Commercial and rural property agents to keep their real estate licences in a move to protect small investors

Most real estate agents and auctioneers selling commercial and rural property will be required to continue to hold a real estate licence in a move designed to protect small investors.

The recommendation is included in the Decision Regulation Impact Statement, which the Council of Australian Governments (COAG) will consult in determining the final framework for national licensing of property occupations.

The earlier draft Regulation Impact Statement had recommended that non-residential or commercial property be excluded from national licencing on the basis that the work they does not fit “within the usual consumer protection framework that underpins licensing of property occupations”.

However, this position has been reversed following views expressed in public consultations and submissions that were “strongly supportive of the inclusion of non-residential property work in the scope of regulated work of real estate agents, agent’s representatives and auctioneers agent’s representatives and auctioneers”.

A strong driver of this reversal was a desire to protect small investors involved in transactions under $1 million.

The National Occupational and Licensing Authority notes a submission from the Real Estate Institute of Australia (REIA), providing “informative data on the monetary amounts for non-residential property sales, which was not available when the Consultation RIS was drafted.

“The data shows that the majority of sales are under $1 million, (and 97% are under $10 million).

“There was also a strong view that the buyers and sellers of non-residential property work were  generally small investors and not necessarily experienced or sophisticated consumers, and the new data appears to support this view,” says the Decision Regulation Impact Statement.

“Based on the evidence above and the risk to consumers, it is proposed that non-residential property work will be included in the scope of regulated work of a real estate agent and an agent’s representative with an exclusion from the requirement to be a licensed agent for certain non-residential property transactions.

“The thresholds for the transaction will be based on either a monetary value or an area of property.”

A figure of at least $10 million has been proposed as the base point for developing the prescribed monetary exemption, and an area of 10,000 square metres is proposed as the base point for the prescribed area.

“The impact of removing licensing for these large types of transactions would be minimal, given the small number of transactions above $10 million and has not been quantified in this RIS.”

These monetary and area size exemptions do not apply to rural sales, all of which will require that the agent is licensed.

An exemption is also proposed for non-residential property transactions between related entities.

The Decision Regulation Impact Statement provides the example of the employees of Westfield Shopping Centre Management, managing or leasing shopping centres within the Westfield Group, or employees of AMP Office and Industrial managing and leasing commercial offices on behalf of its related AMP.

Exclusions will be set out in amendments to the national law.

The Decision Regulation Impact Statement can be read in full here.