The Property stock & Business agents Act 2002 is set to undergo some substantial changes which will affect the way in which agents in NSW will carry on their businesses. The changes will
strengthen supervision requirements for Licensees in charge and require agents to undergo increased education to both enter and remain within the industry.
The new bill, known as the Property Stock and Business agents amendment.(Property Industry reform) Bill 2017 was passed by Parliament and was assented on 21 March 2018. The new Act will be known
as the Property & Stock Act 2002.
License categories will be reduced from 6 to 3 with the abolishment of Business, Buyers and Onsite Residential property Licenses. The 3 remaining licenses will be Real Estate Agent, Stock and
Station Agent and Strata Management Licenses.
The 3 license categories that have been abolished will be absorbed into the Real Estate Agents license with transitional arrangements in place. Alternatively, these agents can consider upgrading
to the full real estate agents license.
For each category of License, i.e Real Estate agent, Strata Managing agent and Stock and Station agent there will be 3 levels of authority. Licensee in charge (Class 1), Agent (Class
2) and Assistant agent (which replaces the current “Certificate of Registration” )
Whilst there was talk that the “Corporation license” would be abolished it will remain in force meaning that each License category will require a Licensee in charge (Class 1 agent) if the business
is conducted using a PTY LTD company. Operating your business as a sole trader will also require you to hold a Class 1 agents license.
Current Licensees in charge will be given the opportunity to “upgrade” to a Class 1 agents license by a formal application at the time the new changes take effect. Class 2 agents who wish to
upgrade to a Class 1 agents license will need to undertake a Diploma level course to acquire the extra knowledge to operate and oversee their real estate operation. Agencies will be able to employ
multiple Class 1 and Class 2 agents which will give them the ability to promote a Class 1 license holder to the position of “Licensee in charge” if and when the occasion should arise.
Current Licensed real estate agents will automatically transition to a Class 2 agents license at the time the new changes take effect. However a 1 year time restraint will be applied to those
assistant agents who wish to upgrade to a Class 2 agents license commencing from the time that they are issued their assistant agents certificate. A Certificate IV in Property services will be the
minimum study requirements and work evidence will also be required to demonstrate practical experience over the 12 month waiting period.
Assistant agents will not be able to carry out the full range of functions that the current Certificate of Registration holders undertake. Tasks that have been flagged include signing agency
agreements, executing residential leases and exchanging contracts. This list is not exhaustive and as the name suggests “Assistant” agents will act to initially support the fully licensed agents
within the office, similar to that of a traineeship or apprentice. It is unclear at this point how the supervision requirements will be met but it would appear that any documents signed by the
Assistant agent would need to be countersigned by either a Class 1 or Class 2 agent to ensure compliance.
Assistant agents will initially be granted registration for a 4 year period and within this time will be required to undertake studies and gain experience so that at the 4 year mark they can
transition to a Class 2 agent’s license. A failure to complete the studies within this 4 year period will see a suspension period of 12 months meaning that the Assistant agent will not be
authorised to work under the new Act. This continued study and on the job training will alleviate the Assistant agent’s requirement to undertake Continuing Professional Development (CPD) during the 4
year term however CPD requirements will remain in force for Class 1 and Class 2 agents but with changes from the current arrangements.
Agents that currently operate a single Trust account will be required to separate monies into a Sales trust account and a Property Management trust account. The Act will return to the “old days”
in regards to annual audits of the agencies Trust account requiring a Statutory audit return to Fair Trading irrespective of whether the audit is qualified or unqualified. Online lodgement
arrangements are being developed to assist Fair trading eliminate the extensive paperwork which will be generated by the auditors.
The Act abolishes the requirement to have a Licensee in charge at each physical office location. A Class 1 agent can now supervise multiple offices provided the enhanced governance requirements
under the Act are satisfied.
The Real Estate industry award 2015 has also been amended in line with the new Property and Stock Act 2002 which has introduced new categories of employment for industry professionals. Laws in
relation to employing commission only sales people and commission payments to sales staff that are no longer employed within the agency came into force in April this year and agents are urged to
check the current award to ensure they are currently paying the correct rates of pay given the new employment categories introduced.
These extensive changes were set to take effect in October/November 2018 but Fair Trading have now amended the time frame for introduction to the 2nd quarter of 2019.
However, CPD changes are due to start 31st October unless this is also amended. We urge agency principals and management staff to investigate and familiarise themselves with the new laws
and commence putting a transition strategy in place in order to minimise business disruption.
You can check out all the changes and the frequently asked questions at Fair Trading. The link is provided here. Industry Reforms due 2019
To download a copy of the new changes in a table format then click here.