by Col Myers
24th May, 2018
Changes are fast coming for NSW real estate licensing
The Property, Stock and Business Agents Amendment (Property Industry Reform) Bill 2017 has now been passed by both houses of the NSW parliament. The accompanying regulations are still being finalised and the new legislation is expected to come into effect in the latter part of this year (possibly October or November).
How the new legislation will work
The new licensing framework will have three levels of licences:
- -Licensee in Charge (Class 1);
- -Licensed Agent (Class 2); and
- -Certificate of Registration Holder (Class 3);
The highest level Licensee in Charge (Class 1) licence will be required for anyone working as a licensee in charge of a business. In order to apply for this licence, a person will need to have two years’ work experience and must have also completed a diploma from the National Property Services Training Package. The government takes the view that, given the level of responsibilities of licensees in charge, these training and experience requirements are considered appropriate and will enhance industry professionalism and help minimise consumer detriment;
The Class 2 licence is equivalent to the current full real estate agents licence. Class 2 licence holders will be known as ‘licensed agents’. Licence applicants are already required to complete a Certificate IV-level qualification and this requirement will remain. However, the reforms mean that Class 2 licence holders will also need to have 12 months’ industry experience to apply for a full licence;
Certificate of Registration holders (the Class 3 licence) will need to complete three additional competency units from the Certificate IV qualification, increasing the total to seven competency units needed to become a certificate holder.
Continuing professional development (CPD)
Class 1 and Class 2 licence holders will have to complete six hours of CPD annually. This will involve three hours of compulsory topics and three hours of elective topics. This is an increase from the current requirement for 12 CPD units that take four hours to complete.
Licensees in Charge will have to do the same six hours as Class 2 licence holders, but will also have to do another three hours of CPD focusing on business skills.
So how will the changes affect building managers in NSW?
The onsite residential property managers licence will cease to exist.
Holders of the current licences will be grandfathered onto the real estate agent’s licence with appropriate restrictions, so that their business operations will not be affected. This will avoid any interruption to routine business operations from the licensing reforms. The range of activities for grandfathered licence holders will be restricted, unless they complete the additional competency units required to qualify for a full real estate agents licence (as will be required in the revised qualifications order). In other words, existing holders of an onsite residential property managers licence will be issued with a Class 2 agent’s licence, but with a restriction that the agent can only carry out letting unless the licensee upgrades.
Managers that hold a current full real estate agents licence will presumably also need to hold a Class 1 Licensee in Charge licence. This will be a concern for those that do not have two years’ experience working in the industry.
All new entrants to the management rights industry will need to obtain the Class 2 agent’s licence and, on face value, a Licensee in Charge licence. This might prove to be impossible for many.
One benefit of the new Licensee in Charge licence is that it will provide more flexibility as a licensee in charge will be allowed to supervise more than one office of the same business. In other words, if the business has two or three different locations, there does not have to be a licensee in charge physically at each venue (which is currently the case).
I am aware that ARAMA has made a number of representations to the New South Wales government, setting out its concerns about the loss of the onsite residential property managers licence and any requirement for an onsite manager to also obtain a Licensee in Charge licence.
Clearly, the Licensee in Charge licence makes sense for a traditional real estate agency that has numerous employees and/or a number of offices. However, it makes no sense at all for it to also apply to an onsite manager that primarily lets lots in its complex and may negotiate the odd sale.
It remains a concern for the industry in NSW that new entrants will need to obtain a full real estate agents licence (and possibly a Licensee in Charge licence) in circumstances where they may not have the requisite one or two years’ experience working in the real estate industry.
ARAMA is continuing to push for relief for its members in the regulations, so that when drafted, they will exempt onsite managers from having to hold a full real estate licence and/or a Licensee in Charge licence where they only intend to carry out letting in the complex that they manage. Watch this space!