nsw REAL eSTATE lICENCE CHANGES 2018
When would the new property industry laws start?
It is currently anticipated that the new laws will be in place in early 2019. The continuing professional development (CPD) guidelines are also under review with changes to CPD coming into effect towards the end of 2018.
What are the licensing reforms proposed?
Currently there are six licence types, plus a corporation licence. These will be reduced to three: 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.
These agents will only need a Real Estate licence if they deal in property sales or management.
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 or 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, supported by changes to CPD, 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.
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.
The corporation licence will be removed. It is basically a duplication that does not provide any greater consumer protection.
How would qualification requirements change?
New industry entrants applying for a certificate of registration will need to complete three additional competency units from the Certificate IV qualification. This would increase the total units required for entry to seven.
Applicants for an Agents 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’ 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.
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.
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 authorise transactions for trust accounts
· any agreement entered by 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 or unscrupulous 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.
What are the changes to Continuing Professional Development (CPD)?
A new system for CPD will be introduced to establish a professional training pathway.
Certificate holders must complete their Certificate IV within 4 years to progress to a licence. Certificate holders will not be required to undertake CPD.
For licensees, instead of the current 12 CPD units that take 4 hours to complete, agents will be required to complete 6 hours of CPD.
Half of the CPD hours will be compulsory topics covering law changes and compliance issues in response to market trends. The compulsory topics will be identified by an advisory panel and will be revised regularly.
The remaining 3 hours will be made up of elective CPD topics chosen by licensees to suit their own professional needs.
Licensees in charge will undertake an additional 3 hours of CPD focusing on business skills.
Who will provide CPD?
The compulsory CPD topics will be delivered by industry groups and government agencies. Industry groups may elect to engage the services of a registered training organisations (RTO) to deliver compulsory topics on their behalf.
The elective topics will be delivered by industry groups, government agencies and RTOs.
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 three extra units of study before becoming eligible for a certificate of registration. Consultation with industry has confirmed this is unlikely to place an unnecessary 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 Agents 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 and some industry participants will need to do additional education.
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 ‘licence in charge’ category will need to complete a diploma in property services. A diploma qualification costs approximately $11,000. However, a licence holder will have already completed part of the diploma by having done a Certificate IV, reducing any additional cost.
The new CPD requirements may also add additional costs. NSW Fair Trading will continue to provide its CPD activities free of charge.
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. During the last financial year, the Property Services Compensation Fund paid out nearly $2.4 million in response to consumer claims. The year before it was $3.1 million.
Currently, only qualified audits must be lodged. While this was introduced a few years ago, this approach is 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, cheap and simple way for audits to be lodged by the licensee in charge or their auditor.
Will there be less regulatory burden for agents?
The reforms have been developed to increase the professional standards of the industry in the short term with a longer term objective of a co-regulation framework.
In the interim, the reforms will support the industry and reduce regulatory burden by:
· introducing the option of 1 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.
The power to cancel a licence will apply if false documentation was used to obtain the licence or a licence was issued in error.
These powers are already in place for the home building licensing regime.
Source – NSW Fair Trading 1 September 2018