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Business and Company Law Property Law Property Purchases and Sales

How to Become a Licensed Property Services Provider

From May, 2012 a new body, the Property Services Regulatory Authority (PSRA) has been set up to regulate the provision of property services in Ireland.

This new body covers auctioneers/estate agents, property management service providers, and letting agents.

Anyone providing property services in Ireland requires a licence and is leaving themselves open to up to 5 years in prison and an unlimited fine if they provide property services without one.

A separate licence is required for each property service.

There are a number of different application forms depending on whether you are a sole trader, independent contractor, company or partnership.

The Property Services (Regulation) Act 2011 is the relevant piece of legislation which you can find at www.IrishStatuteBook.ie and the PSRA (www.NPSRA.ie ) have produced a booklet explaining the whole procedure together with the application forms and notes to help you with filling out the application.

Sole Trader/Independent Contractor Example

The following comprises the main requirements for a sole trader/independent contractor but is not comprehensive or exhaustive.

Please refer to the guide here. ..Guide to Becoming a Licensed PSP

Your application would be as a sole trader or independent contractor (depending on whether you have employees or not) and the main requirements are as follows:

  • A completed and signed Application Form (PSRA/LA 3)
  • Evidence of your qualification(s) or necessary experience (see below)
  • Evidence that the required level of Professional Indemnity Insurance, which covers both the employer and employees, is or will be available to you,
  • Accountants Report,
  • Tax Clearance Details,
  • Certificate of Business Name Registration (only required if you intend using a business name-it is not necessary to trade under a business name but if you choose to do so the business name will have to be registered),
  • Prescribed Licence Fee (€1,000),
  • Passport size photograph,
  • Compensation fund contribution of €200.

The necessary experience required is that you have held an auctioneer’s licence for three out of the last five years.(This is not now the case-see the amendment below which points up the difference between the booklet published by PSRA and the published regulations covering the qualifications requirement)

The level of professional indemnity insurance cover which must be provided for is as follows:

“the amount insured for each and every claim (exclusive of defence costs) must be at least twice the business’s annual fee turnover (exclusive of VAT) in the previous fiscal year subject to a minimum cover of €500,000 (five hundred thousand euro), with no limit on the number of claims in any one year.”

Hopefully this article together with the guide above will give you a good understanding of what is now required to become a licensed property services provider in Ireland.

Update 18th June, 2012

The PROPERTY SERVICES (REGULATION) ACT 2011 (QUALIFICATIONS) REGULATIONS 2012 sets out the qualifications requirements for applicatnts for the various licences and were published on 5th June 2012.

These regulations appear to different significantly from the booklet published by the PSRA as the regulations now give some discretion to the PSRA in relation to the applicant proving he/she has attained the minimum qualification requirements.

Here is an extract:

“minimum qualification requirements”, in relation to an application for a
licence, means—
(a) the applicant has, in respect of the subject areas specified in the Schedule, successfully completed a course of studies which has led to the
awarding to him or her, by a nationally recognised awarding body or
awarding bodies, of 120 ECTS compatible higher education and training credits at levels 6 to 10 of the framework of qualifications (in this
definition referred to as the “Irish framework”),

(b) the applicant has, in another jurisdiction, in respect of the subject
areas specified in the Schedule, successfully completed a course of
studies which has led to the awarding to him or her, by a body or
bodies in that jurisdiction that is or are equivalent to a nationally
recognised awarding body or awarding bodies, credits, under a framework in that jurisdiction that is equivalent to the Irish framework,
equivalent to levels 6 to 10 of the Irish framework,
(c) the applicant has lawfully engaged in, and for periods amounting
together to not less than 3 years of the 5 year period immediately
preceding the making of the application, the provision of the property
service for which he or she is seeking the licence, or
(d) the applicant has such other qualifications or experience, or both,
which, although not falling (or fully falling) within paragraph (a), (b)
or (c), satisfies the Authority that the applicant is suitable to provide
the property service for which he or she is seeking the licence

The PSRA application form for a sole trader/independent contractor now refers to “evidence of my engagement full time in the provision of Property Services for 3 of the last 5 years” which is a significant difference from page 13 of the PSRA booklet which states:

In the case of a Sole Trader or Independent Contractor evidence that the applicant was the holder of a licence or permit issued under the Auctioneers and House Agents Acts 1947 to 1973 for three of the five years immediately preceding the making of the application.

Categories
Property Law Property Purchases and Sales

10 Key Areas to Consider When Leasing Commercial Premises in Ireland

leasing-commercial-premises
Leasing commercial premises requires caution

Thinking about leasing a shop unit?

Coffee shop?

Office?

Other commercial premises?

If you are thinking about leasing a commercial shop unit in Ireland there are a number of key areas you need to consider before going ahead.

Set out below is a non-exhaustive list of issues that you will need to be satisfied about before investing your cash in a full repairing and insuring lease (FRI lease).

At the end of the piece I also deal with some common questions I am regularly asked by people looking to start or grow their business by taking on a commercial unit.

1) The term

How long will your lease be? Will you have statutory rights under the Landlord and Tenant (Amendment) Act, 1980? Will you have a break clause? Is Vat payable?

2) Repairs

Who is responsible for repairs? If it is a lease in excess of 5 years you as tenant will likely be responsible.
If it is a lease of less than 5 years you may only be responsible for internal repairs.

The question of whether it is a new building or an older building will also be significant and other issues to be addressed would include latent and inherent defects in the building, what is considered fair wear and tear and what risks are covered by insurance.

3) Insurance

If it is a full FRI lease then you as tenant will almost certainly have to pay the insurance premium held in your landlord’s name.
This will vary depending on whether you are the sole occupier of the building or if it is multi tenanted in which case you will be obliged to pay a proportion of the landlord’s premium.

You will therefore be concerned about the risks that the landlord is insuring against and whether the building is insured for reinstatement value or cost.

As tenant you will also want to insure against public liability, employers liability, plate glass and contents but this will depend very much on the nature of your business.

4) Alterations

You may need to make alterations when you take on the property to ensure that it is right for the purpose intended.
This will generally require the landlord’s consent which cannot be unreasonable withheld or delayed.

5) Alienation of the premises

Alienation is the legal term for your assignment of the lease to a third party; you will need the landlord’s consent to this but the landlord cannot unreasonably withhold or delay his consent.

However the question of reasonableness is one which might be disputed and the landlord may argue that his refusal is in the interests of “good estate management” and is therefore reasonable.

6) Service charges

Service charges may or may not arise in your particular circumstance. If there are service charges in respect of common areas you will need to ascertain exactly what is included and how much your service charges will be.

7) Rent reviews

How the rent will be reviewed will be of critical importance to you; generally rent reviews will take place at 5 yearly intervals and is an area that may require arbitration or some agreement as to how any disputes will be resolved.

8) Guarantee

Will you be obliged to provide a guarantee for rent, rates and other outgoings?

9) Break clause

Is there a break clause in the lease?

10) Stamp duty and VAT

You will be liable for the stamp duty on the lease but landlords also have an option to charge VAT or not. This is another area that you will want to check before investing as it can have a significant impact on your cash flow.

These are just some of the many factors you need to consider and be clear on before leasing a commercial premises.

Here are some questions that crop up repeatedly. If you have any questions simply send them in to me with the contact form below and I will answer them.

Commercial Premises F.A.Q.

‘How long should I sign a lease for?’

This very much depends on

  1. What you want and need
  2. What the landlord wants, needs, and is prepared to give you.

So, it depends on good, old-fashioned negotiation between you and the landlord, or his agent.

You need to consider your future needs and potential expansion/growth; however, you must also consider your business failing. It’s not a pleasant thought but you need to consider it. At least one break clause can give you a way out of the lease, and it could be exercised due to the growth and new needs of your business, or the failure of the business.

‘What documentation will I need?’

When you go to take a look at the premises to speak to the landlord and/or auctioneer, you don’t need any. Later on if you are going ahead, your solicitor will require some identification and anti money laundering papers, but initially when negotiating you don’t need anything.

‘What are my legal responsibilities (and the landlord’s)?’

Your main responsibilities will be to pay the rent, insurance, and any service charge. However, the location of your unit-for example in a shopping centre or multi unit development-may place some extra responsibilities on you. These will all be contained in your lease in the form of covenants and conditions; your landlord’s entitlements and obligations will also be found in the lease, and for this reason you need to negotiate a good one at the outset.

‘As the property is not finished it still needs toilets, railings walls plastered, staircases and a number of other unfinished works.  I am unsure as to what I should be asking them to finish as I don’t know what it is they will expect me to finish.’

This too is a matter for negotiation and agreement, and you want to be sure to avoid having to carry out a huge amount of renovations/refurbishments which may only benefit the landlord in the long run.

If there is work to be done, and the landlord undertakes to carry it out, get a surveyor or architect to check the work before signing a lease.

Your solicitor will also be looking for certificates of compliance with planning permission and building regulations from the landlord’s solicitor, but you need to be sure that the work is carried out to a satisfactory standard for your needs.

Categories
Property Law Property Purchases and Sales Taxation

Stamp Duty | Stamp Duty Rates In Ireland

Stamp duty is a tax on documents and most peoples experience with stamp duty will be in relation to property purchase which gives rise to the notion that stamp duty is applied to property.

But it is actually a tax on the instrument which witnesses the property transaction and you will also see stamp duty applied to other instruments (legal documents) such as shares in companies.

The Stamp Duties Consolidation act 1999 governs this whole area and in that legislation there is a Schedule 1 which sets out the heads of charge for stamp duty which stipulates that the stamp duty on a conveyance or transfer of property will range from 0% to 9%. Each year the government in the Finance Act may change the rate of duty in various heads of charge but the duty will be calculated on an “ad valorem” (for value) rate.

Generally stamp duty will be payable if the document/instrument is executed in Ireland or if the transaction relates to property in the State. You used to have 30 days within which to stamp your document/instrument with the Revenue Commissioners; this is now 44 days and you can do the stamping online with the new online stamping service provided by the Revenue Commissioners called eStamping with the purchaser being the liable person for the duty.

However if it is a voluntary transfer, such as a gift, both parties will be jointly and severally liable.

Residential Stamp Duty Rates

The rates of duty applicable for residential property (whether new or second-hand) are as follows:
First €125,000 Nil
Next €875,000 7%
Excess over €1,000,000 9%

* Transactions, where the consideration (or the aggregate consideration) does not exceed €127,000, are exempt from stamp duty.

Stamp Duty Rates On Non Residential Property

Up to €10,000 Exempt

€10,001 to €20,000 1%

€20,001 to €30,000 2%

€30,001 to €40,000 3%

€40,001 to €70,000 4%

€70,001 to €80,000 5%

Over €80,000 6%
These rates are applicable from February, 2010.

How much stamp duty you will have to pay will depend on whether you are considered to be a first time buyer, owner occupier or investor.

First time buyers do not have to pay stamp duty on either new or second hand houses but there is a clawback of duty if the first time buyer or owner occupier lets all or part of the property other than under the Rent A Room scheme.

This rent a room relief is not available to investors.

Stamp Duty On New Homes

Investors pay full duty on new homes; first time buyers are exempt. Owner occupiers may qualify for relief from stamp duty if there is a Floor Area Compliance Certificated for the property and whether the house is completed or if it is the sale of a site and contract to build a new house.

Conveyance Combined With Building Agreement

Owner occupiers will pay duty on either 25% of the total price excluding vat or the price of the site(excluding vat), whichever is the higher.
No stamp duty is payable on contents although they are taken into consideration when apportioning the total price paid.

Stamp Duty on Leases

Stamp duty is payable on leases and is divided between any premium payable which is calculated at normal stamp duty rates and duty payable on the rent.

Residential and Non-Residential Property

The stamp duty on the premium or fine is the normal rate for residential or non residential as appropriate.
Lease for a term not exceeding 35 years or for any indefinite term-Rate: 1% of the average annual rent
Lease for a term exceeding 35 years but not exceeding 100 years-Rate: 6% of the average annual rent
Lease for a term exceeding 100 years-Rate 12% of the average annual rent

Transfers Between Spouses
Transfers between spouses are exempt from stamp duty.

Stamp Duty Reliefs

Consanguinity Relief
This relief applies to transfers between blood relations such as transfers from parent to child, grandchild, grandparent, brother, sister and some others. The relief provides for payment of 50% of the normal stamp duty that would have applied had there been no relationship.

Young Trained Farmer
There is no stamp duty on a transfer of qualifying land to young trained farmers.

Site Transfer From Parent To Child
When a parent transfers a site to a child for the purposes of building a private residence, and the value of the site is less than 500,000 euros, then there is no stamp duty.The size of the site can not be greater than 1 acre.

Farm Consolidation Relief
There is considerable relief in relation to the transfer of farms to encourage the consolidation of farms and the best place to investigate this scheme is the farm advisory body, Teagasc.

Charities And Sporting Bodies
Charities and sporting bodies both enjoy relief from paying stamp duty when acquiring property; both the charities and sporting bodies need to be approved and further enquiries should be made from the Stamp duty section of Revenue Commissioners for further information.

Gifts/Voluntary Transfers
Bear in mind that if the transfer is a voluntary transaction, that is a gift, the stamp duty will be calculated on the market value of the property at the date of transfer.

If you are thinking about buying or selling a house and want a professional, competitive, personal service, we would be delighted to hear from you.

UPDATE 2013

A much simplified stamp duty system was introduced in Ireland in 2010 with many of the exemptions and reliefs outlined above being abolished.

The stamp duty rates in Ireland are as follows:

Residential Property

Up to €1,000,000-the rate is 1%

Excess over €1,000,000-the rate is 2%

There are also reliefs in relation to transfers between spouses, civil partners, and cohabitants.

Non Residential Property

The rate was 2% until the budget announced in October, 2017 which saw an increase in stamp duty on commercial property increasing to 6%.

Stamp duty 2020

From October 2019 the stamp duty rate on non-residential is 7.5% (this rate applies to instruments (written documents) executed on or after 9 October 2019.)