KEY POINTS:
The Government has announced sweeping changes to the real estate industry including an end to self-regulation and protection for buyers and sellers.
Associate Justice Minister Clayton Cosgrove today said the industry had failed to deal with complaints about rogue agents in a transparent way and had been a "closed shop" for too long.
Real estate agents said they welcomed greater transparency but they had concerns about how the new system would be paid for.
Mr Cosgrove said: "New Zealanders' greatest asset is often their home, so it is paramount that people have access to an independent, transparent and effective disciplinary process should they feel they have been ripped off."
"Good honest agents also need an independent body that will review complaints efficiently, fairly and objectively. Currently that does not exist."
In May, Mr Cosgrove signalled the Government was keen to clean up the industry with a range of tough proposals.
Final decisions, announced today, include the removal of industry regulatory functions from the Real Estate Institute of New Zealand (REINZ) and the establishment of a new independent complaints body.
The new independent Real Estate Agents Authority will oversee licensing, complaints, disciplinary and enforcement processes and provide information for consumers.
The authority will have wide investigative powers and will also be able to order a wide range of penalties and remedies.
Agents will no longer be required to be members of REINZ and a disciplinary tribunal will be created to deal with serious cases, with the power to cancel licences and award compensation.
Other changes include:
* the establishment of a public register of real estate agents and salespeople that records any breaches of industry standards;
* requiring licensees to undergo ongoing professional development training;
* requiring real estate professionals to give consumers educational information provided by the authority about their rights plus a written statement to disclose any conflicts of interest.
Mr Cosgrove said the changes would ensure "land sharks were an endangered species".
"Honest real estate professionals will no longer be tarred by the same brush as the last land shark who rips someone off and brings the entire industry into disrepute."
Mr Cosgrove said the new structure would be funded by the industry, not taxpayers, and it will not cost consumers anything to lodge a complaint.
The changes will be implemented through new legislation expected to be passed next year.
Harcourts CEO Bryan Thomson is welcoming the changes and said a new transparent system will benefit the public and the industry.
He said the changes do not spell the end for the Real Estate Institute.
"When you're a member services organisation that is also charged with being a disciplinary function under the act, you're in a no-win situation because you can end up being seen as non-effective by your members and the public," Mr Thomson said.
The institute was governed by a 30 year-old act of Parliament that needed reviewing, he said.
"The industry has worked very hard to deal with rogue agents. Sometimes it hasn't been as quick or effective as it should have been but I think we've seen instances recently where people have been involved in fraudulent action and the companies have taken immediate action," Mr Thomson said.
He said it is unclear who will pay for the new system and not all the detail has been seen.
Barfoot and Thompson director Peter Thompson is also concerned that there have been no costings of the changes released.
He said without compulsory membership of the Real Estate Institute "land sharks" could have more opportunity to stay in the market place.
"But overall the transparency in the judicial side of things and the increase in the penalty will go a long way," Mr Thompson said.
He said the costs could be astronomical and at the end of the day it could be the consumer who covers it.
Last month the Herald on Sunday reported that some real estate valuers were involved in alleged fraudulent valuations.
One alleged fraud involved properties being bought and sold several times within the same group of people at inflated prices to convince banks to lend large sums of money. Millions of dollars are alleged to be involved.
The agents have been temporarily suspended and the Serious Fraud Office is investigating, Mr Thompson said.
- NZPA, EDWARD GAY
