New rules on education level likely to shrink pool, but lifeline exists
THOUSANDS more property agents are set to bail out of the industry over the next 17 months due to tough new rules being introduced by the Government.
The regulations will impose a basic educational standard - a minimum four GCE O-level passes - on estate agents.
There are now no such requirements and no mandatory examination, so anyone can easily become a property agent.
While the new rules allow agents who do not meet the educational requirements to sit an industry exam to earn qualification, the immediate effect will be an exodus from the industry, say experts.
ERA Asia-Pacific associate director Eugene Lim estimates that the number of agents who do not have four O-level passes may comprise up to 30 per cent of the 30,000-strong pool of agents.
Experts forecast a drop of up to 25 per cent to 30 per cent in the number of agents by the end of next year.
About 15 per cent to 20 per cent will drop out by the end of this year, and possibly another 10 per cent by the end of 2011, although new ones may join, said Mr Lim.
But there is a lifeline for existing agents once the rules kick in later this year.
The Ministry of National Development (MND) recently told real estate agencies that agents who have done at least three property deals over the past two years will not need to have the minimum O-level passes.
But they will need to pass the new mandatory exam for agents within a year from January 2011.
This means that older, experienced full-time agents who do not have the four O-levels or the equivalent will have more time to pass the industry exam.
New agents who may have joined the industry earlier this year will also benefit as they will be able to complete three deals fairly quickly, said Dennis Wee Group director Chris Koh.
Under the new rules, agents need to have a minimum educational requirement and take an industry exam.
They will also have to register through their firms at a new statutory board called the Council for Estate Agencies.
But the expected clear-out should not affect the industry too much, given the big number of agents, including inactive ones.
'Nobody knows exactly how many agents are out there. Many agencies have not done any housekeeping at all. I won't be surprised if some names are repeated at different agencies,' said Mr Koh.
He recently let go of 1,500 inactive agents, leaving 3,500. That was after he tried to recall all agents to update their particulars to meet MND requests.
Mr Koh said the 1,500 agents had not done any deals in a year and had failed to update their particulars. Some quit as they are in the civil service and do not want their names in the public registry, as is required under the new rules.
'Every month, I bring in new agents and let go of some inactive agents. But previously, there was no urgency to terminate so many,' Mr Koh said.
At HSR Property Group, executive director (agency) Jeffrey Hong said the firm will do a 'screening exercise' in the next two weeks. It now has 7,000 agents and has not had a regular practice of terminating inactive ones.
There has been little change at the other two big agencies - ERA and PropNex - as they have been doing their housekeeping.
ERA's Mr Lim said: 'We do not need to chop just because of the new rules. On average, we let go of about 100 inactive agents every month. Our sales force is about 3,000-strong and it is active.'
PropNex chief executive Mohamed Ismail added: 'I let go of 2,800 agents two years ago and another 1,200 this January.
'All my agents are covered by professional indemnity insurance and are active. My next audit will be in October.'
Source: Straits Times, 29 Jul 2010