New South Wales’ peak real estate body has amped up its support for a dedicated watchdog for the property industry, saying the complex issues landlords, tenants and investors face are not being addressed by the state government’s current regime.
Property services currently fall under the umbrella of the NSW Government’s Fair Trading division, which deals with complaints and issues across more than 40 industry types, including automotive, retail, and even tattoo parlours, as well as property, construction, and rentals.
Speaking to Australian Property Investor Magazine, Real Estate Institute of New South Wales chief executive Tim McKibbin was unreserved in his criticism of the current system and the need for property, as the state’s largest industry, to be governed by a Property Services Council and a dedicated Commissioner.
“All of the industries under the auspices of Fair Trading are smaller than the property sector in terms of dollar value transactions and are not legally complex,” Mr McKibbin said.
“Conversely, real estate transactions always involve large sums of money and are by their very nature legally complex.
“Speaking plainly, Fair Trading does not have the skills, knowledge or experience to protect the interests of consumers and support the industry, while the Bill will address these issues.”
The proposition of a new watchdog for the property sector has been discussed by NSW Parliament for several years, culminating this year in a Property Services Bill passing the Upper House and set to be debated by the Lower House in coming weeks.
The Bill was first introduced to parliament in 2019 by the Shooters, Fishers and Farmers MP Mark Banasiak (then known as the Real Estate Services Council Bill 2019).
At the second reading speech in March, Mr Banasiak said property’s contribution to the NSW economy and prominence in the lives of everyone buying, building or renting a home justified its own regulatory body.
“Residential real estate transactions alone are a $107 billion industry annually in New South Wales, (making it) bigger than the combined mining industry at $21 billion, the retail industry at $22.8 billion and the tourism industry at $38.1 billion,” Mr Banasiak said.
“Consumers have the reasonable expectation that the real estate agents they retain to advise and guide them through a property transaction are ethical, appropriately educated and experienced.
“The House must reluctantly acknowledge that the (legislation that had property services encompassed by Fair Trading, the) Property, Stock and Business Agents Act 2002 has not delivered the outcomes Parliament intended, therefore, consumers' expectations have not been met.”
Back to the future
Mr McKibbin said it was difficult to understand how the nightlife economy had its own Commissioner but the state’s biggest industry did not, with high profile issues such as major building flaws in residential towers beyond the resources of Fair Trading to properly address.
Mr McKibbin said the Bill would bring NSW in line with regulatory models used in other states and align the property industry with the legal and building services industries.
“This bill returns the property industry to the regulatory environment of old, and it replicates the regulatory architecture of the legal and building services industries, and of other states,” he said.
“Government legislation is driven by the advice it receives and good policy comes from broad engagement and understanding of the industry in question.
“There are many policy shortcomings that a real estate services commissioner, representing the best interests of consumers, could address,” he said.
Since Fair Trading assumed responsibility for the property services sector, training requirements to qualify as a real estate agent have been downgraded and similar failed attempts made to de-licence auctioneers and strata managers.
While florists and hairdressers undergo years of training, those entrusted with the sale and navigation of the complex regulatory environment of selling people’s greatest assets now need only complete a four-day online training course.
“Fair Trading alleges the panacea of anything that ails a market is competition so it removes things that are termed barriers to entry, but unfortunately education, training and experience are deemed to be barriers to entry,” Mr McKibbin said.
The new legislation, Mr McKibbin said, does not bestow on industry or any other stakeholder any power beyond a voice direct to the Minister.
“A dedicated Commissioner will have industry experience and will work cooperatively and constructively with industry,” he said.
“Industry’s relationship with Fair Trading is at best adversarial and clearly this is unproductive, with all stakeholders suffering.
“This Bill does not create an untested or uncharted regulatory architecture; to the contrary, it simply returns to the days when industry stakeholders had a genuine voice.
“Colloquially put, it’s back to the future!”
The Bill’s passage is also being closely watched across the border in Victoria, where there is an Estate Agents Council, that differs from what NSW is proposing, and Consumer Affairs Victoria, which is responsible for the sector in a similar way to Fair Trading NSW.
“The REIV congratulates NSW for successfully bringing attention to the matter,” REIV chief executive Gil King told API Magazine.
“The real estate sector is a very significant contributor and driver of any state’s economy and it’s critical that its governance sits with the appropriate government authority.”
“Victoria will be keenly following the developments in NSW.”
