Housing & property Property professionals Changes to property and stock agents laws

Changes to property and stock agents laws

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Information on key changes to property and stock agent (real estate, strata, stock and station) laws.

Residential Tenancies Amendment (Rental Fairness) Act 2023

From 3 August 2023, the ban on real estate agents soliciting rent bids will be moved from the rules of conduct in the Property and Stock Agents Regulation 2022 to the Residential Tenancies Act 2010.

This does not practically impact agents’ obligations. A real estate agent or assistant real estate agent continues to be prohibited from soliciting or inviting an offer of rent that is higher than the advertised price for a residential rental property. However, agents can accept a higher rental offer if it is made freely and voluntarily by a prospective tenant.

Any new advertisements for residential rental properties must continue to include a fixed price. They cannot be advertised with a price range, or with text like 'offers from' or 'by negotiation'.

The penalty for non-compliance remains the same. The maximum penalty that a court can award for non-compliance is $5,500 for an individual or $11,000 in any other case. A fine (Penalty Infringement Notice) may also be issued - $550 for an individual or otherwise $1,100.

Rent bidding - general fact sheet

Property and Stock Agents (Qualifications) Amendment Order 2022

On 18 November 2022, changes were made to the Property and Stock Agents (Qualifications) Order 2019 (Order), which sets out the qualifications required to obtain a certificate or licence, or upgrade to a higher class of licence, in the real estate and property industry.

The changes are relevant to persons applying for a class 1 licence, class 2 strata managing agent licence or certificate of registration as an assistant strata managing agent. The Order also includes a new qualification pathway for persons applying for a class 1 licence restricted to on-site residential property manager functions.

Class 1 licence changes

The Order now recognises the new Diploma of Property (Agency Management) (CPP51122) and Diploma of Property (Agency Management-Strata) (CPP51122), relevant for class 1 agent licence applications.

For more information, see how to apply for a property licence.

Class 1 on-site residential property manager licence changes

The Order prescribes 9 mandatory units and allows any other 9 elective units to be completed from the Certificate IV Real Estate Practice (CPP41419) for a class 1 real estate licence with an on-site residential property management restriction condition. These units are:

  • the 5 core units, and
  • of the elective units:
    • the following 4 elective units -
      • Establish landlord relationships (CPPREP4121),
      • Transact in trust accounts (CPPREP4125),
      • Manage onsite residential property (CPPREP4181),
      • Manage short-term or holiday letting (CPPREP4510), and
    • any other 9 elective units.

Students who are currently enrolled in a Certificate IV Real Estate Practice (CPP41419) with the intention of applying for a class 1 real estate agent licence with an on-site residential property manager restriction condition under the previous pathway, have until 18 November 2023 to complete the Certificate IV without needing to complete the new qualification requirements.

The previous pathway required applicants to complete the 5 core units, 5 units from Group A, 5 units from Group B and 3 elective units from the Certificate IV Real Estate Practice (CPP41419).

For more information, see how to apply for a real estate agent’s licence restricted to on-site residential property manager functions.

Class 2 strata managing agent licence changes

The Order lists the new Certificate IV in Strata Community Management (CPP40521) as a valid qualification for persons applying for a class 2 strata managing agent licence. Agents pursuing the new Certificate IV will also be required to complete the elective unit ‘Handle strata community funds held in trust (CPPSCM4085)'.

For more information, see how to apply for a strata managing agent licence.

Assistant strata managing agent certificate changes

The Order adds a pathway to obtain a certificate of registration as an assistant strata managing agent. The pathway lists four units from the new Certificate IV in Strata Community Management (CPP40521) and one independent unit from the general property services training package. The units are:

  • Identify and analyse risks in strata community management (CPPSCM4028),
  • Apply knowledge of WHS laws in the workplace (BSBWHS307),
  • Access and interpret legislation in strata community management (CPPSCM4009),
  • Source and extract information from strata plans (CPPSCM3020), and
  • Work effectively in strata community management (CPPSCM3017) from the general property services training package.

For more information, see how to apply for a certificate of registration for an assistant strata managing agent.

Property and Stock Agents Regulation 2022

The Property and Stock Agents Regulation 2022 (the Regulation) is in force from 1 September 2022. The Regulation replaces the Property and Stock Agents Regulation 2014, with minor changes.

The key changes in the Regulation are:

  • updating the definition of buyer’s agent so it aligns with the Property and Stock Agents Act 2002 (section 3).
  • stronger disclosure requirements for vendor and buyer agents when accepting expression of interest deposits. Agents must only accept expression of interest deposits from a consumer after the consumer signs a written statement declaring the agent has informed them of certain information and that they understand the information (schedule 2 sections 6 and 13; schedule 3 section 4).
  • requiring vendor agents to refund expression of interest deposits within 14 days if another person enters a sales contract (schedule 2 section 6(5)(c)).
  • exempting real estate agent and assistant agents from having to disclose material facts listed in the Regulation in relation to residential tenancy agreements (section 47). This means agents will have to tell prospective tenants about the material facts set out in the Residential Tenancies Regulation 2019. To learn what tenants must be told, please see what tenants must be told on the starting a tenancy page.
  • requiring strata managing agents to co-operate with owners corporations or associations (of a community land scheme) in the transfer of management functions where they terminate the agent’s contract and decide to self-manage (schedule 4 section 1).
  • clarifying that assistant agents performing business agent and on-site residential property management functions may not enter contracts for the sale of land, enter an agency or franchise agreement, and authorise withdrawing money from a trust account (section 5(3)).
  • clarifying the exemption from obtaining professional indemnity insurance (section 12(6)(b)).
  • removing the collection agent clauses allowing the Secretary to issue guidelines when agents use collection agents to collect rent.

Property and Stock Agents Amendment (Material Facts Disclosure Obligations) Regulation 2021

Since 1 September 2021, agents have been required to disclose an additional material fact in relation to apartment buildings that are subject to building work compliance orders:

Property and Stock Agents (Qualifications) Amendment Order 2021

On 16 April 2021, changes were made to the Property and Stock Agents (Qualifications) Order 2019 (Qualifications Order), which sets out the qualifications required to obtain a certificate or licence, or upgrade to a higher class of licence, in the real estate and property industry. It also set out the qualifications required to become accredited as an auctioneer.

The changes mostly concerned dual licences for agents who work in both real estate and stock and station. New pathways were created to allow experienced licensees to become dual class 1 or class 2 licensees without having to revert to being an assistant agent to add a category to their licence.

The Order now recognises previous versions of the units required to obtain auctioneer accreditation that are still being taught until 30 September 2021. Licensees who completed the following units before 30 September 2021 can be accredited as an auctioneer:

  • Conduct auction (CPPDSM4004A) and Prepare for auction and complete sale (CPPDSM4019A) for real estate agent licensees, or
  • Conduct livestock sale by auction (CPPDSM4039A) and Conduct auction of rural property (CPPDSM4037A) for stock and station agent licensees.

These changes can be found on the NSW Legislation website.

Property and Stock Agents Amendment (Refund of Fees) Regulation 2020

From 1 July 2020, a person who cancels or surrenders a license or certificate, may be able to receive a partial refund of their application fees.

Better Regulation and Customer Service Legislation Amendment (Bushfire Relief) Act 2020

This reform gave the Secretary power from 25 March 2020 to waive, postpone, reduce or refund fees paid under the Act or Regulation due to financial hardship or other special circumstances such as natural disasters.

Real estate and property industry reforms 23 March 2020

Major reforms to the regulation of real estate and property agents commenced on 23 March 2020.

The Property, Stock and Business Agents Act 2002 was the primary legislation that governed the conduct of agents working in this industry. The Act was amended by:

As of 23 March 2020, the Act is called the Property and Stock Agents Act 2002.

The Act is supported by a set of regulatory instruments, including:

What are the changes?

Restructured licensing system

Licence types

The licensing system was significantly restructured, with licences and certificates of registration in three categories:

  • Real estate (with or without restrictions)
  • Stock and station
  • Strata management.

The previous real estate agent, business agent and on-site residential property manager licences were rolled into the real estate agent licence category. Under the new unrestricted real estate agent licence, an agent may carry out the following functions:

  • business agent
  • on-site residential property manager, and
  • real estate sale or leasing functions.

People who held one of these licences at the time of this change were able to transition to a real estate agent licence that restricted the licence holder to business agent or on-site residential property management functions only.

Depending on the qualifications provided with an application, licensing officers will determine if the qualification criteria has been met for a full real estate agent licence.

The stock and station and strata management categories were not changed. They will continue to be issued as separate licences or certificates of registration.

Licence levels

The new system includes 3 licence levels. These are determined by the applicant’s qualifications and experience in the sector:

  • certificate of registration as an assistant agent
  • class 2 licence as a licensed agent
  • class 1 licence as a licensed agent or licensee in charge of a business

New entrants to the industry need to obtain a certificate of registration as an assistant agent and perform entry-level roles while they obtain the qualifications and experience necessary to become a fully licensed agent (class 2 or class 1 licence).

A person who is the licensee in charge of a business will need to obtain a class 1 licence.

Licence duration

Applicants can choose a licence duration of 1, 3 or 5 years, providing more choice on what works best for their business and budget.

The standard 3 month restoration period will apply for expired licences.

All certificates of registration will be issued for a fixed term of 4 years, with no extensions of time or renewals allowed beyond that time. This establishes a clear training pathway for assistant agents to advance to a class 2 or class 1 licence as they build on work experience and improve their knowledge of the industry.

By the end of the 4 years, the certificate of registration holder can either obtain a class 2 licence or cease working as an assistant agent. A person may apply for a new certificate of registration 1 year after the expiry of their previous certificate of registration.

Restricted functions for different licences

An agent will have different functions they can carry out, depending on their level of licence, or if they hold a certificate of registration.

Certificate of registration holders will have restrictions on the kinds of activities they may perform as an assistant agent, such as being unable to bind parties into an agency agreement or a franchising agreement.

Class 2 and class 1 licence holders may exercise all functions in their area of practice. However, only the nominated licensee in charge of a business can authorise the withdrawal of money from a trust account.

Licence or certificate of registration holders are authorised to continue carrying out their current functions in their area of practice after 23 March 2020. However, they also need to comply with the changed legislative requirements according to their level of licence.

Appointing licensee/s in charge and trust account requirements

NSW laws require a different LIC to be in charge of each place of business.

Since 23 March 2020, an LIC may be nominated to be in charge of an entire business or there may be several licensees responsible for different parts of the business carried out under a licence – so long as no part of the business is left unsupervised by an LIC. However, there cannot be more than one LIC for the same part of business.

These requirements apply to:

  • corporation licence holders
  • individual licensees who carry on business under a class 2 licence, and
  • a class 1 licence holder who carries on business (who would be the LIC for their business).

These licensees are referred to as a ‘principal licensee’ in the Supervision Guidelines.

It is up to the principal licensee to determine how they apportion the business. For example, a principal licensee may appoint an LIC for multiple place(s) of business or one for each business area, such as strata, real estate sales or property management.

Increased qualification and Continuing Professional Development (CPD) requirements

Entry standards increased for licence and certificate of registration holders.

For example, a class 2 licence holder must hold their licence for at least 2 years, complete work experience requirements and a relevant diploma to be eligible for a class 1 licence.

Assistant agents and licensed agents must complete CPD training annually as a condition of holding their licence or certificate of registration.

The new CPD requirements divide CPD into compulsory and elective topics.

Licence holders will be required to undertake a minimum number of hours of CPD per year. Assistant agents will need to complete at least 3 competency units from a Certificate IV qualification each year, to ensure that they will be eligible to apply for the relevant class 2 licence.

See the CPD requirements for more information.

Disclosing specific prescribed material facts

It is an offence for an agent to induce a person to enter into a contract or arrangement by concealing a material fact.

The new regulations specify the kinds of facts that an agent knows or should reasonably know and must disclose to a prospective purchaser. These include that the property:

  • flooded from a natural weather event or was affected by bush fire in the last 5 years
  • has significant health or safety risks
  • is listed on the loose-fill asbestos insulation register
  • has been the scene of a crime of murder or manslaughter in the last 5 years
  • has been used for the production or supply of a prohibited drug or plant in the last 2 years
  • is, or is a part of, a building that contains external combustible cladding to which:
    • a fire safety order, or a notice of intention to issue a fire safety order, has been issued requiring the building to be rectified regarding the cladding
    • a building product rectification order, or a notice of intention to issue a building product rectification order, has been issued requiring the building to be rectified regarding the cladding
    • a development application or complying development certificate application has been lodged for rectification regarding the cladding.

The agent will be liable if they fail to disclose these facts, whether or not they intended to conceal them from the prospective purchaser, if they knew of the fact, or should have reasonably known about the fact.

Extended rules of conduct

The regulations introduce new rules of conduct which apply to both agents and assistant agents.

Payment of rental income monthly to landlord

An agent must pay rental money received on behalf of the landlord under a residential tenancy agreement to the landlord at the end of each month, unless the landlord has instructed otherwise.

This ensures that rent is passed on in a timely manner and landlords are aware if there has been a failure to account in their rental income.

Maximum dollar value of gifts and benefits

An agent must not request or accept any gift or benefit from another person that is valued at $60 or more, if it could be considered to give rise to a conflict of interest.

The amount reflects the value of a gift that would be unlikely to induce an agent to alter their conduct by receiving or being promised the gift or benefit.

Separate trust accounts for rental and sales money

The licensee in charge of the business will need to establish separate trust accounts for rental money and sales money.

Many businesses already maintain separate trust accounts for rental income and sales deposits.

This requirement improves the accountability and transparency of agents by ensuring they do not mix rental and sales money in a single trust account.

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