Real estate revamp aims to lift standards

Kristy McDonald. Photo / Mark Mitchell

Rules governing about 70,000 house sales annually will change in three months when the new Real Estate Agents Authority opens.

Wellington QC Kristy McDonald was appointed by the Government to head the authority in May but her official role does not begin until November 17, when rules come into force which usher in the authority.

The authority replaces both the Real Estate Institute and Real Estate Agents Licensing Authority's self-governing and regulatory functions.

But McDonald says the country's agents - once about 18,000 but now about 12,000 - have nothing to fear.

"It's all about increasing standards and that's a good thing. I thinkthe industry will welcome that.It's all about raising profes-sionalism and consumer confidence."

The authority's headquarters will be in Wellington and next month it will start a website (www.reaa.govt.nz) which McDonald says will contain information about the new system.

"The objectives of the authority are that the process will be independent and transparent and the disciplinary process will be independent from the industry."

The regime is also designed to be self-funding: agents will pay annual $500 licence fees and levies will be raised to fund the complaints and disciplinary regimes.

An implementation team has been established through staff at the Ministry of Justice in Wellington and a large group has been working on the new regime for months.

McDonald says the biggest change will be ushering in the individual licensing regime so that all agents, branch managers and salespeople are regulated and accountable.

Under the 1976 act, agents are licensed and the branch managers and salespeople must have a certificate of approval issued by the Real Estate Agents Licensing Board. The certificates are applied for and held by the agent who employs the branch manager or salesperson.

That all changes to individual licences under the new act. All agents, branch managers and salespeople must apply for and renew their own licences from November.

A new rulebook will also be brought in.

"A code of professional conduct and client care will be introduced and the new authority is required to issue that. A draft is going out for consultation within the next month. It will set standards of conduct for all agents, salespeople and branch managers. It sets out duties of disclosure and has rules on the provision of information and other aspects," McDonald says.

New written guidelines must be provided to those buying and selling houses before contractual documents are signed.

"They must be given to consumers when an agency agreement is entered into and a separate document must be provided when a sale and purchase is entered into."

There will be a rigorous complaints and discipline regime. "The complaints process, which comes under the board's control, will mean agents will be investigated and possibly censured, licensees made to apologise and fines be made of up to $10,000 for licensees and $20,000 for companies.

"The new authority can also refer matters to the new Real Estate Agents Disciplinary Tribunal to conduct a hearing."

Justice Minister Simon Power has appointed six members to the authority.

They are former Consumer Institute chief David Russell; New Plymouth commercial and property lawyer John Auld; Auckland JP Barrie Barnes, who has had a long involvement in the real estate industry; ex-president of the Institute of Chartered Accountants Denise Bovaird; Joan Harnett-Kindley, of Wanaka, who has run real estate businesses; and Peter McDermott, of Wellington, who has a background in banking and finance and formerly held senior positions at BNZ and National Australia Bank.

HOUSING SECTOR

* About 6000 houses are sold a month.
* The median national price is $340,000.
* Sector handles deals worth $23 billion.
* Radical overhaul from November 17.