A list of common questions about the changes to laws for the property industry due to start in 2019.
When will the new property industry laws start?
It is currently anticipated that the new laws will be in place in 2019.
What are the licensing reforms proposed?
Currently there are 6 licence types, plus a corporation licence. The 6 licence types will be reduced to 3: Real Estate, Strata, and Stock and Station.
The following licences will come under the one Real Estate licence:
- buyer's agent
- on-site residential property agent
- business agent.
Each licence type will have the levels of:
- 'Certificate of Registration' for new entrants, with heightened entry requirements
- 'Agent' - gained once the practitioner has more education and industry experience, and
- Licensee in Charge for operators of a real estate agency, a stock and station agency or a strata managing agency.
Currently, a new entrant can perform the same functions as an agent with many years' experience in the industry. The new licensing arrangements will provide a career pathway for industry practitioners. They will establish clear duties and responsibilities that an industry practitioner can perform that are consistent with their level of experience and qualifications.
A new 'licensee in charge' category will be created. They will be an individual responsible for key agency matters such as operating trust accounts, and the overall supervision of employees.
How would qualification requirements change?
New industry entrants applying for a certificate of registration will need to complete 3 additional competency units from the Certificate IV qualification. This will increase the total units required for entry to 7.
Applicants for an agent’s licence are already required to complete a Certificate IV level qualification. The reforms will also require an applicant to have 12 months' practical industry experience.
Applicants for the new 'licensee in charge' licence category will need to:
- complete a diploma and have at least 2 years' practical experience as an agent under the supervision of a 'licensee in charge', or
- hold a Certificate IV and an equal qualification in business management and have at least 2 years' practical experience as an agent under the supervision of a 'licensee in charge'.
Will current certificate and licence holders need additional training and qualifications?
Current certificate and licence holders will be able to continue to work with their existing qualifications as the reforms will include grandfather and transitional arrangements. This will include existing licensees in charge being transitioned to the new licensee in charge licence.
The reforms will mean minimal change for some certificate and licence holders. Others may need to do additional education and experience over a period of time. NSW Fair Trading is working with industry to implement these arrangements.
How will the current activities of certificate and licence holders be affected?
The reforms would restrict certain activities and increase the responsibility of the licensee in charge to properly supervise their employees. For example, the reforms propose that:
- only a licensee in charge can authorise the release of funds from a general trust account (required to be held under the Act)
- any agreement handled via a certificate holder be authorised by a licensee or licensee in charge before it takes effect.
These measures will increase the supervision and training of practitioners while protecting consumers from dealing with inexperienced operators.
Will there be any exemptions to the new licensing requirements?
An exemption from the requirement to hold a certificate or licence will apply to people working in property agencies who do not do the duties of an agent. For example, this would include reception, administration and graphic design duties.
An exemption from licensing requirements will apply to people undertaking the functions of on-site residential property managers at small strata schemes. The threshold for this exemption will be subject to public consultation, but will possibly be limited to schemes with no more than 20 lots.
The pre-existing exemption for certain commercial property agency work will remain in place.
What are the changes to Continuing Professional Development (CPD)?
A new system for CPD is currently being considered and details will be made available as soon as practical.
In the interim, agents and certificate holders must continue to meet their current CPD obligations to retain their licence.
Will it be harder to start my career in the property industry?
To start a career in the property industry an entrant will have to do 3 extra units of study before becoming eligible for a certificate of registration. Consultation with industry has confirmed this is unlikely to place a significant burden on industry entrants, who will be better prepared for the work ahead. The extra units will also contribute towards a Certificate IV qualification.
Will it be harder to get a full licence?
Applicants are already required to hold a Certificate IV to apply for an agent’s licence. The additional requirement of 12 months' practical industry experience will, in most cases, be achieved while a certificate holder completes their Certificate IV.
Will it be harder to become a licensee in charge?
The creation of the diploma qualification with experience requirements for licensees in charge will create a higher entry threshold for that role. However, given the responsibilities of licensees in charge, this is considered appropriate. The reforms place clear responsibilities on a licensee in charge for supervision and providing employees with industry experience. This role is a key part of improving industry professionalism, and this approach is supported by industry associations.
Will the new licensing arrangements and education requirements increase costs for industry?
There will be additional costs for new entrants to undertake additional units of education. All industry participants will need to complete a Certificate IV to remain in the industry after a period of 4 years.
It is estimated that the costs for new entrants may increase by up to $800 per person. However, this will not increase the total costs for completing the Certificate IV qualification.
Licensees wanting to apply for the new 'licensee in charge' category will need to complete a diploma in property services. The cost of a diploma qualification is approximately $11,000 if a person does not already hold any other qualifications. However, a licence holder will have already completed part of the diploma by having done a Certificate IV, which will help reduce any additional costs.
VET Student Loans are available for full-time, part-time and online study.
Completing a Certificate IV or Diploma will also contribute to CPD requirements. This will reduce the need for, and cost involved in, additional development activities.
Why are the requirements for submitting trust accounts audits being changed?
Agents' failure to account for money held in trust is a major risk area for the industry and can result in significant consumer detriment. This financial year, the Property Services Compensation Fund is expected to pay out over $7 million in response to consumer claims.
Currently, only qualified audits must be lodged. While this was introduced a few years ago to reduce the administrative burden and cost of submitting audits in hard copy, this approach has become a barrier to effective risk identification and pro-active compliance action.
To minimise any administrative burden, Fair Trading is developing an online portal which will provide a quick and simple way for audits to be lodged electronically by the licensee in charge’s appointed auditor.
Will there be less regulatory burden for agents?
The reforms have been developed to improve the conduct and increase the professional standards of the industry.
In the interim, the reforms will support the industry and reduce regulatory burden by:
- introducing the option of 1, 3 or 5 year licence periods
- clarifying the definition of 'material fact'
- streamlining licence types, removing regulation for some activities
- providing clarification on the use of electronic signatures.
Why are new powers to suspend or cancel licences needed?
Under current laws, Fair Trading cannot always act immediately to deal with consumer risks posed by an unscrupulous agent, even if the harm is clear and immediate.
The time needed to investigate before taking action could mean that the agent's misconduct continues and more consumers suffer losses. The power to suspend a licence while an investigation is conducted provides a very effective way to minimise potential harm to consumers.