MND regulatory framework for property agents

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Published August 21, 2009

MND regulatory framework for property agents

Ministry to launch industry and public consultation exercises from next month

By UMA SHANKARI


(SINGAPORE) The Ministry of National Development (MND) said yesterday it will start consultations for a new regulatory framework for the real estate industry - a move that was widely welcomed.

Over the past few years, property agents here have come under fire for not having the right qualifications and for unethical practices.

In March this year, for example, Minister for National Development Mah Bow Tan said the status quo was 'not tenable' and the system was 'not satisfactory'.

To tackle the problem, MND will launch an industry consultation exercise and engage various stakeholders from next month. Parties that will be consulted include industry associations, agency directors and individual agents, the ministry said.

There are two objectives: To help consumers better safeguard their interests and to boost the professionalism of the real estate industry.

This will be followed by public consultation. The entire consultation process is expected to be completed by November and key elements of a new regulatory framework are expected to be ready by December.

'Over the past months, MND and other agencies have been studying ways to strengthen the regulatory framework, which include getting real estate agencies to take greater responsibility for the actions of their agents,' MND said in a statement.

'Other areas to be studied include qualifications and training requirements to increase professionalism, an improved dispute resolution mechanism and an enforcement framework against agencies with errant agents.'

MND's move comes even as real estate agent groups here push to improve the professionalism of property agents. The industry is now largely self-regulated, but players have said the voluntary system is no longer working.

'We have been looking forward to this consultation for a while,' said Singapore Accredited Estate Agencies (SAEA) chief executive Tan Tee Khoon. 'The real estate industry here has been fragmented and unregulated for a long time.'

He believes a basic regulatory framework from the government is essential so the industry can then use it to self-regulate. SAEA, for its part, has accredited about 7,000 of the estimated 30,000 property agents here.

But Dr Tan says more is needed. In particular, a dispute resolution system that can deal with complaints from the public and ensure that genuine complains against errant agents are addressed is essential, he said.

Property agencies also welcomed the consultation. PropNex, which employs more than 5,000 real estate agents here, said a central registry of agents - from which those with a black mark can be struck off - is a must.

'We all know that the current state of affairs is not adequate,' said PropNex chief executive Mohamed Ismail. 'Agents who have flouted the rules at one agency can just join another now. There is no way of stopping them from practising.'

In its statement, MND said that while the government works on a new regulatory framework, individual tenants and home buyers must also exercise greater care and responsibility.

'Working with other agencies, MND will look into various public education efforts to equip consumers with the knowledge to conduct their real estate transactions prudently and with due diligence,' the ministry said.

http://www.straitstimes.com/Prime%2B...ry_419386.html

August 21, 2009 Friday

Property agent review under way

Better regulation and new training and exam requirements expected

By Joyce Teo


TOUGHER powers to nail dodgy operators and new ways to solve disputes with home buyers are some of the recommendations expected from a review of how estate agents go about their business.

Industry experts also expect the government appraisal to outline new training and exam requirements for agents entering the business.

The impetus for the review - the report will be made by the end of the year - has come from the real estate sector itself, with leading players lobbying the Government to look at regulating the largely fragmented industry with very low entry barriers.

The move is timely. There has been a significant rise in sales and values in recent years - and a new boom seems on the starting blocks - while complaints against errant agents have soared.

The Consumers Association of Singapore received 1,100 real estate-related complaints last year, 1,113 in 2007, and 991 in 2006.

'All this while...there wasn't an effective instrument to address the complaints,' said Mr Mohamed Ismail, chief executive of PropNex and first vice-president of the Institute of Estate Agents (IEA).

'The greatest weakness of the industry is that there isn't a central body to regulate it. Because of this, agents flout the rules, knowing their rice bowls are not affected.'

Only companies or firms in the housing-agency business need be licensed by the Inland Revenue Authority of Singapore (Iras). There are 1,737 housing agencies and 25,000 to 30,000 unlicensed agents dealing in HDB or private homes.

In March, National Development Minister Mah Bow Tan said the status quo was 'not tenable' and that the whole system was 'not satisfactory'. He said then that the ministry would review the framework for the real estate industry to help customers better safeguard their interests and increase the sector's professionalism.

Property sector players say the main priority is to introduce a mandatory accreditation or licensing scheme for individual agents.

This would help check errant operators who switch from one firm to another after getting fired. They can even rejoin the industry right after getting out of jail.

The chief executive of Singapore Accredited Estate Agencies (SAEA), Dr Tan Tee Khoon, said agencies, once licensed, usually recruit several associates who work on an agreed shared commission.

'Therefore, the industry ends up with more than 30,000 agents, (most) without sound understanding of real estate practice,' he said. 'It will be an insurmountable task for the industry to self-regulate when it has never been regulated.'

Added ERA Asia Pacific's associate director Eugene Lim: 'Agents are not our employees. They do not take a salary from us so the amount of control that we can exert is limited.'

Industry leaders also maintain that agents need to have basic qualifications and take a standardised exam.

There should also be a basic training syllabus laid down, said Mr Ismail.

The big agencies conduct regular training but there are many small companies that may not have the resources to teach agents, noted Mr Lim.

A sound model to resolve disputes and provide mediation and adjudication services for aggrieved parties must also be put in place, said Dr Tan.

It is not compulsory for agents to join the two industry bodies - the IEA and the SAEA - so customers may have no one to turn to if their agents are not association members, said Mr Chris Koh, director of Dennis Wee Properties.

The two associations have been vying for more regulatory clout since Mr Mah's comments in March. Some players believe the Government should empower the associations - be it one or both - to run a central registration scheme for agents and help solve disputes. But others want a third party.

'The associations can bark but cannot bite. The people who run them are all volunteers from the industry. We need a central regulatory authority that is a neutral party to enforce rules,' said Mr Lim.

The National Development Ministry said yesterday that it will first consult the key players such as agency directors and individual agents apart from industry associations. A public consultation phase will follow, with the process wrapping up by November.

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