Cosgrove Clayton: Real Estate Agents Bill — Second Reading 
Cosgrove Clayton: Real Estate Agents Bill — Second Reading 
[Volume:649;Page:18357] 
Hon CLAYTON COSGROVE (Associate Minister of Justice) 
: 
 I have great pleasure in moving  
That the Real Estate Agents Bill be now read a second time 
. The Real Estate Agents Bill has its origins with ordinary Kiwi consumers. They have written to me and to others in droves expressing their frustration about how the current complaints and discipline regime is being operated by the Real Estate Institute of New Zealand. They are frustrated by the current regime’s lack of accountability openness and transparency and about its complete lack of independence from the industry. 
I have also heard from many honest decent and honourable real estate agent professionals who are tired of their reputation being tarnished by a few unscrupulous members—more than a few recently—of the industry. Under the current system the only disciplinary body with any independence from the industry and with any power to suspend or strike off registered agents and salespersons is the Real Estate Agents Licensing Board. However the board receives complaints only if they are referred to it by the Real Estate Institute itself and indeed this seldom happens. According to information provided to me by the institute only 10 of the 583 public complaints it received between 2004 and 2007 were referred on to the licensing board. This bill will correct that situation by providing rigorous robust protection for Kiwi consumers. 
The new authority will provide independent oversight of the industry. Where agents deliberately rip off consumers the bill will provide appropriate sanctions and penalties. Most important it will also provide an avenue for consumers to seek redress in the form of compensation. I have been criticised by some both in this House and in other places for exposing real estate agents who have ripped people off but I make absolutely no apology for doing that. I have always said in every press statement I have made—and they are on the record—that the vast majority of people in this industry are honourable fair-minded good professional honest people. This Government will not allow though the reputation of the vast majority of agents who are as I have said decent and professional to be tarnished by those who abuse the trust of consumers. 
The Justice and Electoral Committee received over 1300 written submissions and heard directly from over 700 people. Nearly all I have to say were from the real estate industry and I welcome the industry’s impressive level of engagement. The committee also heard from consumers affected by the actions of unscrupulous real estate agents and from Consumer New Zealand which fully supports the aims and objectives of this bill. The committee has reported back to the House with recommendations that address the concerns that have been raised and it has enhanced the bill by improving and clarifying certain provisions while not altering the key reforms therein. The Government supports those recommendations. I was pleased to note that the majority of submissions supported the new independent authority and supported the enhanced protections for ordinary consumers as they seek to buy or sell their most valuable asset their house. It was also pleasing to note the Real Estate Institute’s recent comments on the bill. In a press statement 
on 30 July 2008 the president Mr Cleland stated: “We support the independent complaints authority and the increase in penalties.” 
We on this side of the House are determined to provide robust protection in this area for decent hard-working Kiwi consumers. The question though is whether the National Party will continue to oppose consumer protection. The National Party of course did not do anything to improve the real estate industry whilst it was in Government and it should be noted that National did not even support this bill’s referral to a select committee so that New Zealand consumers and real estate industry members could have their say. The question is: why? Even now when the Real Estate Institute itself has had somewhat of a positive change of heart in respect of this bill I ask what the National Party will do now. Will it continue to support leaving consumers exposed as they put their biggest asset—their house—at risk or are we about to witness yet another flip-flop from National? I sincerely hope that sense is prevailing over there and that it will be the latter option but we will soon see. 
I turn now to the key recommendations made by the select committee. The committee has recommended amending the commencement date so that the Act will come fully into force 1 year after its enactment. I propose to amend this provision through a Supplementary Order Paper to 14 months after the Royal assent which will allow more time for the establishment of the Real Estate Agents Authority and for the industry to gear up for these reforms. It has always been the Government’s intention that the necessary industry knowledge and experience will be available—that is common sense—on the authority and the disciplinary tribunal and I welcome the committee’s recommendation that the bill be amended to specify industry representation on both that authority and tribunal. 
For the avoidance of doubt I intend to bring forward a further amendment through the Supplementary Order Paper to make it explicit that for first-term appointments to the authority and the disciplinary tribunal the Real Estate Institute will be consulted. I have reassessed the experience requirements for real estate industry licences and I intend to bring forward an amendment through the Supplementary Order Paper that will increase the requirements from 2 years’ industry experience in the previous 10 years to 3 years’ experience. 
The committee is concerned that introducing a new transparent complaints and disciplinary regime will lead to a surge in complaints. This may be the case. Consequently it has recommended allowing the Real Estate Agents Authority to establish as many complaints assessment committees as will be necessary in order to ensure that complaints are investigated and expedited in a timely manner. The committee has also recommended that both the authority and the complaints assessment committees should be able to investigate allegations on their own initiative. This will allow proactive investigations where there are allegations of unsatisfactory conduct or misconduct and I welcome that recommendation. 
Many industry submitters supported strengthening the bill’s compulsory continuing education requirements. The Government agrees with the committee’s recommendation that the completion of ongoing continuing education requirements be a condition of licence renewals. This will raise industry standards. 
One of the major wins for consumers in this bill is the right to seek adequate redress. The committee has recommended that the disciplinary tribunal be able to award up to $100000 in compensation. This reflects the significant financial harm that disreputable agents may inflict on consumers. 
Concerns have been raised that the requirement for a review of the employment status for salespersons has the potential to create too much uncertainty within the industry at a time when it will be required to deal with a whole new regulatory regime. Therefore I will put forward an amendment through the Supplementary Order Paper to remove this requirement. 
The committee has made improvements to provisions relating to the duties imposed on real estate agents. In particular it has recommended that the ability to cancel sole agency agreements after 90 days should apply only to the sale of residential property as commercial and rural properties typically take longer to sell. The committee has also recommended ensuring that the cooling-off period cannot be used to avoid paying an agent commission if the agent negotiates a sale during that time. 
Many within the real estate industry have been concerned about the effectiveness of the auction provisions in the bill. After further consideration on this issue and taking into account the steps already taken by the industry to address the risks posed to consumers when buying and selling real estate at auction I intend to bring forward amendments through the Supplementary Order Paper that will remove from the bill the provisions regulating the conduct of auctions. 
In conclusion I say that this bill has the protection of the consumer at its heart. Kiwi consumers as they seek to buy or sell their most valuable asset—their home—have demanded a regulatory regime overseeing the process that they can be confident is fair open transparent and accountable. They have demanded that. If things go wrong then there should be a system they can rely on to deal effectively with rogue agents and to compensate them for any losses. This Government has listened. It has listened to the very good recommendations of the committee and others. 
Hon Tony Ryall 
: You have not. 
Hon CLAYTON COSGROVE 
: The member should have a look at the press statements. The Real Estate Agents Bill will provide the protection and confidence that Kiwi consumers are demanding. It will also support good honest agents who do indeed—as I have always said—comprise the majority of this industry. The select committee process has added value to this bill. Its recommendations reflect the views of the majority of the committee and I welcome them. 
I thank the hundreds of submitters and the highly paid lobbyists very expensive as they are who made submissions to the committee and approached their task diligently. I also acknowledge and thank the Green Party and New Zealand First for their work and support in ensuring that this bill achieves the benchmark that has been set by our communities and consumers for openness transparency accountability and independence in the real estate industry. I have much pleasure in commending the bill to the House.