FOR the longest time, the real estate industry was unregulated, so much so that any Tom, Dick or Harry could jump in to become an agent, particularly when the property market was hot. The downside: Some consumers were fleeced and defrauded by unscrupulous agents out to make a quick (and unethical) buck. The most common complaints were that agents provided unsatisfactory service, were unprofessional in their conduct, or misrepresented information. In one case, a husband-and- wife team stood at both ends of the buyer-seller relationship - a clear conflict of interest.
Come Jan 1, the industry will be experiencing a new dawn. Under the aegis of the Council for Estate Agencies (CEA), a level of regulatory oversight will be brought to bear on the industry. Under the CEA's rules, agents cannot represent both buyer and seller, or refer clients to moneylenders. Agencies will also be required to have a system for handling complaints and follow advertising guidelines.
The CEA's establishment will benefit the market in three ways. One, it will upgrade the image of the industry, which has been dogged by an increasing number of complaints in recent years. Two, it would weed out moonlighters eyeing a quick buck by requiring minimum educational qualifications and mandatory examinations. Three, and most importantly, the CEA's most potent weapon is enforcement - the ability to fine agents, or even suspend or terminate their licences. This should be more than enough to deter potential fraudsters and profiteers from doing the undesirable.
Whether the new regime will raise professional standards, however, remains to be seen. Higher standards go beyond requiring minimum educational qualifications or passing industry-specific tests, important as these are. Property buyers and sellers can help the CEA by exercising due vigilance in their transactions. As we have argued before, the new regime essentially lowers the barriers to consumers seeking redress, giving them the necessary tools to learn about and protect their rights. In the end, this will provide the strongest safeguard against unethical behaviour by housing agents.
On the CEA's part, it will have to regulate not only with a light touch, but also with the right touch. Already, some agencies have expressed concern that the CEA might be tempted to over-regulate by making eligibility criteria too stringent. There is no reason to believe that the CEA will not arrive at an optimum level of regulation. For now, one thing is certain: For a Wild West cowboy industry, the long arm of the law has arrived to rule the day. It is about time.