Tommy's First Word - Issue 116, current to 9 November 2010

It is almost 12 months since the Real Estate Agents Act 2008 took full effect giving politicians, the administrators of the Act and the Real Estate Industry time to bed down the changes, learn to work with a new regime of governance and to assess its practicability.

The Act was the brainchild of the then Associate Minister of Justice Clayton Cosgrove and the Labour Government, and was introduced with a fanfare of grandstanding by Mr. Cosgrove and his Labour party cohorts.

Much publicity was given to the need to “clean up” the industry and isolated cases of indifferent industry work practices were given unlimited press by the media nationwide.

It seemed at that time that “good news” stories about the industry did not make good press and weren't considered for publication. The reality of the situation was that any cleaning-up was needed for only a very small number of industry participants and affected a minute number of the total number of industry transactions.

The 2008 Act provides for an administration that is unwieldy, expensive to run and seems to be no quicker in resolving troublesome issues than the previous system of internal control by the Real Estate Institute of NZ. The fact that it is independent of the industry and that decisions are seen as being more transparent is an improvement though. Under the new Act, real estate practitioners are required to make available to the public clear guidelines on how to make a complaint; a requirement that solicits and encourages complaints.

What other industry is required to do this?

The very nature of real estate is such that in many transactions there is someone left feeling disappointed and looking to blame someone else. It may be a buyer who has been out-bid for a property or one who thinks that they have had to pay too much for a property, or it could be a vendor who feels they have under-sold their property. In any of these circumstances the easiest course of action is to blame the agent involved.

The Real Estate Agents Authority born from the 2008 Act is currently seeking submissions from licensees regarding fee increases of 50% to take effect from January 2011. It seems costs of setting up and administering the Act have gone through the roof and members are expected to pay for the privilege of the new governance system. All this at a time when the industry is struggling through the economic downtown.

This is not a cry for sympathy (which as an industry we are unlikely to get) but simply an attempt to put the record right and state that in our view, the Act needs looking at closely. The complaints system is unwieldy and expensive to run. Consider the facts for a minute please. In the latest figures available from the REAA's website, there have been a total of 693 complaints/allegations, two thirds of which are still being processed, and we understand around 32 complaints have been withdrawn.

Of the allegations that have been investigated and finalised, the following decisions have been made:- Complaint Assessment Committee decisions not to inquire 45 Unsatisfactory conduct 11 No further action 107 Charges laid before Disciplinary Tribunal 3 Based on these figures, it does not seem to me that we are an industry running out of control or one that needs expensive and time consuming enquiries into every complaint laid.

Many complaints seem to be frivolous or ill founded and it is unfortunate that complainants are unable to be charged for lodging unsuccessful complaints or be required to meet some costs where their complaint is not upheld. If this were possible, many issues would be resolved at grass roots; many complaints would not proceed and many hours would be saved, as would a lot of unnecessary expenditure. I am not suggesting we don't need some form of controls but rather that there is a better way than by subjecting us to Mr Cosgrove's illconceived Act.

Perhaps John Key and his Minister of Justice may find time to look into the issues involved? After all, the National Party has always discouraged unnecessary government department empire building, and while I am not suggesting that the Real Estate Agents Authority is unnecessary, I am suggesting that there is room for improvement and a close look at the mandate that has been given to the REAA to govern our industry.

Best wishes,

TOMMY HEPTINSTALL

Managing Director