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CEPI meets: Luc Machon and the Belgian Professional Institute (IPI)
Luc Machon was recently elected as a director of CEPI. He has also taken over the position of treasurer which had been held for many years by Mark van De Woestijne. We wish to welcome him and take the opportunity to better understand the workings of the Institut Professionnel de l’Immobilier, competent authority and disciplinary body for real estate professionals. The IPI is unique in Europe. Its impact on the Belgian market is obvious and it seems to have a positive effect on the quality of services offered. Looking carefully at the evolution in the number of active professionals as well as the number of transactions conducted by registered professionals, the Institute also seems to have a stimulating effect on the market.
Luc Machon holds a Master’s degree in law and followed complementary course in economics and property management. In 1988, he set himself up as an agent and property manager. For several years, his company has also been active in property development. Since 2006, he has held several directorships at the Confédération Immobilière de Belgique and the Institut Professionnel de l’Immobiler (www.ipi.be) of which he is the outgoing president.
The European Commission is conducting a mutual evaluation exercise concerning access to the regulated professions in which the real estate sector is directly involved. The IPI is the regulatory body for real estate professionals in Belgium. What is the history of the regulation of the real estate professions in Belgium and why was it introduced?
In Belgium the regulatory framework for real estate professionals (real estate agents and property managers) was created at the request of the real estate sector. Until 1993 anyone could call themselves ‘real estate agent’ as the title and the profession were not protected. Consumers had no guarantees regarding the professional knowledge/skills of their real estate agent. There were no rules of conduct and there was no specific organ to turn to with complaints. All this changed in 1993 .
The purpose of the regularization is primarily the further professionalization of the sector as well as the protection of the consumer.
The real estate profession was first regulated in 1993 . At that time an extensive (exhaustive) list of diplomas was drawn up, all of which granted access to the profession of real estate agent. Twenty years later this list was outdated (diploma’s had changed names, the BAMA structure didn’t exist at the time,…).
Since the 1st of January 2014 the mandatory diploma conditions to gain access to the profession were drastically reduced.
All master and bachelor diploma’s (level 6 – European Qualification Framework) now give access. Furthermore foreign diplomas (and/or experience acquired abroad) also give access under certain circumstances.
To guide the newcomers, and specifically those without a specific real estate diploma, a competence test is now imposed on all new candidates who wish to register as a real estate agent. The objective of this test is to measure their strengths and weaknesses on which they can work on during their 1 year training period. This competence test does in no way prevent candidates from being registered on the trainees’ list.
It must be stressed that the access to the profession is regulated, but the threshold is very low. There are numerous possibilities to be admitted. The figures exist to prove this point. Belgium has over 9,000 real estate agents and their number grows each year. In The Netherlands the access to the profession is not regulated and there are only 5,000 real estate agents. The conditions related to the access to the profession do not in any way jeopardize the mobility in our sector.
What do you believe has changed since regulation was introduced in Belgium, particularly with regard to the real estate market, and is it possible to distinguish the reasons for those changes?
A lot has already been done with regard to the professionalization of the profession and the protection of consumer rights. More and more private individuals call upon real estate agents to sell their property whereas beforehand they would have tried to do it themselves. They are still allowed to do so, but we have noticed that more and private individuals call upon the skills of a professional real estate agent. As the registered agent is under the IPI’s control, he/she may be asked by his/her supervisory body to exercise his/her activities in a professional manner. As disciplinary body the IPI can react much faster by informing, raising awareness and controlling (in a proactive way) its members. The consumer therefore benefits from a faster intervention from a supervisory body. Going to court takes up a lot of time and may often be too late.
As far as real estate professionals are concerned what benefits do you think regulation brings together with membership of a body such as IPI?
The state installed the IPI to enforce the protection of the title, to keep the lists of real estate agents and property managers + trainees (mandatory certification), to ensure that all recognition holders have the appropriate professional liability insurance, to draft the rules of conduct and to make sure those rules are observed (subsequently ratified by virtue of a Royal Decree).
The IPI performs regular checks to make sure all registered members have a professional liability insurance (including a security deposit). Several insurance companies offer a professional liability insurance for real estate professionals. Those companies keep lists of their insurance holders and inform the IPI if people are omitted from the list.
Real estate professionals that require an IPI recognition but don’t have the appropriate insurance and security are indefinitely banned from the register and can no longer exercise the profession.
Consumer protection is an important consideration for real estate professionals. How do you think the interests of consumers are best served in terms of professional regulation? What aspects of the regulation should consumers be aware of in particular?
Each real estate agent must practise his/her profession in compliance with the rules of conduct. These include among others :
- obligations when a real estate agent signs a listing agreement (written agreement, certain compulsory and unlawful clauses in this agreement, compliance with the current regulations on sales/rentals – in Belgium numerous documents are compulsory when selling real estate such as an energy performance certificate, inspection of the electrical installations, mortgage statement, soil certificate). In view of these many obligations it is definitely not redundant to offer qualitative assistance to those who want it.
- obligations when carrying out an assignment (with regard to the relation with the client, with regard to the relation with the prospects, with regard to the relation with the co-workers, confidentiality, continued training, obligations with regard to the fee, …).
- general obligations : professional liability insurance, security deposit, continued training, …
Real estate agents who do not meet these obligations can be disciplinarily sanctioned by the IPI (caution, reprimand, temporary suspension or definitive deregistration).
Consumers can report any complaints they may have regarding their real estate agent or property manager to the IPI, that subsequently investigates each complaint. If a complaint implies a breach of the code of conduct (hereby including a breach in the Law on market practices and consumer protection) the professional may face disciplinary actions.
Following intervention by the IPI, a large number of complaints filed against real estate agents can be closed because: no statutory requirements were violated; the complaint was based on an misunderstanding; the parties reached an agreement. Should it be established that the real estate agent violated the professional code of conduct, the same agent could incur a disciplinary sanction. Sanctions include a caution or reprimand, suspension or definitive deregistration.
The current mutual evaluation is said not to be an exercise in deregulation but more a detailed examination and justification of professional regulation, at least in so far as it is proportionate. What would you like to see as the outcome of this exercise both for Belgium and other EU countries?
The real estate professions are becoming increasingly technical in the content and nature of their tasks and require skills and knowledge in fields such as law, economics, taxation, insurance, mortgage credit, town and country planning etc. The fact that the tasks involved are more and more complex increases the need for there to be a regulatory framework. Taking into account also the different levels of knowledge and access to information available it becomes readily apparent that there is a need to ensure that the increasingly technical and complex services being provided are and remain of a high level.
The mutual evaluation by the EU is legitimate but will it enable to compare the same elements across the Union as the tasks and obligations of real estate agents within the different countries are far from being the same. It is indeed difficult to compare apples and pears.
To remove national requirements where they exist in the real estate sector would create a vacuum which would not serve to guarantee free movement of services but would reduce protection for the consumer because of a lack of certainty and guarantees of quality service.
The European Commission is conducting a mutual evaluation exercise concerning access to the regulated professions in which the real estate sector is directly involved. The IPI is the regulatory body for real estate professionals in Belgium. What is the history of the regulation of the real estate professions in Belgium and why was it introduced?
In Belgium the regulatory framework for real estate professionals (real estate agents and property managers) was created at the request of the real estate sector. Until 1993 anyone could call themselves ‘real estate agent’ as the title and the profession were not protected. Consumers had no guarantees regarding the professional knowledge/skills of their real estate agent. There were no rules of conduct and there was no specific organ to turn to with complaints. All this changed in 1993 .
The purpose of the regularization is primarily the further professionalization of the sector as well as the protection of the consumer.
The real estate profession was first regulated in 1993 . At that time an extensive (exhaustive) list of diplomas was drawn up, all of which granted access to the profession of real estate agent. Twenty years later this list was outdated (diploma’s had changed names, the BAMA structure didn’t exist at the time,…).
Since the 1st of January 2014 the mandatory diploma conditions to gain access to the profession were drastically reduced.
All master and bachelor diploma’s (level 6 – European Qualification Framework) now give access. Furthermore foreign diplomas (and/or experience acquired abroad) also give access under certain circumstances.
To guide the newcomers, and specifically those without a specific real estate diploma, a competence test is now imposed on all new candidates who wish to register as a real estate agent. The objective of this test is to measure their strengths and weaknesses on which they can work on during their 1 year training period. This competence test does in no way prevent candidates from being registered on the trainees’ list.
It must be stressed that the access to the profession is regulated, but the threshold is very low. There are numerous possibilities to be admitted. The figures exist to prove this point. Belgium has over 9,000 real estate agents and their number grows each year. In The Netherlands the access to the profession is not regulated and there are only 5,000 real estate agents. The conditions related to the access to the profession do not in any way jeopardize the mobility in our sector.
What do you believe has changed since regulation was introduced in Belgium, particularly with regard to the real estate market, and is it possible to distinguish the reasons for those changes?
A lot has already been done with regard to the professionalization of the profession and the protection of consumer rights. More and more private individuals call upon real estate agents to sell their property whereas beforehand they would have tried to do it themselves. They are still allowed to do so, but we have noticed that more and private individuals call upon the skills of a professional real estate agent. As the registered agent is under the IPI’s control, he/she may be asked by his/her supervisory body to exercise his/her activities in a professional manner. As disciplinary body the IPI can react much faster by informing, raising awareness and controlling (in a proactive way) its members. The consumer therefore benefits from a faster intervention from a supervisory body. Going to court takes up a lot of time and may often be too late.
As far as real estate professionals are concerned what benefits do you think regulation brings together with membership of a body such as IPI?
The state installed the IPI to enforce the protection of the title, to keep the lists of real estate agents and property managers + trainees (mandatory certification), to ensure that all recognition holders have the appropriate professional liability insurance, to draft the rules of conduct and to make sure those rules are observed (subsequently ratified by virtue of a Royal Decree).
The IPI performs regular checks to make sure all registered members have a professional liability insurance (including a security deposit). Several insurance companies offer a professional liability insurance for real estate professionals. Those companies keep lists of their insurance holders and inform the IPI if people are omitted from the list.
Real estate professionals that require an IPI recognition but don’t have the appropriate insurance and security are indefinitely banned from the register and can no longer exercise the profession.
Consumer protection is an important consideration for real estate professionals. How do you think the interests of consumers are best served in terms of professional regulation? What aspects of the regulation should consumers be aware of in particular?
Each real estate agent must practise his/her profession in compliance with the rules of conduct. These include among others :
- obligations when a real estate agent signs a listing agreement (written agreement, certain compulsory and unlawful clauses in this agreement, compliance with the current regulations on sales/rentals – in Belgium numerous documents are compulsory when selling real estate such as an energy performance certificate, inspection of the electrical installations, mortgage statement, soil certificate). In view of these many obligations it is definitely not redundant to offer qualitative assistance to those who want it.
- obligations when carrying out an assignment (with regard to the relation with the client, with regard to the relation with the prospects, with regard to the relation with the co-workers, confidentiality, continued training, obligations with regard to the fee, …).
- general obligations : professional liability insurance, security deposit, continued training, …
Real estate agents who do not meet these obligations can be disciplinarily sanctioned by the IPI (caution, reprimand, temporary suspension or definitive deregistration).
Consumers can report any complaints they may have regarding their real estate agent or property manager to the IPI, that subsequently investigates each complaint. If a complaint implies a breach of the code of conduct (hereby including a breach in the Law on market practices and consumer protection) the professional may face disciplinary actions.
Following intervention by the IPI, a large number of complaints filed against real estate agents can be closed because: no statutory requirements were violated; the complaint was based on an misunderstanding; the parties reached an agreement. Should it be established that the real estate agent violated the professional code of conduct, the same agent could incur a disciplinary sanction. Sanctions include a caution or reprimand, suspension or definitive deregistration.
The current mutual evaluation is said not to be an exercise in deregulation but more a detailed examination and justification of professional regulation, at least in so far as it is proportionate. What would you like to see as the outcome of this exercise both for Belgium and other EU countries?
The real estate professions are becoming increasingly technical in the content and nature of their tasks and require skills and knowledge in fields such as law, economics, taxation, insurance, mortgage credit, town and country planning etc. The fact that the tasks involved are more and more complex increases the need for there to be a regulatory framework. Taking into account also the different levels of knowledge and access to information available it becomes readily apparent that there is a need to ensure that the increasingly technical and complex services being provided are and remain of a high level.
The mutual evaluation by the EU is legitimate but will it enable to compare the same elements across the Union as the tasks and obligations of real estate agents within the different countries are far from being the same. It is indeed difficult to compare apples and pears.
To remove national requirements where they exist in the real estate sector would create a vacuum which would not serve to guarantee free movement of services but would reduce protection for the consumer because of a lack of certainty and guarantees of quality service.