Real estate sector told to appoint watchdog

Clayton Cosgrove

A Cabinet minister has called for a new consumer watchdog to police the real estate industry.

Buildings Issues Minister Clayton Cosgrove has demanded that the Real Estate Institute consider establishing a new position - similar to the Banking Ombudsman - to hear complaints and take the relevant action when agents break the law.

And he wants proposals before Christmas.

Describing a house purchase as the single biggest investment most people make, Mr Cosgrove said yesterday that he was also speaking to Consumers Institute chief executive David Russell to establish how complaints against agents could be handled in a more transparent, effective way.

The minister said the Real Estate Institute had to address many issues in its policing of the sector and simply requiring that fines be increased from $750 to $30,000 was not the solution.

"I know of one Christchurch real estate agent who earns $3 million a year, so fining agents is no solution when you're talking those sorts of earnings," he said.

He also wants the institute to consider referring all complaints to the Real Estate Agents Licensing Board, which can stop agents from practising.

Mr Cosgrove's proposed overhaul comes at the same time as the institute is seeking a Crown Law Office review of its handling of a case involving the sale of two Napier flats.

Chief executive Christine Le Cren said the case had gone to the law firm Meredith Connell, where the Crown Solicitor for Auckland is based, for scrutiny.

She called for a full investigation into whether the institute should have referred the matter to the agents licensing board and expects a result this week.

The case involved CD Realty, trading as Bayleys Napier, which pleaded guilty to three separate offences involving false valuation claims and wrong documentation and was fined the maximum $750 on each count.

The institute has so far refused to take the case to the board, saying no money was lost. That has angered Deb Leask, who complained to the institute about the actions of Graeme Sawyer, a former residential manager at Bayleys Napier, after he offered to buy her flats for $230,000 when she had sought $400,000.

Although she listed the flats with Mr Sawyer's Bayleys Napier colleague John Payne, they were subsequently sold through another agency for close to the asking price.

John Bayley, national head of Bayleys, one of the country's largest realtors, is pushing for the institute to take further action in the case.

He met institute president Murray Cleland and Ms Le Cren late last week to discuss the matter.

"The institute has to take a strong stance on these sorts of issues if they are going to be respected in the community," Mr Bayley said.

He emailed Ms Leask saying he had instructed counsel and written to the institute urging more action be taken in the matter, as well as offering his full co-operation. Ms Leask said she was pleased to get Mr Bayley's support and looked forward to further action and a full investigation.

Mr Bayley also criticised the way Bayleys Napier had handled the matter, saying it operated under a franchise agreement which stipulated that the franchisee must adhere to rules of good conduct and not take any actions that might reflect badly on Bayleys.

The institute found the men had broken the rules but lawyer Vernon Tamatea said no money was lost because Mr Sawyer's purchase offer never proceeded.

The complaint was handled by an investigation subcommittee.