Tony Brazier

www.braziers.co.nz

Tony Brazier

The Press - Wednesday 8 December 2010

REAA Report Card

A recent Press article concerned with the fact that the $1.6 billion property management industry has little regulation for its members to adhere to, outside of real estate agencies, highlighted one of the main objections that arose when the legislation changed which governs our country's real estate licensees. As expected this huge danger to the investing public's finances has not gone away although it would appear the government is starting to see the need for the warnings given at the time. After reading the article one was left wondering what other issues of concern at the time have come to fruition.

One year on and the new Real Estate Agents Act 2008 has had time to take affect within the industry so, prompted by the above article, I gauged it was prudent to get the views from local Principals as to how they feel the changes have made the industry more transparent and the public safer, as was the intention in the first place.

Pleasingly every Principal had no problem with the introduction of the extra paper work to ensure the public knows their rights and are fully aware of the real estate process in buying and selling. The only negative comment here was that it was deemed to be an insult to the intelligence and past business relationships of those that have been clients for years. The comment was also made by one Principal that good agents have always discussed these sorts of things with their clients, (e.g. not signing when under stress) but it's good to see that it is a requirement for all now.

There were a couple of minor gripes including the lack of good commercial statistics available on sales and lease information in order to be able to adhere to the requirement to provide an appraisal prior to listing, with accompanying statistics. Another Principal mentioned the lessening need as time went by for the public to be shown in full words on every advert that this particular company is Licensed under the Real Estate Agents Act 2008 when LREA (Licensed Real Estate Agent) would suffice henceforth, much like LMVD etc. One frustration shared was the inability of the REAA to give advice on how to act in particular situations. In endeavouring to do things correctly we, apparently, must firstly do it wrongly, have a complaint made against us in order to then have the REAA make a judgement for others to learn by.

This leads me to by far the lengthiest topic of the conversations and the cause of much angst in the industry and that is of the complaint process and its cost. In the motivation to change the act, make it more transparent and to ensure there was no chance of peers adjudicating over their own, a regime of highly qualified adjudicators has been set in place. The problem is not with the personnel, as their credentials are without compare. The problem is with the system which can only be altered now by judicial process through the Minister of Justice.

It is easy for the Principals now to say "I told you so," but the complaint pendulum appears to have swung too far. As with the previous REINZ regime, (which was free and voluntary), the REAA are also finding (if I'm reading their correspondence correctly) that nearly 60% (195 of the 334 completed complaints YTD) are deemed "No Further Action." Although 7.7% are adjudged as Unsatisfactory Conduct and only 0.9% have had charges laid before the Disciplinary Tribunal, much time could be better spent, it seems.

The system, no doubt, works brilliantly and the adjudicators are doing a fantastic job but recent levy increases to cater for this expensive process met with 40% of the industry's licensees taking the time to make submissions. It is clear to all of the Principals spoken to that a need for change to the legislation is needed already, after only one year, in order to keep the REAA sane and the industry solvent.

The Associate Minister for justice Hon Nathan Guy says that he is "... keen to see the REAA make further improvements in their efficiency and operation, particularly in how complaints are processed and dealt with". He also said "... It was clear from feedback that the original (levy) figure is too high". To their credit, after submissions came in, the REAA dropped their levy increase but it is still deemed to be paying for a process which is much too easy to complain in and has all of the costs put on the licensees regardless of the fact that 60% are deemed not worthy of further action. The cry comes, "Why are we paying for it?"

The suggestion of the Principals surveyed was to charge the public a fee upon making a complaint which is refundable upon any result apart from "No Further Action." This deterrent would not only save hundreds of hours of unnecessary adjudication but pay for the legitimate complaints to go through the process. Even the Tenancy Tribunal has a lodgement cost.

Presently the levy includes a fee for every licensee regardless of their clean record and expertise. Should we not let the user pay as the current increase in levies easily could cause the loss of many more levy paying licensees, further exacerbating the REAA's financial woes in the future.

Tony Brazier has worked in the property industry for 23 years and owns a real estate company selling and managing residential and investment properties.

This columns information is of a general nature only. Readers should seek professional advice before acting upon it.