In real estate, a lot of focus is often put on sales, but in reality, many businesses within our industry offer both sales and property management services, with the latter the most steady and reliable revenue stream.
This month, as we explore the broader culture within agencies, we introduce our property management series: monthly articles that explore legislation and compliance, best practice, innovation, service and the people who deliver these for agencies every day.
With more than 2,800 complaints relating to tenancy matters reported to Fair Trading in 2018, our first instalment in this series takes us back to compliance 101: what you need to know and what you need to be doing to ensure you get it right.
EAC director, owner of Aspect Estate Agents and property management specialist, Elizabeth Sargood provides us with her best tips and insights for compliance.
Property management is a complex area, often fraught with challenges, due its foundation in long-term relationships with both properties and people.
Being responsible not only for the correct conduct of people but also for the condition of a home and its capacity to provide what was promised, is never going to be 100% easy.
On top of the operational, day-to-day requirements, property management professionals also need to have an acute understanding of the law as it relates to their field, and how it should be adhered to and applied.
And just to make sure we are fully aware of this requirement, Fair Trading keeps a very close eye on what we do and how we do it.
What is a Fair Trading spot audit and how can you prepare?
Just as it sounds, in addition to planned, scheduled appointments to review your activity, Fair Trading can also surprise you with an unplanned visit and audit. While this may seem terrifying for some property managers, those of you who do the right thing, know your area and comprehensively follow the rules will have nothing to worry about.
Knowing what Fair Trading will look for and ensuring those areas are perfect, can help you be prepared for an audit at any time, even if you didn’t know it was coming!
Start with the following quick tips I use, and add your own in a checklist you can review on a regular basis.
- Ensure Certificates of Registration and Licences are up to date at all times. Fair Trading sends each agent notifications when certificates and licences are close to their renewal requirement date, so in addition to acting on those notifications, diarise your own important dates and those of your team.
- Always carry out CPD training prior to certificate or licence expiry, as required by the law. Don’t leave training to the last minute and give yourself no other option than to undertake a quick and useless online training module. Make sure you are aware, at all times, of your own deadline, and well-in-advance, research CPD courses that will help you achieve your professional goals in a way that best suits your learning style.
- Ensure trust accounts are audited internally once every eight weeks — if you have done it and know everything is as required, you can be more confident Fair Trading will have the same result, should they make a surprise visit. While it may be time-consuming, this activity gives you the jump on any issues and helps you check if your team is following procedures.
- If you do find any discrepancies in your trust account make it an absolute priority to deal with them immediately and resolve swiftly.
Above all, make sure you have a really thorough understanding of the Act; this will likely then mean the above points are already taken care of and you can feel comfortable at any time an audit occurs.
Quick reference audit list
When Fair Trading stop by for an audit, they will be looking for certain information. The below is my quick reference list of documents Fair Trading look for in a property management file:
- No prohibited terms in lease agreements (for example, carpets must be steam cleaned at end of tenancy, this directly contravenes the Act)
- Leases provided/completed and signed correctly
- Managing Agency Agreement is completed and signed correctly. Dated prior to the current lease start date.
- Water usage efficiency measures in place.
- Condition reports completed properly, dated.
- Bonds lodged with Fair Trading.
- Agency offering online bond lodgement to tenants.
- Notices (especially rent increase notices) completed correctly, with the correct notice periods given.
Also note, the following office files will be required:
- Licensing and CPD points are up-to-date for all employees.
- Yearly trust account audit has been completed and audit report submitted to NSW Fair Trading.
- Professional Indemnity Insurance confirmation provided .
- Documentation for the last two End-of-Month are provided and correct.
They will also ask to see a minimum of two sales and two property management files.
Ten tips for making compliance standard practice in your office
In addition to being prepared by conducting your own audits and understanding legislation, you also need to make sure everyone on your team is doing everything as they should, within the timeframes specified.
Finding time to manage your own requirements and everyone else’s can be near impossible, my ten quick tips below can make the process easier.
- Create written procedures and ensure every new agent is given a copy, and all agents are reminded of these in regular staff meetings.
- Develop a checklist for yourself, and a smaller, personal checklist for each member of your office.
- Make sure you are familiar with legislation, especially the rules of conduct.
- Ensure all members of your office are undertaking regular training so they are up-to-date with all legislative changes and requirements.
- Ensure updates and new information is shared within the office. While all staff should and will attend training, changes occur regularly, so the more everyone shares what they know with each other, the more comprehensive the knowledge-base becomes.
- Subscribe to online newsletters or RSS feeds that send updates and notices direct to your inbox — save yourself time searching.
- Set automated reminders in your own diary and in those of your colleagues (than, you don’t have to remember to remind them, it’s done for you!).
- Develop and implement complaint handling procedures. Ensure all staff who will encounter complaints are well-versed in your procedures and adhere to them strictly.
- Add all of these resources: checklists, key legislative points, dates, to a shared file or dashboard you all use in smaller agencies, or to the intranet in larger agencies.
- Be security conscious — some trust account breaches and other offences have occurred simply because emails were hacked or internal passwords weren’t strong enough.
Remember, industry groups like the EAC are an incredibly useful resource. As a member, you can also access free legal support!
What happens if you don’t comply?
Consequences of non-compliance vary depending on a range of factors. If an audit is conducted and your are found not to be compliant, you might expect:
- A trader education letter
- A warning letter
- An on-the-spot infringement notice
- Disciplinary action such as cancellation of your licence
Elizabeth Sargood is a specialist in property management for Aspect Estate Agency and a director with the EAC.