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Much ado was made by estate agents after l May when Malta became member of the European Union. The estate agents saw membership as a boost for their business and the government saw it as a boost to tourism and the economy. In effect new regulations were issued and new procedures were established regarding the sale of immovable property, residency and importation of effects by EU citizens.
But as usual this new system did not regulate the confusion that exists in the business of estate agents. In Malta an estate agent can be an estate agent, a property developer and a turnkey contractor – three roles in one.
An estate agent can be a company formed by a notary or by a lawyer. The lawyer or a notary besides being the shareholder and or director of the company can be the legal advisor or the notary of the company. Anyway, it is all one big happy family.
It is a pity that we have reached a stage where many people have become more diffident regarding notaries and lawyers when it comes to soliciting advice or services relating to property.
We have heard instances when a client went to a particular notary to engage his services for the contract of sale of a particular property and that notary went behind his client’s back and negotiated the property for himself. Notaries must not be allowed to speculate on property or even form a company with this objective. It goes against the code of ethics and against the very nature of the profession.
The same applies to lawyers. Lawyers must not defend their clients to the extent that they become accomplices with their clients. Lawyers who render their office as money banks for fear of tax, or the creditors, or the spouse are breaking the law and become accomplices with their clients. I know that certain accountants also have this habit but I am more familiar with what goes round in the line of my profession.
It is the same with property speculation. The legal profession and property business do not go hand in hand and no client can get good advice on a property deal from a lawyer who is also an estate agent or a property developer or both. But clients have a right to know who’s who and who are the lawyers that are involved in the property business.
All this hotchpotch of roles is not only confusing but is also giving Malta a bad image. Since May, I have already had two cases where two EU citizens were taken for a ride by the estate agent and by the so-called ‘notary.’ They decided to buy property in Malta on plan. They were taken by an estate agent to the owner of the property who was also an estate agent.
As usually happens and on the pretext that the searches had already been conducted by their notary, they told the clients that it is better to commission the notary of the estate agent that is selling the property, somebody whom it was later discovered is not a notary at all.
No mention was made to them that they have the right to appoint their own lawyer. In the promise of sale agreement the estate agent who sold the property also projected himself as the turnkey contractor so that part of the money went for the purchase of the land and part for the contract of works.
But, as if that was not enough, when the time for the contract of sale was approaching, the owner kept telling them that the apartments will be ready by the deadline on the konvenju, and when I went on sight I discovered that the sight was still a hole where not even the foundations were laid.
Rubbing salt into the wounds, when the clients went to complain to the estate agent to ask for the help of a lawyer, the agency introduced her to their lawyer whom they only later discovered to be a director of the estate agency.
If we really want the property business to flourish and we really want EU citizens to buy property in Malta, we cannot tolerate this abuse any further.
Rogue estate agents are routinely ripping people off and breaking the law and the government has failed to crack down on them. No place in the European Union allows estate agencies to also be property speculators and property developers and turnkey contractors.
It is difficult nowadays to decide which side the estate agent on: is he there to protect and promote the interests of his clients or of his company? In effect I query why our estate agents are allowed to affiliate themselves with other associations within the EU when our system is not regulated. Even the commission of estate agents is very high for Malta. In the UK, the average does not exceed 3 percent. In Malta it goes up to 5 percent.
The situation calls for immediate mandatory regulation of the estate agency industry. I expect the government to introduce an Estate Agents Act which must also seek to protect consumers. Under the current system, anyone can, in effect, set up shop as an estate agent. No license is required and no previous experience or knowledge of the law is needed.
That must stop and estate agents must be professionally trained and qualified. The government should require that estate agents be licensed, have some sort of minimum qualification and comply with a compulsory code of ethics. An Estate Agents Authority should be set up to monitor and enforce compliance.
In the United Kingdom, there is the National Association of Estate Agents which has best practice guidelines and the business is regulated by law. However at present there is a lot of pressure from the consumers associations so that the present system of self-regulation is replaced by mandatory regulation. According to a recent study published by ‘Which?’ a consumer magazine in the UK, 70 percent of respondents felt estate agents regularly misled them and only one in 10 people thought they could be trusted.
Trust is precisely what needs to be restored in the estate agency business. What is the use of investing time and money to attract foreigners to buy property in Malta when word is already traveling fast that the estate agency business in Malta is a dodgy business? The government must step in and give the business a regulatory framework that will reform the industry and protect consumers.
The public has been exposed to the unchecked, often illegal, whims of rogue estate agents for far too long!
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