There has been lots of discussion over the past 12-18 months regarding the need to overhaul the Property Services industry.
We all agree that there are areas that are crying out for an overhaul, in particular in the areas of training requirements.
We have read, digested and rummaged through the points made by the NSW Fair Trading and have summarised what we believe is ‘The Good, the Bad and the Ugly’ of what is in store.
Let’s start on a positive note…
- As of January 30th, 2017, it is mandatory for all private landlords and agents to be registered with Rental Bonds Online and must now invite tenants to lodge their rental bonds using the system. You can read more about the changes on our recent blog on the mandatory rental bonds changes.
- The implementation of Property Industry Training Reforms including improving entry standards and training requirements, enhanced continuing professional development (CPD), higher standards of accountability and strengthening NSW Fair Trading’s powers to take action on rogue agents. Parliament will pass this legislation in the coming months.Find out more about the proposed Training Reforms.
- Under these proposed training reforms, Certificate of Registration holders will not be able to authorise trust transactions.
- The reinstatement from the change to legislation in 2013 of the need to lodge all audits, regardless if the audit is good or bad. To ensure you pass each and every audit, we’ve covered the top tips on How to Ace Your Next Audit.Failure to lodge an audit will result in disciplinary action. Additionally you’ll be able to lodge all audits electronically with the implementation of a new online portal system.
- Licensed agents will be prohibited from authorising trust transactions (unless in certain circumstances). This proposes a difficult situation as most Licensees delegate this authority to another trusted staff member to manage, whilst they continue to manage the entire business. This reform needs further research and clarification, as the current guidelines are too loose for effective implementation.
Anyone involved in Property Management appreciates the frequency of demanding landlords when it comes to the disbursement of rental funds.
In fact, the above restriction of not allowing other trusted staff members allocate trust funds will place major strain on the entire process. What will qualify as ‘certain circumstances’?
- A review of the supervision guidelines needs to be conducted. Allocating further responsibility to the Licensee instead of effective delegation, means that precious time is taken up in administrative activities. This time would be spent better on developing relationships and obtaining new business.
- The proposal to remove the ‘Corporation License’ is worrying. Instead, there will be a ‘Licensee in Charge’ category. This will make the Licensee directly responsible on the agency agreement.Consequently, the removal of the Corporation License opens whole can of worms on licensee asset protection and changes the way businesses structure their rent rolls.
- Another change is the proposal that Licensees will need to provide clients with annual updates regarding fees and charges.Providing our clients with an annual update simply opens the floodgates for clients to ‘shop around’. Licensees will be competing against those agents who are offering 1% management fees with below par service.
In brief, the proposed changes are on the way. Connect with us for notification on their implementation and what you need to do to remain breach free.
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~ Jane Morgan is the Director of End of Month Angels, a consultancy firm specialising in Trust Accounting. Jane knows the legislative requirements of running a successful Real Estate office through her 19 years industry experience. Don’t trust just anyone with your trust accounting. Book an appointment with an End of Month Angel today.