminal problem.

The feedback from within the industry is that this organisation was previously known for getting information into the media that 'wasn't necessarily correct' and that it is essentially a 'for profit organisation masquerading as a trade body.' It has no vetting procedures and its website is essentially a property portal (nothing against that, we are a property portal, but we're not claiming to provide regulation within the industry). In any case, the information gleaned could hardly be considered a ringing endorsement so we wouldn't advise you to put too much faith in the EEAU badge if you do come across companies using it.

As an amusing aside, the first paragraph of the EEAU homepage claims to offer protection against "rouge estate agents", so if you know of anyone in the industry who isn't wonderful at applying make-up or uses too much foundation you might report them.

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Bulgarian Dreams Expelled from AIPP

It will come as a bit of a shock to those who have had dealings with Bulgarian Dreams that they have been officially expelled from AIPP (the UK based Association of International Property Professionals).

There is no specific reason given for the expulsion except that the "Tribunal finds that the conduct of Bulgarian Dreams in this regard fell way short of the ambits that should be expected."



This decision by the AIPP would have to call into question the value of the company's two Bentley awards, awarded in 2005 and 2006. These awards are renowned within the industry for being given to International Homes Magazine's largest advertisers to thank them for their custom over the year, but that's a rant for another blog thread.



News on the grapevine suggest that the company's owner, Robert Jenkin, has gone to ground and is completely uncontactable. Someone within the industry in Bulgaria cited the company as a perfect example of "an agent who became a developer without sufficient knowledge and is now suffering the consequences."



All reference to AIPP seems to have been removed from the company's site but it still claims to be a member of the EEAU (European Estate Agent's Union). The link to this entity's site (http://www.eeau.eu) currently only leads to an error page.



If you have had dealings with Bulgarian Dreams we strongly recommend that you get in contact with the company to query your current status or contact AIPP to examine your options at this stage.



Further info on the company's expulsion from AIPP can be found at http://www.aipp.org.uk/

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