Real Estate Agents Bill Second Reading

Tena koe Mr Speaker, Tena tatou katoa.

It couldn’t be a better time to be introducing a new regulatory framework for the real estate industry to help them to shape up to the expectations of the consumer client base that they service.

Statistics from the Real Estate Institute of New Zealand revealed a dramatic reduction in residential sale volumes over the year end. Sales registered in July 2008 were down by a massive 33 per cent (on sales in July 2007).

It would be simplistic to suggest that this Bill will single-handedly reverse a perilous economic downturn – but then again, one never knows what may turn the tide in encouraging home-owners to take a gamble on the current market.

What we do know, is that concern with issues such as misleading representation; poor contractual advice and mishandled funds, have been making more and more New Zealanders risk averse to the real-life Monopoly board.

Such was the level of concern in fact, that some 1328 submissions were received from the public.

This in itself should warrant this Bill being accorded particular attention to facilitate the smooth passage of law in the most efficient time possible.

However when we think about the Foreshore and Seabed Bill, the sheer volume of submissions – 3946 written submissions were received – and 234 oral presentations made –it wasn’t given serious and responsible attention.

Let us hope that the net is cast differently for this Real Estate Agents Act.

Returning to this Bill then, the impact of any legislative changes to promote public confidence in the performance of real estate agency work, must not be under-estimated.

Analysis of the number of New Zealand computers visiting real estate websites found an average of 325,000 sessions per week.

As of July 2008, there were 60,150 residential properties for sale on the market, being put up for offer by approximately 1500 real estate agents and over 20,000 salespeople so it is a huge industry.

It requires that we take seriously the importance of consumer protection in real estate transactions.

It is about protecting and promoting the interests of consumers in real estate transactions. A worthy ideal and one that we hope will be taken up as a priority by all parties in this House and it is beginning to look that way.

There has been much said about the need to regulate agents, managers and salespeople to ensure that consumers are able to receive a quality service from an agency which adheres to industry standards.

There is no denial that an upgrade has been sorely needed.

The 1976 Act, for instance, included as a maximum penalty, that the Institute could impose a fine no greater than $750.

But more significantly, there had already been moves afoot within the industry to upskill and improve.

The Real Estate Institute had themselves realised the urgent need for consumer protection and had contracted none other than consumer affairs advocate, David Russell, to carry out their own review against their own internal Code of Ethics and rules of practice.

This Bill, then, emphasizes moves already in place, to enhance industry standards; and provide accountability through a disciplinary process.

The changes that will be made to an operational code of conduct will ensure that any progress is independent, transparent and effective.

All values that we, as the independent voice of Maori in this Parliament, are adamant must be upheld in all spheres of Government, including this House.

Consumer NZ outlined this case clearly to the Justice and Electoral Select Committee. They told the Committee that a significant number of the complaints fielded by their advisory service came from people who have had problems with Real Estate agents.

For too long people have had to accept quite a poor service from real estate agents and operators even though I would say also that there are some very good real estate people. The legislation will level the playing field and allow consumers to take action if they have been poorly treated.

It was pleasing to see the Real Estate Institute of New Zealand giving support to the reforms, and their agreement that professionalism will be enhanced and consumers protected, through lifting industry standards.

They particularly supported the creation of an independent and transparent complaints and disciplinary process.

A key initiative put forward by this Bill is the recommendation to amend the functions of the Real Estate Agents Authority, particularly ensuring that there is consultation with the sector.

So we are pleased to see the call from so many of the submissions from real estate agents have been taken up and that the membership of the Authority and of the Real Estate Agents Disciplinary Tribunal will be broadened to ensure industry expertise is represented.

We also support the move to ensure that agents who employ independent contractors are liable for their actions as if they were an employee – giving better protection to consumers.

There are a couple of areas, however, which we believe require further work as the Bill proceeds through the House.

The first of these was presented by the Whitireia Community Law Centre. Their view was that consumers faced with detailed agency contracts and complex statutory rights need far more than ‘educational information’, as provided for in the Bill, to assist them in understanding their rights to make a complaint.

Consumer advocacy should be recognised as an important way of maintaining industry standards and setting in place processes to achieve client care.

As a corollary to this, Whitireia Community Law also recommended that the functions of the Authority should be expanded to include funding negotiation, and conciliation or mediation of consumer complaints.

The second is the contentious issue of property management.

This is an area of special relevance to Maori. The Maori Party is of course aware that the relatively low Maori home ownership rates would suggest a relatively high Maori renting rate.

56% of the Maori population are not in owner-occupied dwellings, as opposed to 31% of non-Maori.

In real numbers, two thirds of our population do not own their residence.

The importance of having an effective oversight of the entire industry is crucial – in effect, whether one is renting, or owning is irrelevant - the key thing is that the process is transparent, and of course that all steps have been taken to ensure the people are not exploited by unscrupulous traders or misleading representation.

To this effect, we will be looking with interest at any SOPs that may come into the House at the Committee stage, which address the issues of property management.

We are happy to support this Bill at this stage, in that we support any developments which can lift standards and achieve better protection for New Zealanders in dealing with real estate agents.

And we join with the Green Party in commending the officials for the way in which this Bill has been dealt with at select committee.