Land Agents (Registration of Property Managers and Other Matters) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 10 August 2017.)

The Hon. D.G.E. HOOD (16:43): The Land Agents (Registration of Property Managers and Other Matters) Amendment Bill that we are dealing with in this chamber touches on issues in which I have a particular interest, namely, in the function and operation of real estate and tenancies in this state. There is no doubt in my mind that our industry in South Australia and, indeed, elsewhere in the country, no doubt, does not function perfectly. As a parliament, we need to address the ongoing tenancy and management issues as a matter of urgency.

On the face of it, the three key elements to the reforms appear to be appropriate measures to address some of the issues the industry is currently facing, as outlined in this bill. They are: increasing consumer protections; reducing the regulatory burdens on commercial property managers; and enabling the Commissioner for Consumer Affairs to address misconduct.

To carry on the business of selling, purchasing or otherwise dealing with land or business in general, a land agent must be registered. It, therefore, makes sense that this bill requires a residential property manager, who for all intents and purposes deals with these matters, should also be registered.

The Conservatives have consulted with the industry, and the industry itself is supportive of this view. The Conservatives also agree with the government's assertion that 180 calls per month in respect of poor service or other matters, whether it be questionable conduct or even misconduct in some cases by property managers, is too many, and we believe it is representative of broader issues within the industry. Of course, the fault does not always lie with the property manager or the industry itself, but these matters can indeed be difficult to determine. Nonetheless, this bill attempts to deal with these matters, and as I said a moment ago, 180 calls per month along these lines or dealing with these issues is certainly far too high.

Whilst there are, of course, many exceptional property managers who operate in our community on a daily basis, we know that there are those who could perhaps use some further mentoring or training to ensure a more uniformly successful statewide operation. The training requirements under this bill are yet to be determined, which gives rise to questions about cost, effectiveness and accessibility for those who fall within the ambit of this bill.

My party and I will reserve judgement at this stage as to whether this will genuinely improve the current situation in which we find ourselves or whether it becomes yet another hoop that businesses have to jump through that has no measurable benefit to the agent, the manager or the client whatsoever. In principle, we lend our support to these provisions and look forward to the release of further details of the training requirements once consultation with the industry takes place. This is a very important aspect of this bill and the details of it are yet to be fully explained.

As always, the Australian Conservatives welcome common-sense approaches to genuine issues. We believe this bill goes some way to affording better protections and support the rights of those who choose to rent their properties. Certainly, widening the provisions to allow prosecution of employees who intend to defraud or engage in misconduct, rather than simply prosecuting the employer, as the law currently stands, is an important and welcome change. There needs to be consequences for misconduct, and we certainly believe that in cases where prosecution is warranted an employee should be subject to a stronger deterrent than mere dismissal from their employ. Accordingly, we support enabling the commissioner to act on compliance and enforcement where appropriate. Again, I understand the industry itself supports this change, to their credit.

It will, of course, remain to be seen now how this new regulatory system affects the industry and if regulatory and therefore cost burdens are decreased, as the government supposes. Certainly, that is our hope. However, on balance, this reform still remains important to improve the benchmark for property managers and those dealing within this industry.

In respect to tenancies in general, we believe we have a system that is not optimal. Private rental properties in some instances, indeed increasingly, have become a new form of social housing, whereby landlords are required to provide housing at their cost during certain operational periods with little or no effective recourse when difficulties are encountered.

For matters that require resolution, we currently have the SACAT system, whereby an aggrieved party can lodge an application for the cost of $71.50 and present their matter. Frequently, when the agent was the initiating party, the tenant does not front the tribunal. In fact, just last week I had a constituent ring and inform me that of their five scheduled SACAT appearances for that week, four of the five tenants simply did not show up to the tribunal. I am told that these tenants fully understood that their claims were malicious and that SACAT would not award in their favour, so they simply did not show up. In fact, one person actually hung up the phone on the tribunal once they realised why they were calling. This is an absurd waste of the tribunal's time, not to mention taxpayers' money.

Since we are talking about deterrents and reducing burdens on agents and property managers in this bill, I consider it is high time we look at the way in which the system is being exploited and how those exploits are driving up the cost for the taxpayer and the private investors, many of whom are mum-and-dad investors who are trying to secure a better future for themselves and their children through investing in residential real estate and are facing unnecessary costs and difficulties in doing so.

I would like to foreshadow my intention to introduce a bill into this parliament in the coming weeks, which is currently out for consultation but is thus far receiving strong support. The bill in question provides that SACAT has the power to award costs, either by application or of its own initiative, in proceedings before the tribunal that are lower than the current jurisdictional limit of $40,000 currently in place for the tribunal. The Conservatives view this as way too high.

As I have said, the Conservatives are always looking for common-sense approaches to issues that our constituents face. Our system is not working properly, and changes must be made to ensure an equitable system. In relation to this bill, it appears to strike a reasonable balance between the regulation of the industry and the rights of the property owner. We look forward to the passage of this bill and to monitoring its impact within the industry.

I would take the opportunity to commend the industry on its positive engagement during this process. Indeed, when we have contacted them for their input on this bill, not only have they engaged with us well, but they have informed us they have been engaging with the government for some time on this and that they are broadly supportive of the measures within this bill. I think when we have a situation where government consults industry, it results in better legislation and often an industry that is more happy to comply and therefore higher rates of compliance.

The Hon. K.J. MAHER (Minister for Employment, Minister for Aboriginal Affairs and Reconciliation, Minister for Manufacturing and Innovation, Minister for Automotive Transformation, Minister for Science and Information Economy) (16:50): I thank the honourable member for his contribution and I thank all members for their contributions and their involvement with this bill. I note that the government has taken on notice a question from the member for Bragg in the other place, which I will now address and put on the record.

The member for Bragg sought clarification in relation to prosecutions under the Land Agents Act 1994 (the act), specifically when matters fall under the responsibility of Consumer and Business Services as opposed to South Australia Police, who makes these determinations and whether the existing legislative framework is being administered as intended. The act empowers Consumer and Business Services (CBS) to prosecute or take disciplinary action against a land agent with respect to allegations of the inappropriate deposit or withdrawal of trust account money.

Where an employee of a registered land agent misappropriates trust money at present, the act does not empower CBS to take action against the individual, only the registered land agent. The land agent may also rely on the general defence in the act, that the offence was not the result of any failure on their part to take reasonable care. In these circumstances, the evidence may not support prosecution or disciplinary action of the land agent.

Alternatively, it may not be appropriate to pursue action against the land agent due to the general defence and that the agent may have taken appropriate action in response to the alleged breach, such as by reporting the alleged breach by the employee, terminating their employment, personally replacing the misappropriated money, and strengthening safeguards against misconduct.

Existing trust account offences in the act are narrow and primarily relate to the deposit or withdrawal of trust moneys as opposed to serious misconduct of a dishonest nature and only attract a maximum penalty of $20,000. The benefits gained from a breach may be highly profitable, resulting in the maximum penalty not being sufficiently high enough and CBS being unable to take appropriate action. In cases where a registered land agent is alleged to have misappropriated trust money, CBS may refer its investigation to SAPOL to consider prosecution under the Criminal Law Consolidation Act 1935, which attracts penalties of up to 10 years' imprisonment.

In recent years, CBS has referred three investigations of this nature to SAPOL. I am advised that one agent has been successfully prosecuted and the other two investigations are being progressed with a view to prosecute. Under the act, CBS does not have jurisdiction to consider disciplinary action or prosecution of any person other than the registered land agent with respect to the misappropriation of trust money. Alleged breaches by individual employees—i.e. sales representatives or property managers—must be reported directly to SAPOL, often by the employer, that is, the registered land agent.

In these circumstances, SAPOL will investigate the conduct of the employee while CBS assesses the conduct of the registered land agent in light of the general defence in the act. The bill proposes to empower CBS, the primary regulator of the real estate industry, to take action against the appropriate individual (employee or employer alike), with sufficient maximum penalties for the misappropriation of trust money.

I would also like to take this opportunity to clarify how the bill relates to Airbnb-type operators. Airbnb is an online platform within the peer-to-peer sharing economy which puts property owners offering short-term accommodation in touch with consumers. The bill does not seek to amend the definition of a land agent under the act, which primarily relates to a person carrying on the business of selling, purchasing or leasing property on behalf of others, or selling or purchasing their own properties.

With respect to leasing, the key aspects of defining an agent relate to 'carrying on business' and 'on behalf of others'. I am advised that in broad terms owners offering their property on Airbnb are generally not carrying on business, nor are they managing someone else's property. Airbnb itself is an online platform designed to put owners in direct contact with consumers and is therefore not considered an agent for the purposes of the act.

However, I understand there are some circumstances where a third party carries on the business of managing property owners' Airbnb listings. In these cases I am advised that the third party may well be acting as an agent and is required to be registered. For the most part, Airbnb operators are not required to be registered under the act, and this bill does not change that. However, agents utilising the Airbnb or similar online platforms are still required to be registered.

I believe this should go some way to answering questions put forward by the Hon. John Darley, namely, that Housing SA is not a land agent. It does not carry on a business on behalf of others, and this bill does not change that. All appropriate businesses in the real estate sector are headed up by a land agent, and this bill seeks to ensure that their employees performing property management are registered, similar to sales representatives.

In relation to community housing providers, for the most part they do not fall under the definition of a land agent and therefore will not be affected by this bill. However, there are a very small number of providers who hold land agents' registration, some due to ongoing tenancies with the National Rental Affordability Scheme. In these cases, only two staff out of a large workforce might manage properties on behalf of others; the remaining staff are managing properties on behalf of the provider and would otherwise not be affected by this bill.

The government does not wish to unnecessarily burden community housing providers, especially where it is not consistent with the intent of the bill. The government is working closely with these providers and will seek to alleviate the burden on staff exclusively performing property management on behalf of the provider through the regulations.

In response to the Hon. John Darley's question as to whether the government is considering similar reforms for strata managers, he might recall the extensive 2013 strata and community reforms, which were the culmination of the government considering the broad regulation of this sector. These reforms placed extensive conduct requirements on strata managers, rather than imposing a licensing regime.

The reforms and measures contained in the bill, I am advised, have received broad support from the real estate and community housing sectors, including industry and tenant advocacy groups. The reforms aim to increase protection for tenants, landlords and the broader community engaging the real estate sector. I commend the bill to this chamber.

Bill read a second time.