Change beckons for the NSW real estate sector after both the regulator and minister condemned training and education standards.
Fair Trading has asked a four-person panel to investigate entry-level standards and minimum education requirements as well as continuing professional development, with public responses due by 15 January.
The regulator said in a discussion paper that “the entry level for a certificate holder is relatively low”, with applicants required to demonstrate competence in only three or four units from the relevant training package.
“Certificate holders can enter into contracts and perform trust account functions on behalf of the agency. If these functions are performed without appropriate supervision, this may lead to an increased risk for consumers,” it said.
Fair Trading said that one way to better manage this risk would be to increase the minimum entry standards for certificate holders.
However, that might make it hard for agencies to find staff given that the industry suffers from an 80 per cent churn rate each year, according to the discussion paper.
Fair Trading said vendors who hire poorly skilled agents might fail to realise the highest possible price for their property.
“If a key role of an agent is to appraise the potential sale or leasing price of a property and to recommend a listing price, a certain level of skill is needed to perform this task,” it said.
“There are also technical skills needed to manage trust accounts, as agents typically handle large amounts of money as deposits for vendors/purchasers, rents collected on behalf of landlords and rental bonds.”
Victor Dominello, the Minister for Better Regulation, backed the Fair Trading review, describing training and education standards as a “major issue” for the real estate industry.
Speaking at a Real Estate Institute of NSW event, Mr Dominello said in response to a question from REB that the industry needs to raise its standards.
“When I was at the ministerial conference for consumer affairs ministers across the states and the feds, down in Victoria about three months ago, I had a commissioner from Western Australia say to me, ‘What is going on in NSW?’” he said.
“She said, ‘Most of the complaints that we get in relation to the real estate sector in WA are from real estate agents that come from NSW’.”
However, Mr Dominello said the state government would not act unilaterally on reform.
“That’s why when of the first things I did when I became minister responsible for Fair Trading was make sure that we got structures in place so that we’ve got a very strong working relationship with the REI,” he said.
“This has to be done in partnership and we will do reform in partnership. This is something I’m very much committed to.”