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Real Estate Institute Welcomes Legislative Review

Real Estate Institute Welcomes Legislative Review

The Real Estate Institute has welcomed the review of the Real Estate Agents Act 1976 and the opportunity for public consultation on how the industry should be regulated.

The Institute’s National President Graeme Woodley said the Minister, Hon Rick Barker, and his officials have produced a comprehensive discussion paper, Renovating the Real Estate Agents Act – Reasonable Offers Considered, which describes the public protection afforded by the current regulatory regime and asks whether there is a case for change.

“Some 90% of all residential properties in New Zealand are sold through our members. Our experience suggests the public are well served by the current legislation. While there is room for improvement and for the Act to be updated, I don’t believe fundamental changes are required as the present regime has proved effective and efficient.

“However, with legislation before Parliament to enable lawyers and conveyancers to act as agents in real estate, it is a good time to review the legislation regulating real estate,” Mr Woodley said.

“For most New Zealanders, buying and selling a house is the most significant financial transaction they will make. For this reason the Institute believes there needs to be strong proactive consumer protection for real estate in addition to generic consumer protection legislation.”

The current legislation requires people engaged in the selling, letting or leasing of property to be licensed and be members of the Institute. This enables the Institute to deal with complaints from the public about unprofessional or unethical conduct of real estate agents.

“The public currently have free access to the Institute’s complaints procedure, where we encourage them to take any issues they might have in the first instance. We take complaints very seriously and ensure that complainants are given every assistance to lodge complaints. Our hearing procedure and process is very transparent with the findings of all complaints publicly published. All of this is at no cost to the complainant.

“This demonstrates the effectiveness of the current licensing regime and the REINZ’s efforts to raise and enforce standards, and is a credit to the industry,” Mr Woodley says.

Far from being complacent, the Institute has recently launched a Code of Conduct for Auctioneers setting out best practice for real estate auctions, which has been well received. Codes of Practice for real estate advertising, sale by tender and property management are currently being developed by REINZ.

“Home ownership and property investment is New Zealand’s preferred form of saving and owning your own home is consistent with social cohesion and participation. We would be concerned should the cost of regulation increase, as those costs are ultimately passed on to consumers and would ultimately make the goal of home ownership less affordable and more difficult.

“Currently statutory compliance costs are minimal, are a cost to the industry with no contribution from the taxpayer. REINZ estimates that compliance costs amount to less than 0.014 cents per dollar of commission received by its members. This includes membership of REINZ, the provision of a Fidelity Fund, and the cost of operating the independent Real Estate Agents Licensing Board.”

Mr Woodley says many of the stories that abound about real estate agents amount to no more than urban legend: “To be successful in the business, agents and their salespeople need to be well-known and respected in the community. Remember, real estate people don’t get paid unless they perform and properties only change hands when there is a willing seller and willing buyer.

“Regulation works in the interests of consumers when it provides a fence at the top of the cliff, as opposed to an ambulance at the bottom. In the last two years, the Institute has received 150 complaints against its members who were involved in the sale of more than 100,000 residential properties and the letting of many thousands of rental properties throughout the country.”

Essentially, the REINZ position is that legislation governing real estate should contain specific consumer protection measures, which it says are the primary and over-arching reason for any occupational regulation.

The Institute would also like to see all people acting as agents in real estate sales belong to a professional body. Under the current Act, real estate agents (licensees) are required to be members of REINZ but real estate salespersons don’t have to belong.

“The public don’t make this distinction and shouldn’t have to, they refer to both using the generic term ‘real estate agent’,” Mr Woodley says.

Copies of the Discussion Paper are available on the REINZ website: www.reinz.org.nz or the Ministry of Justice website: www.justice.govt.nz . Submissions on the questions raised in the paper are required by the Ministry of Justice by 15 September.

“We want to encourage people to make their views known to the Ministry so that whatever changes are made work in the interests of the public and enable poor practice, whenever it occurs, to be dealt with quickly as a deterrent to others. That is what we have at the moment and why the system currently works so well,” Mr Woodley says.

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