Friday, May 7, 2010

Govt steps in to curb errant property agents

New statutory board to regulate industry after rise in complaints

NEW rules to nail errant property agents and protect Singapore's home buyers and sellers will be introduced by the Government.

It is planning a new statutory board - the Council for Estate Agencies - to regulate the industry and require all property agents to sit examinations, register and stick to a binding code of ethics and conduct.

Agents and agencies that flout the council's rules will be subjected to a range of disciplinary measures, including debarment.

A key impetus for the Government's get-tough initiative is the rising number of complaints made against property agents in recent years.

The Consumers Association of Singapore (Case) received 358 real estate cases, including complaints, in the first four months of this year, against 1,079 cases last year and 1,100 in 2008.

And there has been a range of gripes from consumers about agents failing to give proper advice, using misleading sales tactics and not honouring agreements.

Players in the largely fragmented and self-regulating industry had called for a mandatory licensing scheme for individual agents to help crack down on errant operators switching firms after being fired.

The existing voluntary accreditation programme had allowed some agents to rejoin the industry after serving prison sentences for fraud.

The changes - set to be introduced in the second half of the year - are destined to give regulation more focus, given that the Ministry of National Development has opted for a central body to license agencies and register agents.

Under the new regime, all estate agents will have to register through their agencies with the Council for Estate Agencies, which will also take over the Inland Revenue Authority of Singapore's role in licensing estate agencies.

To practise, property agents will need to pass a mandatory industry examination and undertake compulsory continuing professional development.

Those who have already passed an industry exam will not need to sit the new test.

New agents must have a minimum of four GCE O-level passes or the equivalent.

Licensed moneylenders, or employees of a licensed moneylender, are to be prohibited from becoming an estate agent or agency, and vice versa.

There have been reports of moneylenders trading as estate agents and exploiting cash-strapped HDB flat sellers. And National Development Minister Mah Bow Tan had announced in Parliament that new measures were being drafted to tackle the issue.

Additionally, the new regulations will set out standard prescribed estate agency agreements for sale and leasing deals.

Measures aimed at avoiding conflicts of interest are planned and will mean, for example, that agents will not be allowed to represent both the seller and buyer in the same transaction.

To keep errant players in check, the framework will have the backing of legislation and disciplinary mechanisms. This will give the Council for Estate Agencies the power to hit agencies and agents with warnings, fines, suspension and debarment.

ERA Asia-Pacific associate director Eugene Lim welcomed the introduction of the new controls.

'Errant agents can now hide behind the companies. With the change, they can be struck off the register and won't be able to practise any more,' he said.

In the area of consumer dispute resolution, agencies and agents will need to participate in mediation and adjudication.

This process will tap existing facilities, such as consumer watchdog Case and the Singapore Mediation Centre, instead of a special tribunal as earlier suggested.

The changes being implemented are going to mean that the Singapore Accredited Estate Agencies (SAEA) will no longer be accrediting agents.

SAEA chief executive Tan Tee Khoon said that the SAEA can help small firms with mediation services for dispute resolution and training, given that agencies will have to set up dispute resolution and training systems for their agents.

Mr Jeff Foo, president of the Institute of Estate Agents (IEA), said that the changes would mean the IEA becoming more relevant, given that as the platform and voice of the real estate sector, it can provide feedback to the new statutory board.

Key elements of new framework

Property agents need to be registered with a new statutory board called the Council for Estate Agencies. The board will also be licensing estate agencies.

Agents must pass a mandatory industry examination, undertake mandatory continuing professional development of six hours a year, and have a minimum of four GCE O-level passes or the equivalent.

Agents will not be allowed to represent both the seller and buyer in the same transaction.

Estate agencies and agents must not be a licensed moneylender or an employee of a licensed moneylender.

New legislative powers and mechanisms will be introduced to discipline agencies and agents. Such actions include warnings, fines, suspension and debarment of agencies and agents.

A public registry of estate agencies and agents will allow consumers to check on the particular agency or agent they are engaging.

Source: Straits Times, 7 May 2010

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