Buyers: your questions answered.
Why do AIPP members voluntarily follow a code of conduct to sell overseas property responsibly?
What should you ask your agent or lawyer?
Are all deposits refundable?
What happens after I make a complaint about my agent to the AIPP?
How many complaints have you had?
Paul Owen, chief executive of the AIPP, answers all your questions on overseas property here.
Q. When I see a company with the AIPP logo, what is it telling me?
The AIPP logo is telling you that your agent or developer has signed a voluntary Code of Conduct (see our website for details); for example, they must not mislead or pressure you into your purchase. With AIPP membership they’ve been given the standards that we expect them to work within. It would be perverse to sign up to these voluntary rules and then not follow them.
An estimated 242,000 overseas property completions by UK buyers took place in 2007 (AIPP International Property Market Report 2007) so it’s too great a volume for the AIPP to follow each one. The fact that our members choose to follow our guidelines gives you an extra degree of reassurance as you have the recourse to take action through the AIPP if anything goes wrong.
Q. What are your three most common complaints?
1. The terms and conditions of viewing trips.
Consumers are unsure what’s covered by it so we advise to check the details clearly and always read your contract.
2. Reservation deposits and whether they are refundable.
This will be made clear in your contract; only take what is written to be true particularly when it conflicts with what is said.
3. Off-plan development delivered late, or not according to the original plans.
Q. How does the AIPP complaints procedure work?
First, we mediate between you and our Member. You’ll be pleased to know we get quick settlements on a significant number of complaints.
If the disciplinary panel finds the complaint more serious we’ll take harder action. An example is a penalty fine of one month’s net profit.
Q. Will it cost me to complain to the AIPP about a member?
No, all costs come out of the running costs of the association, which is funded by our members. Your legal rights will not be affected.
Q. How many complaints have you had?
We’ve had over 100 official complaints since we launched in early 2006 and we’ve had more recently simply because we have a lot more members now.
Q. What questions should I or my lawyer ask from the outset?
Who owns the land? Do I have full legal rights to the property?If it’s off-plan, does the developer have planning permission?We’ve also come across buyers who can’t rent their property in completed Phase 1 because Phase 2 is being built and it’s too noisy! So ask how long the building will go on for.
Q. How many companies have you turned down for membership?
In 2006 19 per cent of applications to the AIPP were turned down or withdrawn upon further enquiry; in 2007 this figure rose to 21 per cent, mainly because we’ve had a sharp increase in companies wishing to join.
Q. Have you booted anyone out of the AIPP?
Yes, we have expelled two companies so far (notice is in the news section of our website). We reserve the right to name any company that is expelled for breaching our Code of Conduct. However, where complaints are upheld against a company (and they remain a Member) we will not name them.
We feel that if they have been cautioned and adhered to the penalty we gave them then it would be unfair to then name them. By honouring their penalty they have shown commitment to our Code of Conduct so we do not want to generate negative press coverage against them.
Q. Do all AIPP members give refundable deposits?
No, it depends on the contract you have with the agent or developer so it’s important you get yourself an independent lawyer from the beginning.
Members cannot unduly pressure or force you into making a decision. However, they are allowed to take a deposit to secure a property and take it off the market.
After taking your deposit members must give you reasonable time to make up your mind.
Q. I’ve read your members’ Code of Conduct - what should I look out for in a ‘misleading statement’?
The word guaranteed – nothing is ever guaranteed - if it sounds too good to be true it probably is!
When an agent tells you that your investment will have ‘guaranteed capital growth’, this is highly improbable - just think about it. You need to be realistic about your investment. The only guarantee you’ll get is if someone guarantees in a contract that they will buy your property off you for a higher price after a certain amount of time and that the money to buy it is held in a safe account somewhere – and that’s unlikely to happen.
We’ve had consumers tell us they thought they were getting guaranteed rental with their property and there wasn’t a single word in their contract. Others have been told they can get 100 per cent mortgages when they can’t. The best way to protect yourself is through an international property lawyer because they will check out the company you’re buying from.
The AIPP provides reassurance and recourse for the consumer because if one of our members is telling you that you will get guaranteed growth you can take action through the AIPP – at no cost to you.
Q. What training do you give your members selling overseas?
All AIPP members have to go on a training foundation course. This is largely an untrained market with limited regulation, which is why the AIPP was established to self-regulate the market.
The course discusses and explores ethical selling and should have a direct benefit to the consumer – you shouldn't be told “give me your money now”. Members also share ideas about ways to improve their customer service.
A more significant training scheme is being devised presently.
Q. How do I do my own checks when buying an overseas property?
Many buyers go on recommendation of a friend, or they do as much internet research as they can. You can check these figures against what the agent is telling you - if they match up then you’re half way there.
You could also follow these simple steps to success.
• Always visit the property before buying
• Always ask yourself ‘why’? Even if it’s an obvious question like, why are prices going up so much?
• Ask the agent ‘what could go wrong?’
• Always use an independent lawyer. Expert estimates suggest that as many as 70 per cent of buyers don’t use a lawyer and then find out the hard way when things go wrong.
Q. I want to buy in Spain but all the bad media is putting me off, is it still a safe investment?
Spain is having a hard time in the press at the moment, and all investment, of course, comes with risk. The AIPP does not give investment advice but a framework to guide our members and give the consumer confidence.
Buyers are advised to do as much research as they can – much is based on common sense. The AIPP also conducted our Market Survey of what happened in overseas property in 2007 and we found that Spain is still the number one market, as it was in 2006.
Buyers love Spain, it’s easy to get there and there’s a wide choice of property. The international market has expanded too - there are more channels and more markets, some may have similar problems to those seen recently in Spain. There are also problems with the money markets (shares and futures), so property is not alone in coming with risks.
Q. Should your members tell me when they get referral fees from lawyers and currency specialists?
It is not compulsory for them to do this. A referral fee is normally a very nominal fee. What they do need to tell you is whether they are tied to the lawyer they’re recommending. You must make sure your lawyer is independent – you wouldn’t get divorced and use the same divorce lawyer, would you? So don’t share a lawyer with the developer.
Q. How do I complain without putting the agent through the complaints procedure?
Most complaints by consumers are resolved through informal mediation, the first part of our procedure.
Q. Can I always rely on the AIPP to sort my overseas property problems out?
No, you cannot always rely on our ability to sort problems out. However, without using an AIPP member you can only either go to court using your lawyer if things go wrong or you can give up.
With an AIPP member you are adding an extra level of resolution. After you’ve tried reasoning with the company you can take legal advice, give up or call on the AIPP, at no cost to you. We step in after communication breaks down and we will decide if they have followed our Code of Conduct.
Q. Is the AIPP independent?
Yes. We are a non-profit organisation funded by our members to self-regulate the overseas property industry in the UK and Ireland.
Q. Do you lobby the government?
Yes, lobbying is part of the AIPP’s remit. We’ve held discussions with lobbyists and with the British Standards Institute as well as discussions with a prominent MEP. The AIPP will also be taking part in a Europe-wide discussion on self-regulation of the property industry later this year and we're soon due to meet the proposed Government regulators of the international market within Ireland, the NPSRA.
Q. How many overseas property agents are there in the UK and Ireland?
Nobody knows! The AIPP markets to an industry database and we know that between 4,000-4,500 property professionals read our messages.
Q. Has a consumer ever been unsuccessful at the end of the complaints procedure?
Yes. We had a situation involving the sum of €200,000 and we found that our member had followed our Code of Conduct. The buyer had been fully informed of the position before signing a contract and they had received independent legal advice, as recommended by our Members. The particular risk in his purchase was known by him in advance and, unfortunately for the client, the worst case scenario happened. Our Member however was not at fault.
Q. Do all AIPP members sell property that gives me legal ownership of the land?
We cannot monitor every property and every transaction and so cannot guarantee this. This is why you must get an independent lawyer as soon as you can who can check this for you. All Members must recommend the use of an independent lawyer and must give you time to contact one before signing a binding contract ; they must also give you time to reflect on the purchase.
Q. Do all AIPP members put my money into a safe “escrow” account?
No, this is not guaranteed and sometimes it is not possible in the country in which you are buying. Usually, you give very little money to the agent because you are buying the property from the developer.
Your independent lawyer can check if your money is kept in a safe client account and only used to build your property.
Q. How are AIPP members vetted?
We’re looking for a good track record of their business. There is no voting, each application is looked at individually. Experience is only one dimension, though. We’re also looking for their commitment to the AIPP and the likelihood that they will be able to follow our professional Code of Conduct.By following our Code, they’re giving a degree of protection for you, the buyer.
Q. If two AIPP members are selling property in the same country - but both sell responsibly - which one should I use?
It’s ultimately who you feel comfortable with. The AIPP has raised the bar of professionalism and members have signed up to our voluntary Code of Conduct.
If you’re happy with more than one member then you’re on a level playing field and it’s your choice. You have the benefits of buying with an AIPP Member whichever you choose, something you don’t have when buying with a non-Member.
To find out more about the work of the AIPP and how it will benefit the international property world, please call us on +44 (0)20 7409 7061 or email memberinfo@aipp.org.uk (industry) or enquiries@aipp.org.uk (consumer).
