Industry Reforms, it’s a term that’s been thrown about for years – but with Fair Trading flagging March next year as the kick-off date, now is the time to understand what they really mean.
These reforms will significantly change the industry.
Agent’s day to day roles and responsibilities will be altered and so will base training requirements.
To make sure everyone understands how they’ll be impacted, we’ve created a simple, go-to-guide to clearly explain what it will mean for you.
DOWNLOAD THE PDF GUIDE
It’s important to note, this guide is based on the proposed reforms as they currently stand. Fair Trading has asked for feedback on the draft documents, which means they could modify the planned changes.
REINSW was among those who submitted feedback on the draft documents – read more on our submission below.
REINSW’s response to the draft framework
Growing the professionalism of our industry has been a goal for the REINSW for over a decade.
On 2 October 2019, we submitted our response to three draft documents that would implement long overdue reforms to the real estate sector.
These draft documents include the Property and Stock Agents Amendment Regulation 2019 [NSW], the Property and Stock Agents (Qualifications) Order 2019 [NSW] and CPD Requirements for Licence and Certificate Holders under the Property and Stock Agents Act 2002 (NSW) (PSA Act).
These reforms set out more stringent conduct and accountability requirements for practicing agents, they also significantly increase the level of education required for newcomers and existing members of the industry.
The aim is to raise competency across the board and improve consumer confidence in what we do.
By lodging this submission REINSW is hoping to safeguard a better future for the industry.
- REINSW recommends these reforms should commence simultaneously with the residential tenancy reforms to minimise disruption to the industry.
- REINSW suggests if the changes are brought in on the 23rd of March 2020, the market should be given until 30 June 2020 to start using agency forms and agreements that are compliant with the new legislation. This gives the industry sufficient time to get up to speed and become compliant with the reforms.
Draft Amendment Regulation
- REINSW recommends a new clause 4D be introduced to provide guidance on which agency roles fall outside the scope of traditional agency practice and are therefore not subject to the requirement of a licence or certificate of registration (eg. corporate support positions such as receptionists, accounts personnel and assistants).
- REINSW recommends the removal of clause 46B, which would exempt on-site property managers from the PSA Act, if their functions relate to a residential premises with 20 lots or less. REINSW argues all agents should be required to comply with the trust account provisions in the PSA Act for consumer protection. Note that the PSA Act will be the new name for the Property, Stock and Business Agents Act 2002 (NSW) (PSBA Act) once the industry reforms commence.
- REINSW argues clause 54, which puts the onus to uncover material facts onto an agent, extends beyond an agent’s normal practice. REINSW calls for clarity on agents’ due diligence checks required to sufficiently discharge their disclosure obligations under clause 54.
- REINSW proposes it would be more practical to establish a prescribed document containing a series of questions on material facts about the property, that would be filled out and returned by the vendor.
- REINSW requests deletion of clause 54(d) requiring the disclosure of whether a person has committed suicide on a property within the last five years, as this has no impact on a property’s liveability and may cause unnecessary heartache.
- REINSW requests further clarification of clause 54(e) on what constitutes “a significant health risk” within a home and maintains its position that real estate professionals are not properly qualified to identify such risks, arguing this onus should instead be on a qualified professional specialised in the relevant field.
- REINSW asks NSW Fair Trading why a purchaser cannot carry out their own independent due diligence checks when it comes to material facts, so that the onus does not fall solely on the agent.
- REINSW opposes proposed clause 20 in Schedule 1 (‘fees and charges’) and requests its deletion, questioning how an agent could prove they “clearly explained” fees and charges to their client. REINSW argues all relevant fees and charges are already set out in the agency agreement, which is then signed by both parties.
- While REINSW supports the intention of clause 22 in Schedule 1 (‘Licensees and certificate holders not to receive certain gifts or benefits over a certain amount’), it suggests the prescribed maximum of $60 for a gift is too low and should be lifted to no less than $200 in order to reflect commercial realities.
- REINSW requests the deletion of clause 9F in Schedule 2 (‘Agent must not accept payment for a referral’), which prevents buyers’ agents from receiving referral fees. REINSW points out buyers’ agents currently declare any such relationships and referral fees under section 47 of the PSBA Act and argue buyers’ agents should be able to accept referral fees, as their clients have the requisite transparency necessary to decide on whether to proceed with the transaction.
- REINSW recommends clause 13 in Schedule 2, which would require a property manager to obtain three quotes on work to maintain or repair a property, should be deleted. REINSW argues this will cause too many unnecessary site inspections, along with increased management fees and could result in tradespeople charging for quotes, knowing they only have a 1 in 3 chance of getting the job.
Draft CPD requirements
- REINSW stands by its request to be the exclusive provider of CPD compulsory training, in order to improve and guarantee the quality of education and training in the real estate sector.
- REINSW is willing to give all profit made as the mandatory CPD provider to NSW Fair Trading.
- REINSW submits current registered training organisations (RTO’s) and other industry bodies have reduced the quality of education by offering cheap and quick courses which diminish the professional standards of the industry.
- REINSW argues the CPD training reforms would be pointless, if these superficial courses continue operating after the reforms commence, as there will be no improvement to professional standards.
- REINSW recommends once certificate holders obtain their qualification, allowing them to apply for their Class 2 license, they should be required to do 6 hours of CPD, in the same way Class 2 licensees are required to do so.
- REINSW suggests once a certificate holder has obtained their qualification, they should be required to apply for a license as soon as possible, to prevent their knowledge being weakened by time.
- The current framework with other Real Estate Institutes around Australia is that the regulatory body partners with the relevant REI to deliver government funded CPD training. REINSW urges NSW Fair Trading to consider this framework.
To read the full submission click here.