Government is working on statutory codes of conduct and a register for estate agents
The government wishes to subject the estate agency sector to statutory regulations. According to the plans, estate agents will be required to register in a central register. Those who are registered will then be required to adhere to statutory standards of conduct. The proposal is still being finalised and has yet to be debated by the House of Representatives. If the proposal is adopted, the sector will no longer be primarily responsible for self-regulation of the quality of its services.
Reasons for intervention
Concerns about the conduct of some estate agents have existed for some time, including within the political sphere. Consumers regularly report that, when buying or selling a property, they have been either favoured or disadvantaged, or that the bidding process was not transparent. A survey commissioned by the Ministry paints a similar picture: more than a quarter of those surveyed have had a negative experience with an estate agent.
According to Minister Boekholt-O’Sullivan, responsible for housing, such experiences occur far too often. The current system is said to fail to rectify malpractices in a systematic and timely manner. This is why she is proposing regulation. She acknowledges that this is a drastic measure, but regards a compulsory registration scheme as the most appropriate way to tackle problems and improve professional practice.
The industry has, in recent years, attempted to bring its own sector into line. Estate agents’ associations, the Ministry and the Homeowners’ Association have reached agreements on combating malpractice. In addition, a bid log has been introduced, which estate agents who are members of a professional association are obliged to use. However, the Minister notes that these agreements have not been adequately complied with. In her view, self-regulation offers too few opportunities to effectively correct undesirable behaviour, meaning that improvements in the sector are lagging behind.
What the registration requirement entails
The core of the proposal is that an estate agent may only practise if they are listed in the central register. Registration means that the estate agent is bound by statutory standards of conduct.
The standards focus on three areas. Firstly, estate agents must be transparent about their working methods, for example regarding how a bidding process is conducted. Furthermore, they must provide accurate and complete information in a timely manner, such as details regarding the condition of a property’s foundations. Finally, they must treat all prospective buyers equally, regardless of whether a buyer is assisted by their own buying agent or not.
Complaints handling and sanctions
A second element of the plan is compulsory membership of the Disputes Committee. The idea is that by making membership compulsory, consumers will have a simple and accessible route to have complaints about an estate agent’s services assessed.
If an estate agent fails to comply with the standards, the most severe sanction is removal from the register. This is the key difference from the current situation. An estate agent who is currently expelled from a professional association can continue to offer their services as an independent estate agent. Under the new system, this will no longer be possible, as registration in the register will become a prerequisite for practising the profession.
Not yet finalised
The proposal is not yet finalised. For example, it has not yet been decided whether letting agents will also be subject to the registration requirement.
The Minister intends to engage in discussions with the sector and other stakeholders regarding the details of the register. The aim is to submit the finalised proposal to the House of Representatives early next year. It is not yet known when the register will actually come into force.
We will continue to monitor developments.
Questions?
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