Real estate and property industry reforms

The NSW Government released a Real Estate and Property Services Industry Reform Paper (the Reform Paper). Submissions in response to the Reform Paper were due by 5 December 2016. These will be considered as part of the law review process.

The real estate sector is integral to the economic prosperity of New South Wales. It is estimated that the sector in NSW is worth more than $15 billion per year.

The overwhelming majority of real estate agents are hardworking individuals who bring skill and integrity to their profession. Agents routinely deal with large amounts of their clients’ money. The laws must provide consumers with sufficient protection while encouraging ethical, competent and professional conduct in the industry.

To support the professionalism of the sector into the future, the Reform Paper sets out a path to:

• improve entry standards and training requirements for the real estate and property industry
• ensure proper career pathways and professional development through enhanced continuing professional development (CPD)
• increase consumer protection measures through changes to trust accounting and higher standards of accountability
• strengthen NSW Fair Trading’s powers to take action on rogue agents.

What’s happened so far?

Key industry associations have expressed strong support for measures that will improve the skills of real estate and property services practitioners, and raise professional and educational standards.

A review of training for licensed occupations in the property services industry was completed and the final report made available in June 2016. Following public and industry consultation across NSW, the review made several recommendations regarding licensing, qualifications and continuing professional development (CPD). These recommendations are reflected in the Reform Paper.

The Property Stock and Business Agents Act 2002 has not had a substantial review for 20 years. Since that time, the commercial landscape has changed significantly due to market pressures and the growth in strata management services. The NSW Government has introduced significant reforms in the last 18 months to strengthen consumer protection in regard to underquoting, sunset clauses (used to end contacts for off-the-plan property) and reducing the cost of pre-purchase inspection reports.

On 22 November 2017, the Property, Stock and Business Agents Amendment (Property Industry Reform) Bill 2017 was introduced into Parliament, with debate of the Bill by Parliament to take place in early 2018. This was the first step in the introduction of the law reforms. The Bill and Second Reading Speech are available from the NSW Parliament website.

On 7 March 2018, the Property, Stock and Business Agents Amendment (Property Industry Reform) Act 2018 was passed by the NSW Parliament.

The Act provides the foundation for the property industry reforms and is available from the NSW Parliament website.

Other elements of the law reforms will be introduced by changes to related regulations and guidelines that are currently being drafted.

What are the proposed changes?

The main proposed changes are as follows:

• Creation of the category, ‘licensee in charge’, requiring additional skills and experience and to provide stronger supervision obligations
• Improved entry level education for certificate holders and the creation of a career pathway
• Reduction in the number of other licence categories
• New CPD requirements for all licensees
• Greater conduct and accountability requirements
• Enhanced audit requirements for trust accounts
• Enhanced disciplinary provisions to suspend a licence where there is serious consumer risk
• Clear definition of ‘material fact’ disclosure obligations.