October 14, 2009 Wednesday

At last, real protection in property deals

THE real estate trade can expect to come under close statutory scrutiny in under a year. Not before time, in our view. According to a projected timeline for public comment and legislative drafting, the latter half of next year is when laws to professionalise the industry and to reinforce consumer protections in residential property deals would have gained parliamentary passage. The regulatory step should have been taken years ago. There has been growing disquiet about the ethical instincts of property agents, and estate agencies have been slow to upgrade service standards even as they prospered in boom cycles. The industry has shown amply it could not be left to regulate itself, which was the Government's light-touch preference.

For a small market, the over-populated agency sector is, for starters, an embarrassment of riches. There are 1,700 licensed real estate agencies, 25,000-30,000 individual agents. Pruning the numbers alone is no guarantee against malpractice and incompetent handling of client needs, but the common test and trade accreditation for agents proposed by the Ministry of National Development can eliminate unsuitable ones. The industry can build on that by fostering a more professional image so as to attract better educated entrants. But mind this: The act of developing an industry accreditation outfit acceptable to all firms could itself be a challenge, as there are competing trade associations with separate memberships. This will be a test of the industry's intent to improve itself as the accreditation body shall decide on the content of qualifying tests and continuing education, license agents and maintain an online public register open to consumer inspection. Mind this too: The entrance exam must be rigorous, or the edifice of accountability will come tumbling down.

The ministry also proposes that a tribunal adjudicate disputes, to cut through the present mish-mash of processes that often lead aggrieved parties on an exhausting chase to obtain satisfaction, if that. Go for it. The Consumers Association is currently the first port of call for complainants. Despite its strenuous efforts, it is undermined by lack of enforcement clout.

That function of enforcement and punishment for violations will be exercised by a statutory regulatory agency. This is the most drastic of the proposals. In the circumstances, and considering the failure of self-regulation, it is an acceptable way to ensure compliance. Estate agencies and the more successful of agents may protest that this is a case of overkill. Maybe. But absent the regulatory empowerment, the recommendations will sound like good intentions that will just die on the table.