Improvements to the laws regulating property agents started on 15 August 2016.
The reforms will help home buyers access pre-purchase property inspection reports more cheaply and easily. This includes pre-purchase building and pest inspection reports, and strata and community scheme reports.
Agents now need to record details of certain reports. When the prospective buyer requests a contract of sale for the residential property, an agent will need to inform the buyer about the reports they have recorded. Buyers may then opt to access an already available report, and negotiate a reduced cost, instead of commissioning their own report.
Other measures affecting property agents’ responsibilities from 15 August include:
- exempting real estate agents doing commercial property agency work from NSW property, stock and business agents’ laws, in set circumstances. This change was recommended by the Independent Pricing and Regulatory Tribunal (IPART).
- reinstating a previous requirement for agency agreements that are for the sale of residential property by private treaty only.
These changes are the result of the Property, Stock and Business Agents Amendment Regulation 2016.
Pre-purchase property reports
Agents are only be required to make a record of certain details about the following reports, if they are aware of them or can reasonably find out about them:
- a building inspection of the property
- a pest inspection of the property
- an inspection of documents for the property (under section 108 of the Strata Schemes Management Act 1996)
- a financial matters certificate (under section 109 of the Strata Schemes Management Act 1996)
- an inspection of documents for the property (under section 26 of the Community Land Management Act 1989).
Details to be recorded include the contact information for the author of the report and whether the report is available for repurchase. Property owners do not have to tell the agent selling their home whether any pre-purchase reports have already been prepared or completed for the property up for sale. The owner does not have to get any reports.
The maximum penalties that apply to agents who do not comply with the record making and disclosure requirements for these reports is $4,400 for a corporation, or $2,200 in any other case.
Agents should go to our pre-purchase property inspection reports page to understand their responsibilities.
Exemptions for certain commercial property agency work
An exemption applies to a real estate agent doing commercial property agency work on behalf of:
- an affiliate of the agent, or
- an entity (or joint entity) that owns any property that has:
- an aggregate market value of $40 million or more, or
- an aggregate gross floor area of 20,000 square metres or more.
Where these circumstances apply, the agent will be exempt from the operation of all the Property, Stock and Business Agents Act 2002 (the Act).
The exemption removes red tape and the costs of complying with the Act when doing certain commercial property agency work.
Agents should refer to the commercial property agency work exemption page for more information.
Reinstating the price offer requirement - agency agreements for sale of residential property
Following consultation with industry stakeholders, the ‘price offer’ requirement is reinstated. It applies to agency agreements for the sale of a residential property:
- If the agreement provides for the property to be offered for sale by private treaty, the agreement must specify the price at which the property is to be offered.
Agents who are using an agency agreement for the sale of residential property, should check that the offer price term is in the agreement. If not, they should insert the term in the agreement and have the agent and seller each initial and date the insertion. This requirement is included in clause 5 in Schedule 8 of the 2014 Regulation.
How were the new laws developed?
Comments from the public were invited on the proposed draft Regulation. The comments helped finalise and amend the Regulation.
Need more information?
Go to the NSW Legislation website to read the full legislation.
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