In September 2019, Fair Trading released draft property industry reforms for public consultation. Agents and consumers were invited to provide feedback on the proposed reforms until the closing date of 2 October.
With public consultation now complete, and Fair Trading due to release the final reform documents in November, we explore the top ways the reforms may affect you, as an agent.
The real estate industry is a highly-regulated industry, even so, it doesn’t always have the most positive reputation among consumers.
While the reforms proposed by Fair Trading may be somewhat disruptive in 2020, ultimately they are designed to have a positive effect on the way the industry is perceived, the professionalism of agents, and the recognition of expertise.
As an agent, these reforms — if the draft amendments are realised — will affect you. In preparation for their implementation in March 2020, it is important you know exactly what you need to do, when and how.
1. Transferring your qualification
As explained by our partners at the Australian College of Professionals, licensing for real estate agents will change with the new reforms.
Most notably, at the time the reforms are introduced, agents with a Certificate of Registration — who currently sell real estate and manage properties — will find themselves more restricted in their duties.
As an example, you will not be authorised to enter into a contract or transaction on behalf of any party, with the exception of a residential tenancy agreement.
In the case where you are involved with other contracts or transactions, you will require a higher licence holder (Class 1 or 2) to countersign documents in order for them to be considered valid.
Upon introduction of the reforms, you will need to apply to have your existing certificate or licence transferred to one of three new licence classes.
As a Certificate of Registration holder, you can apply for the lowest class, a transfer to an ‘Assistant Agent’.
Successful applicants will be issued with a four year certificate at their next scheduled renewal. This will give you four years to study the relevant units, build up experience and apply for the next licence, a Class 2.
Agents who currently hold a license can apply for a Class 1 or 2 licence depending on their level of experience and the studies they have completed.
The number of licence categories (currently six) will also be reduced to just three: real estate, stock and station, and strata management.
Those agents who currently hold a Business, Buyers or Onsite Residential Property Management Licence, will transfer to a Real Estate Licence and will be restricted to the same specialisation their previous licence dictated.
2. Becoming a Licensee-in-charge
In order to be the Licensee-in charge of a real estate agency, you will need a Class 1 licence.
If you are currently the Licensee-in-charge of your agency, you may apply to have your licence transferred to a Class 1 under the reformed system.
If you are not a Licensee-in-charge now, but your situation changes and you need to become a Licensee-in-charge once the reforms are introduced — perhaps your office needs more agents with the authority to disperse funds from trust, or perhaps you want to start your own agency — you can apply for a Class 1 licence.
To be successful, you will need to have held your licence for two years, have worked in the property industry during that time and you will have completed a Diploma of Property Services — a qualification our partners at ACOP can help you with. You will also need to meet 24 requirements, supported by evidence.
3. Continuing your professional development
Continued professional development or CPD has long been a crucial part of maintaining your real estate certificate or licence, which allows you to practice in this field.
Currently, the system requires all agents to complete a minimum of 12 CPD points with an industry body or registered training organisation each year. These 12 points can be completed in person or online and courses can be of any duration.
The new reforms take into account that some agents may not be capitalising on the opportunity for ongoing training as they could be.
The purpose of CPD is to not only to ensure agents remain up-to-date and cognisant of amendments to the laws that affect them, but as implied, that they also continue to develop professionally.
The proposed reforms means ‘tick box’ courses are out, and real learning opportunities are mandatory!
For Certificate of Registration holders, CPD is now an opportunity to slowly work towards your Class 2 licence. All agents with their Certificate must complete three units each year, over a four year period, towards their Licence.
This approach is not designed to hold Certificate agents back, however, as any agent can choose to complete the units faster at their own discretion.
For Class 1 and 2 licence holders, the CPD requirement moves from a points to an hours system.
Class 2 agents, between March one year and the next (regardless of licence renewal date), must complete six hours of CPD training, half of which will be compulsory topics that relate to crucial areas like regulatory reforms, and half electives (a vast array of topics to select from).
For Class 1 Licence holders, in 2020, the requirement is the same as Class 2, with six hours of CPD training to be completed. As of March 2021, this increases to nine hours, with the additional time allocated to topics that improve business management skills (like trust accounting and risk management).
At the EAC, we view these reforms as important to the future of our industry and a step in the right direction.
Though they may seem somewhat confusing or they may have some impact on your business in the short-term; in the medium-to-long term, they will give our industry the injection of credibility it needs.
They will help ensure agents — the bulk of whom are honest and hardworking — can do their jobs without needing to fight the negative reputation of their industry.
In part 2 of our series on the proposed reforms, office managers and Licensees-in-charge can read through some of our suggestions for helping your teams and businesses be ready for these changes.
If you require additional support in training or preparing for changes, our partners at the ACOP offer a range of resources and courses that will be beneficial to all agents.