While Sydney's real estate and property market is set to recovery this 2020, it looks like this is not the only change that NSW's industry professionals should be expecting
By March 2020, NSW’s real estate agents and property industry professionals will be met with significant law reforms in their industry. What are these changes?
The Property, Stock and Business Agents Act 2002 is the primary legislation that administers the conduct of real estate agents and property industry professionals. From 23 March 2020, this Act will be referred to as the Property and Stock Agents Act 2002.
Recently, the act has been amended by the Property Stock and Business Agents Amendment (Property Industry Reform) Act 2018 or the Amendment Act, the Fair Trading Legislation Amendment (Reform) Act 2018, as well as the Better Regulation Legislation Amendment Act 2019.
Further, as reported by The NSW Office of Fair Trading, these are not the only changes that the industry’s professionals should expect, as reforms have been made to NSW’s real estate and property industry laws.
Here are the six changes to the laws that regulate NSW's real estate and property industry agents. These will all take effect on 23 March 2020:
Restructured licensing system
The current licenses and registration certificates are divided into three categories: real estate (with or without restrictions), stock and station, and strata management.
Currently, the real estate agent, business agent and on-site residential property manager licences are under the real estate category. But with the new licence system, an agent may carry out the functions of a business agent, on-site residential property manager plus real estate sale or leasing functions.
There will be no changes to the Stock and Station Agent, and Strata Management licences.
Once the reform kicks in, the new system will include three licence levels:
- 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.
Applicants can also choose a licence duration of one, three or five years, depending on their business and budget.
For more information, here are the different types of licences and certificates of registrations issued under the Property Stock and Business Agents Act 2002.
Restricted functions for different licences
Class 2 and Class 1 licence holders may still exercise all functions in their practice area. In contrast, the certificate of registration holders will have limits on the kinds of activities they may perform as an assistant agent. Restrictions include the inability to bind parties into an agency or franchising agreement.
Licence or certificate of registration holders may continue performing their current functions after 23 March 2020, but only if they comply with the new legislative requirements that correspond to their licence level.
Appointing a single licensee in charge of the business
The current regulation allows companies to appoint multiple licensees in charge, one for each office. However, effective 23 March 2020, businesses are now only allowed to nominate one licensee in charge to supervise the entire business.
This policy is to ensure that the responsibility of handling a business is only given to suitable and qualified agents.
Raised qualification and Continuing Professional Development (CPD) requirements
The standards of suitability for licence and certificate of registration holders are getting higher.
Class 2 licence holders, for example, must complete work experience requirements, gain a relevant diploma and hold their licences for at least two years to be eligible for a class 1 licence.
Licence holders are now required to take a minimum number of hours of CPD per year, while assistant agents will need to complete at least three competency units from a Certificate IV qualification every year.
Furthermore, not complying with your CPD requirements may result in licence or certificate cancellation or suspension. For more information, see the new CPD requirements.
Disclosing specific prescribed material facts
The new regulations get stricter and more specific in making sure that the agents disclose the necessary details and facts to a prospective buyer. These facts should include the details whether the property:
Has been the scene of a crime or manslaughter in the past five years;
Has been used for prohibited drug or plant production in the past two years;
Has considerable health or safety risks;
Has recently been flooded or affected by bushfire in the past five years;
Is, or has been a part of a building that has external combustible cladding, to which: a fire safety and building product rectification order (or notices of intention requiring the building to be rectified has been issued, or a development application or a complying development certificate application has been fixed for revision regarding the cladding;
Is listed on the Loose-fill Asbestos Insulation Register (even if the buyer could also access the access the register online);
The agent is liable if they fail to disclose these facts to the prospective home buyers, whether or not they did so unknowingly.
Extended rules of conduct
New rules of conduct for both agents and assistant agents are also introduced and will take effect on 23 March 2020:
Monthly rental income to landlord
Agents are required to pay rental money received on behalf of the landlord under a residential tenancy agreement at the end of each month. This is to ensure that the rental money is passed on time, and that the landlords are informed of any failure to account in their rental income.
Agents may not comply if the landlord has instructed otherwise.
Limited value of gifts and benefits
Agents must not request or receive any gift from another person that is valued $60 or more to not give rise to a conflict of interest.
Separate trust accounts for rental and sales money
Separate trust accounts for rental money and sales money are now a must for businesses. This new policy aims to improve the agents’ accountability and transparency by making sure that the two accounts are not mixed in a single trust account.