Words: Ashley Rigg
Published: 20th July 2010
*Will AIPP raise the bar?
According to a report in OPP, the Association of International Property Professionals (AIPP) are preparing to make a series of changes that will improve the way it deals with complaints about the industry.
The AIPP is a great organization and outgoing chief executive Paul Owen did a good job in building up its awareness and credibility in a ridiculously tough market. However, the biggest disappointment of his tenure was not that the AIPP failed to handle complaints; but that it did not raise the threshold at which it is possible to become a member.
Currently, the only criteria for membership is that your company must have been in the industry for at least three years and is willing to pay in the region of £360 per person, per year to join. Applications are subject to scrutiny from the AIPP board, but it hardly a fool-proof screening process.
Handling complaints and expelling people is dealing with symptoms not causes. Surely being a member of the AIPP should be a badge that says “we are contractually committed to conduct business in an ethical manner”?
Kicking people out after the fact is of little use to people who have lost their life savings, especially if you cannot name and shame the developers or agents concerned for legal and negative PR reasons.
Here are a few ideas on how the AIPP could raise the bar on membership:
1. It could create standard contracts which AIPP members must adhere to so that you know everyone is playing the same game. The contract could include standard cooling off periods. The EU looks like it could force the industry down this route anyway so this move may just be pre-empting the inevitable.
2. The AIPP could insist that all members have professional indemnity insurance. It would impose costs on members so may not be workable if the organisation is to maintain its revenues, but it is worthy of consideration.
3. It could insist members deposit money in protected client accounts (escrow). This would give investors more protection and peace of mind but again, would discourage membership. It would affect agents and developer cash-flow, so again would discourage membership.
Strategic choice
The biggest issue with the AIPP is that it is too easy to get in. The harder it makes it to join, the less people will enroll and the higher it will be forced to raise prices to maintain revenues.
Are you willing to pay more for a tougher AIPP or is the status quo good enough?
Source: Global edge
User Comments
Ashley,
I agree that it probably has been too easy to join in the past. I suspect that this was a necessary tactic to bring in members and to create a critical mass for a new body where membership is not compulsory. I have seen the same thing with other similar organisations in the past. Now that AIPP is better known to the public this could be addressed and perhaps the criteria tightened up a bit.
Some of your ideas for raising the bar are interesting and certainly worthy of discussion and further investigation. I was speaking to Mark Sharp about standard contracts only the other day so I know that it is something that they are investigating. He has even asked the question on the AIPP Linkedin discussion page!
I notice that there is some talk of AIPP not enforcing strict procedures and policies. Unless I misunderstand the comments I think that AIPP already do. Members have been thrown out for not complying with the Code of Conduct and many more fined or repremanded. I personally have assisted with several of the Disciplinary Tribunals at AIPP and can confirm that complaints and breaches have been taken very seriously indeed. I don’t think that there is a problem there – although perhaps unless you are involved it is difficult to see the huge amounts of work that they do on this sort of thing. Perhaps AIPP should shout about it a bit more!
I totally agree with Peter’s comments about the difference between lawyers in the UK and abroad. It is one of the frustrating things about what I do that members of the public try and compare the service given by many lawyers abroad (not all) to the way that they expect lawyers in the UK to act. Time and time again I have seen many lawyers just say “the contract is OK” and therefore recommend the client to buy without going into the sorts of details that they would expect of their UK lawyer. Don’t forget that there are specialist lawyers in the UK who give clients the sort of service that they would expect in the UK when buying a property abroad.
As for who is responsible for deposits being safe, escrows etc this is actually quite easy. If a buyer uses an independent lawyer who knows what they are doing then they will make sure that the client is as protected as they can be or at least understand who is responsible and what the consequences are.
Peter Esders,
Chebsey & Co
I think it's time for AIPP to either put up or shut up.
They have been promoting themselves as offering a level of protection for buyers when in reality it offers nothing of the sort. It is long overdue for AIPP to enforce strict procedures and policies for members, like they have mentioned and therefore offer something of real value to the public. Until this happens we will be saving our money and not joining!
John Scott,
Asset Property Brokers
It is very difficult covering differing conditions in different countries. We didn't join, as we had a problem with the requirement to encourage indepent legal advice.
Let me be clear that we weren't against independent advice per se.
The problem we had was that lawyers here are not always working in the same way as in the UK. There is a definite cultural difference.The biggest problem is that if you use a lawyer in the UK, he will mark your card in respect of any planning issues, projected roads or developments nearby and advise whether the price seems reasonable, without being specifically asked. Here they will just do the contract. Naturally, if nothing untoward is mentioned by the lawyer, a buyer will assume there is nothing wrong, as this is normal where they come from, but unless they specifically ask, there may well be issues.
It was some time before we realised this, initially when having been offered a property to sell owned by a Brit that he had clearly paid way over the odds for 3yrs previously (not from us)and we asked him if his then lawyer had commented on the unusual price. Apparently he hadn't and thereafter we started asking more questions. Lawyer after lawyer said they would only offer advice if it was specifically sought, otherwise they just did the contracts.
As an aside, we always check contracts ourselves, as an extraordinary number seem to be carelessly presented, with buyer and seller transposed, wrong addresses and even details left from previous contracts that they had done cut and past jobs on. In one case we were asked to sell some property and discovered the original purchase contract included a plot that the previous vendor had never intended to include and the current vendor didn't know he owned !
Consequently, and in the best interests of the buyer, we recommend a lawyer who we know will not let them down and who we have worked with successfully in the past. We check title ourselves before offering property, so good title is not an issue. Fundamentally, this goes against all that we understand from normal UK practice, but from a practical standpoint, in the best interests of the buyer, who we hope will recommend us to others, it works. After all, if the buyer is going to take independent advice locally, it needs to be up to the standard they are used to, otherwise it doesn't achieve anything and may well be misleading. A buyer coming from abroad has no way of assessing whether the independent lawyer he takes is any good. Whilst some will be fine, not all are.
Whilst it leaves us exposed, it seems fairer to buyers to hold their hands. After all, agents here are paid by both buyer and seller. This imposes an obligation on the agent to look after the best interests of the buyer, too.
Conflicts of interest? Yes, of course there are, but at the end of the day it is down to maintaining reputation. A successful sale is one where both parties recommend us to others. We stand to make far more money that way, apart from the ethical issues.
Without an undertaking to encourage independent legal advice we couldn't join AIPP. They couldn't change the rules for us, as clearly they are of value in other markets, but as I hope it shows, they don't just take anyone.
Peter Ellis,
Croatia Property Services
Hi Ashley,
Because AIPP is volutary and not regulated at a government level, it really does not provide prospective clients with a safe and secure organisation for as an acreditation. It needs a lot more work if clients want to feel their deposits are safe and secure and are refundable if the developer goes down. That is a problem, who is responsible, is it the agent or the developer, the law seems to be very unclear about this?
gerry Jones,
Saffron VIP Ltd
Hi Neil,
Thanks for the comment. I know you guys are really proactive in this area and have done a great deal to both help clients and bang the drum about ethical standards.
Ashley Rigg,
Global edge
Hi Ashley, we have been conducting our own poll on this subject and have compiled a Blog, please use the link to view.
http://www.rivermeadglobalproperty.co.uk/blog/help-get-the-overseas-property-industry-regulated/
Neil Hollingsworth,
Rivermead Global Property