Wilkinson Kate: Real Estate Agents Bill — Second Reading In Committee Third Reading 
Wilkinson Kate: Real Estate Agents Bill — Second Reading In Committee Third Reading 
[Volume:649;Page:18364] 
KATE WILKINSON (National) 
: 
 I appreciate the opportunity to rise and speak in the second reading debate on the Real Estate Agents Bill. When the industry itself wants reform and modernisation—it has been asking for reform for some 10 years—when all the parties to a greater or lesser extent and in a reasonably non-partisan way support such an opportunity for positive change to the industry and when consumers want reform and modernisation of the industry how then can such a meal be made out of this legislation? 
The bill went to the Justice and Electoral Committee for scrutiny and I appreciated the opportunity to sit on that select committee during that scrutiny and certainly enjoyed that experience to a certain extent. The bill went to the select committee for scrutiny under the Minister’s banner of vilification of an industry of his having to “drag land sharks kicking and screaming into the spotlight” and to “drop the hammer on them”. I suppose we then have to wonder whether it is any wonder that such a meal has been made of this legislation. 
The select committee process was as expected. We had many submissions. Some submitters were given a couple of minutes; some were given 20 minutes or even more. I do not need to elaborate further on this for people to be able to guess which submitters were given a considerably longer time to submit and which ones understandably felt short-changed. However I echo the concerns raised by my colleague Chris Finlayson regarding the standard form submissions. They were not particularly helpful especially when it appeared that some submitters had merely ticked the boxes without even knowing the substance of their own submission. But after such vilification one can understand their concern to protect their livelihoods. 
It is pleasing that we have a Supplementary Order Paper produced by the Minister that is certainly an improvement in certain respects. There are some 70-plus amendments. Admittedly it is not of the scale of the emissions trading scheme bill which had over 700 amendments; and again it is not of the scale of the meal breaks bill which had a sneaky amendment not even related to the original bill. But we do now have an improved piece of potential legislation. 
I want to make it clear that National supports absolutely the purpose of this bill: “to promote and protect the interest of consumers … and to promote public confidence in the performance of real estate agency work” by “regulating agents” “raising industry standards” and “providing accountability through a disciplinary process that is independent transparent and effective.” We support absolutely the purpose of this bill. We welcome an update of the real estate regulatory framework and so does the industry. We welcome the need for strong consumer protection and strong consumer confidence and so does the industry. However what we do not welcome is an unworkable bureaucratic regime that will add costs to consumers without enhancing their confidence in an industry that like most industries does have some bad players but where the majority are not bad. 
This reform should have been welcomed by all. It should have brought the real estate industry with it into the 21st century. After all that is what everybody wants. But instead this is a missed opportunity. For no matter what reason can be attributed to how this bill has been handled it is a missed opportunity. Certainly some of our original misgivings have been addressed both in the report back from the select committee and also in the Supplementary Order Paper—such as concerning the removal of the 5-year review of the employment status of salespersons. But other misgivings have not been addressed. Property management is still excluded and when we look at the failures of Blue Chip and others it makes one wonder why it has still been excluded. 
Lynne Pillay 
: It’s outside the scope. 
KATE WILKINSON 
: I appreciate that a review has been promised but this is a bill about real estate and property management is an integral part of real estate. This is a bill that is actually tailored to residential real estate and even then it does not really take into account commercial real estate industrial properties and property management. We accept that property management may be outside the scope of the bill but then again KiwiSaver was outside the scope of the meal breaks bill. But we think it is somewhat ridiculous to have a real estate bill that excludes one of the very ingredients of the real estate industry namely that of property management. 
Real estate involves not only buying and selling property; an important part is property management. This Government appears to believe that property managers pose less risk than real estate salespeople. The institute has informed us that it believes that one in five complaints relates to property management groups and we heard throughout the submission process that the two latest claims—in fact the only two claims for quite some time—on the fidelity fund have related to property management not real estate agency sales work. 
Back in 2003 the Real Estate Institute advised the Minister that it was concerned about property managers operating outside the trust account control and audit regime of licensed real estate agents. Now they are still concerned and those property managers have carte blanche to carry on their business without any checks or balances without any trust account control and without any audit—whether a spot audit or a regular audit. 
Property management involves holding significant funds in an account. Hundreds of millions of dollars pass through bank accounts of property managers. What happens to missing rent moneys? Well the institute under this bill has no jurisdiction to deal with any complaints about missing rent moneys. There is no requirement to hold the moneys in a trust account. There is no fidelity fund in the event of misappropriation. As the institute itself stated: “If residential property managers are not covered by the new regime gaps in the current laws will leave consumers vulnerable. If anything goes wrong the only recourse for consumers may be via the courts. If residential letting agents and property managers are not covered they would not have to meet any educational and practice standards comply with any regulations concerning the holding of money in trust accounts and there would be no efficient recourse for consumers with complaints as the authority and the tribunal would not have the jurisdiction to hear or decide on any complaints concerning the letting or management of property. This is contrary to the purpose of the bill which is consumer protection.” 
The second issue we have some concern about is the bureaucracy imposed by this bill. We have noted before the concerning parallels of this latest bureaucratic proposed system with the Department of Building and Housing. Consumers can still be protected without having to bear the costs of senseless bureaucracy. We are not convinced that this balance has been achieved. The industry will not bear the costs; the costs will be handed down to the consumer and housing affordability will get even more difficult. Consumers will simply have to pay more. 
Actually if this bill were really about consumer protection it would include property management and it would not impose even more costs on the consumer. And if the Minister really were listening and he really were concerned about consumer protection then the bill would have required real estate salespersons to have more experience rather than less. The original bill required 2 years’ experience out of the previous 10 years and the industry itself wanted 3 years out of the previous 5 years. The Minister’s amendment has increased it to 3 years out of the previous 10 years yet even the industry itself preferred more experience because it too is concerned about consumer protection. I would have thought that if this Government really were interested in consumer protection then that would be a very simple improvement to make. 
Concern has also been expressed that the transitional period prescribed in order to implement this legislation is not sufficient. It was originally 12 months. The Minister has very generously increased it by a mere 2 months to 14 months. The institute itself has suggested 2 years. I think it is appropriate to make comparisons to the Lawyers and Conveyancers Act which prescribed 2 years. When we are changing the way an industry is to operate as is intended under this bill it is vital that sufficient transitional time is given for it to be able to actually implement those changes. 
So we have a bill that sadly is just another missed opportunity—a bill intended to protect the consumer and to give the consumer confidence. It has been hijacked by hyperbole and political posturing. Regretfully whilst we absolutely support the purpose of the bill we do not believe that it properly addresses the issue of consumer confidence. Therefore we cannot support it at its second reading.