A list of common questions about the changes to laws for the property industry due to start in 2020.
When will the new property industry laws start?
It is currently anticipated that the new laws will be in place in 2020.
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. Persons working in both real estate and stock and station will be offered a dual licence for both.
The following functions will be covered by the one Real Estate licence:
- real estate sales and leasing
- buyer's agent
- on-site residential property management
- business agent.
Each licence type will have the levels of:
- 'Certificate of Registration as an Assistant Agent' — for new entrants, with heightened entry requirements and can be issued for no more than a total of four years (class 3),
- 'Licensed agent' — can be granted once the practitioner has completed further education and gained at least 12 months industry experience (class 2), and
- Licensee in Charge for operators of a real estate agency, a stock and station agency or a strata managing agency (class 1).
Currently, a new entrant can perform the same functions as an agent with many years of experience in the industry. The new licensing arrangements will provide a career pathway for industry practitioners, with clear functions an industry practitioner can perform that are consistent with their level of experience and qualifications.
A new 'licensee in charge' category will be created, to be held by the individual responsible for key agency matters such as authorising the withdrawal of money from trust accounts and the overall supervision of employees.
How would qualification requirements change?
New industry entrants applying for a certificate of registration in real estate or stock and station work will need to complete 5 core units from the Certificate IV in Real Estate Practice. For entrants applying for a certificate of registration in strata management, the applicant must complete at least 7 prescribed units of a Certificate IV in Strata Community Management.
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 relevant diploma,
- have at least 2 years' practical experience as a class 2 agent, and
- complete prescribed work experience requirements 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 grandfathering and transitional arrangements. This will include licensees currently nominated as a licensee in charge having the option to transition to the new class 1 licence.
Some certificate and licence holders 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 will 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).
There will also be certain restrictions on activities that different certificate holders and licensees may undertake. Under the reforms, an assistant agent may not enter into any binding contractual agreement, except for residential tenancy agreements and livestock transactions.
These measures will increase the supervision and training of practitioners while protecting consumers from dealing with inexperienced or unqualified agents.
Current certificate of registration holders must complete the full Certificate IV qualification within four years of their first renewal after the reforms commence and transition to become a class 2 licensed agent. If not, their certificate will expire and they must cease working as an agent for a minimum of 12 months during which time they will not be able to re-apply for a certificate of registration.
Will there be any exemptions to the new licensing requirements?
Fair Trading is currently consulting on an exemption from licensing requirements for people undertaking the functions of an on-site residential property manager for small residential schemes. The threshold for this exemption has not been finalised, with the current proposal limiting the exemption to schemes with no more than 20 lots.
People who work in property agencies but do not carry out the duties of an agent, such as reception, administration and graphic design duties, do not require a licence. However, Fair Trading acknowledges there is a need for guidance for the industry in this regard and will provide further information as part of commencement of the reforms..
The current exemption for certain commercial property agency work will remain in place.
What are the changes to Continuing Professional Development (CPD)?
Under the new CPD requirements, licensees and certificate holders will need to complete a minimum number of hours of compulsory and elective CPD topics. Licensees in charge will be required to complete an additional 3 hours of business skills topics.
Licensees and certificate holders must provide evidence to NSW Fair Trading to demonstrate that they have completed the required CPD topics, which would be verified by the relevant licensee in charge.
The new CPD requirements will also list providers who are approved to deliver compulsory CPD topics. Fair Trading will further consult with key stakeholders to develop an appropriate approval process.
The new requirements will commence together with all the other industry reforms. 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 complete 5 core units of the relevant Certificate IV qualification (7 prescribed units for strata management work). The new entry requirements for a certificate of registration are relatively similar to the current requirements, which prescribes 3 to 4 units.
However, as part of their ongoing professional training, certificate holders will need to complete at least 3 units from the Certificate IV each year and upskill into a licence within a total of four years since receiving their certificate of registration. This is considered appropriate to ensure that agents working in the industry have sufficient knowledge and skills.
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 and completion of work experience requirements 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 introduction of the diploma qualification with experience requirements for licensees in charge will create a higher entry threshold for that role, given the responsibilities of licensees in charge.
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 is supported by industry associations.
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. Last 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 has developed 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. This online portal commenced on 1 July 2019.
Will there be less regulatory burden for agents?
The reforms have been developed to improve conduct and raise professional standards in the industry, and are not principally aimed at reducing regulatory burden
Key regulatory changes in the reforms include:
- clarifying the kinds of 'material facts' that an agent must disclose
- streamlining licence types, removing regulation for some activities
- introducing measures to improve agents’ transparency and accountability.
The Better Business Reforms of 2018 further introduced the option to renew a licence for 1, 3 or 5 year periods, which provides flexibility for agents to choose a licence duration that works best for them. This change will commence at the same time as all the other elements.
Why are new powers to suspend or cancel licences needed?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 underway provides an effective way to minimise potential harm to consumers.