Vulnerable Irish consumers are being swept up in a mania of overseas property buying despite a complete lack of regulation or advertising standards in the industry, the Irish Association of Investment Managers (IAIM) warned yesterday.
The IAIM says the advertising of exorbitant and supposedly guaranteed rates of return without qualification or disclosure is becoming a regular feature of advertisements by overseas property vendors.
It has written to Minister for Justice Michael McDowell to urge him to introduce regulation in the area.
There are no statistics on how much Irish people are investing in overseas property. However, the number of exhibitions, seminars and advertisements has grown in recent years and it is expected that more money will flow overseas once Special Savings Incentive Accounts (SSIAs) start to mature.
"In terms of a mania, it's almost reminiscent of the stock markets in the late 1990s," said Gary Connolly, chairman of the IAIM's retail funds committee.
Mr Connolly admitted that the IAIM, which represents investment fund managers, has a vested interest in dissuading people from investing in property and persuading them to place their money in equity-linked products instead.
The IAIM believes a code of practice should apply to the sale of all property similar to that which the Irish Financial Services Regulatory Authority applies to the sale of other investments. Any regulation should cover the disclosure of commissions paid to agents, it said.
Last year's report by the Auctioneering and Estate Agency Review Group recommended that a new regulator for domestic auctioneers and estate agents should also cover overseas property vendors. But this regulator is not expected to be up and running for at least two years - too late to protect SSIA holders who use their money to buy overseas.
A few Irish companies selling overseas property are members of the UK-based Federation of Overseas Property Developers, Agents and Consultants (Fopdac).
Noreen Hynes, chief executive of Dublin overseas property firm Aquarius Properties, said Fopdac rigorously vetted all of its members and offered assurance to consumers through its code of ethics and complaints procedure.
Ann Fitzgerald, the IAIM's secretary general and the head of the new National Consumer Agency, said people needed real information. "Anecdotally, it is said there are three prices for overseas property: the price for domestic buyers, the price for the overseas investor and the price for the Paddies," she said.
