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Real Estate Agents Bill passes into law

4 September 2008

Real Estate Agents Bill passes into law

The government has delivered on its promise to protect New Zealanders who are buying or selling their property, with the passing of the much anticipated Real Estate Agents Bill by Parliament today. This Bill brings accountability, transparency, independence and openness to the real estate sector.

Associate Justice Minister Clayton Cosgrove said this important consumer protection legislation means that for the first time kiwi consumers will get a fair go if they feel they have been ripped off when buying or selling what is usually their biggest asset – their home. He said the new law will also support good honest real estate professionals.

The Bill overhauls the Real Estate Agents Act 1976 and ends self-regulation by the industry.
The current in-house complaints and discipline system will be replaced by an independent Real Estate Agents Authority that, unlike its predecessor, will deal with complaints quickly and effectively. It will not cost consumers anything to lodge a complaint, and they will not be required to hire lawyers because the Authority will represent their case if it is referred to the Disciplinary Tribunal.

“In real estate it is often said that the three most important things are location, location, location. Now with the passage of the Bill, the three most important things are the consumer, the consumer, the consumer,” Mr Cosgrove said. ”The new easily accessible independent complaints and discipline process will, for the first time, allow for effective consumer redress, including compensation of up to $100,000. Industry members can also now have confidence that if they are the subject of a complaint, the process will be fair and transparent.”

Mr Cosgrove said another important consumer protection measure relates to sole agency agreements which now include a cooling-off period so consumers are not pressured into signing up, and a cancellation period after 90 days will be put in place should either party want to opt out of the contract. Other new measures include improved consumer information, and compulsory education requirements for real estate agents and salespeople.

Mr Cosgrove paid tribute to the support parties for their backing of the Bill. “The Green Party and New Zealand First deserve special credit for their continued commitment to the protection of ordinary consumers as they seek to buy or sell their most expensive asset - their home,” he said. “The fact that the National Party continued to oppose this important legislation, despite its concerns being met and knowing that the property management regime will be reviewed, shows that it puts petty party politics ahead of kiwi consumers.”

Mr Cosgrove said the Justice and Electoral Committee’s work on the Bill improved and clarified certain provisions without altering its key reforms. “I want to thank the Committee for its careful consideration of the Bill and for the practical changes it recommended. I also want to thank the many hundreds of submitters for their valuable contributions.”
“The Bill stands up to the benchmark that I originally set for it, which is to protect the interests of consumers in respect of real estate transactions, and to promote public confidence in the provision of real estate agency services,” Mr Cosgrove said.

Mr Cosgrove said there is no justification for agents’ fees to rise given that the estimated annual licence fees for real estate agents, branch managers, and salespeople will be similar to the current costs of licensing plus REINZ membership, which will no longer be compulsory.

The key provisions of the Real Estate Agents Bill are to:

- Put an end to self regulation by removing regulatory functions from the Real Estate Institute of New Zealand (REINZ). There will no longer be a compulsory requirement for agents to be a member of REINZ.
- Create an independent Real Estate Agents Authority to oversee licensing, complaints, disciplinary and enforcement processes and provide information for consumers. The Authority will have wide investigative powers and will be able to order a wide range of penalties and remedies.

- Create an independent Disciplinary Tribunal to deal with serious cases, which will have the ability to order the cancellation of licences and award up to $100,000 in compensation. Complainants will not be required to hire lawyers because the Authority - through its Complaints Assessment Committee (CAC) - will represent their case if it is referred to the Disciplinary Tribunal.

- Establish a public register of real estate agents and salespeople that records any breaches of the industry standards against the names of those involved.
- Require licensees to undergo ongoing professional development training.
- Improve the conduct required in the running of a real estate agency business, including mandatory disclosure requirements (including possible conflicts of interest), and requirements to provide independently approved information to buyers and sellers in certain situations.

The Act will come into effect 14 months after Royal assent, to allow enough time for the establishment of the new Authority and for the industry to come up to speed with the reforms.

ENDS

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