A White Paper published in 2016 by Dr Jose Herrera, then Parliamentary Secretary for Competitiveness and Economic Growth – which called for the regulation of estate agents through a new authority and the licensing of all agents – is back on the agenda. Now under the remit of Chris Agius, Parliamentary Secretary for Planning and the Property Market, discussions are well underway, and 2018 should provide “a clearer picture” on its implementation.
“We have held discussions with the sector as recently as last month. Incidentally, Government is also looking into the prospect of setting up an authority whose mandate would be to better regulate the building industry within a socio-economic context which has changed drastically in recent years,” said Mr Agius.
“The role of the authority would include updating current building regulations, addressing conflicting legal scenarios, and providing solutions to legal lacunae. This would, among other things, entail revisiting the 1968 Building Safety Regulations as well as the more recent Avoidance of Damage to Third Party Property Regulations, so as to better define the responsibilities of those involved in the post-permit process. There is consensus that such efforts would only prove successful if all contributing stakeholders are trained and duly registered. Property negotiators are no exception.”
At the time it was published, the White Paper proposed introducing an Act to regulate estate agencies, agents, property consultants, and property managers to safeguard the interests of consumers and promote public confidence in the performance of estate agency work; a Code of Ethics covering conduct between agencies and clients; an organisation to coordinate the efforts of estate agencies and property consultants that promotes high-quality estate in Malta; and international training programmes.
In reaction to the White Paper, Mr Agius stated that, as a point of principle, there should be a clear distinction between brokers and agents. “Brokers are already regulated by the Civil Code, which essentially provides that, in the absence of an agreement, brokerage shall be regulated at the rate of two per cent in the case of sale of immovables,” he asserted. “On the other hand, there seems to be nothing in the law that regulates real estate agents. Providing advice to a client, especially when investment ramifications are concerned, certainly requires regulation on the part of service providers. We want such agents to be well versed so that they are aware of their responsibilities and obligations, while prospective clients have peace of mind. Providing such service should be made possible through accreditation – the new authority will make this happen.”
Mr Agius added that industry feedback on the White Paper was constructive overall. “Estate agents appear to be very positive about the idea of the sector being regulated. Government is equally in favour of having the property market sector operating in the most professional of manners to the benefit of prospective buyers.”
Douglas Salt, Director at Frank Salt Real Estate, was President of the Federation of Estate Agencies at the time that the document was being compiled, and played a significant role in negotiating the contents of the White Paper with Dr Herrera and his team. “Every effort was made and, as far as I know, full consensus was achieved between agents and Government on the contents of the White Paper,” said Mr Salt. “Naturally, the needs of the industry and the market have now changed, and a certain amount of tweaking is required to reflect today’s realities. We are particularly concerned with non-EU nationals opening agencies or referral agencies, which seem to be sprouting up all over the island, with no market knowledge or accountability to various laws, such as money laundering.”
Mr Salt stated that introducing mandatory qualifications for agents, as stipulated in the draft document, could help attract well-rounded individuals to the industry, aiding the company’s recruitment efforts. “As an agency, we have always trained our consultants to a very high standard and it is a hallmark of our agency. Recruitment in our industry is quite difficult, especially when it comes to finding individuals of a higher education level, as they do not see real estate as justification for their studies. Raising the stakes might be an incentive for them to enter a challenging and extremely interesting industry.”
Indeed, one of the greatest challenges the industry is currently facing is the lack of an educated workforce which is able to provide more accurate information on what is being sold, said Mr Salt, “together with a clear distinction between agent and someone who does it all and gets away with it, as well as a clear reduction of speculation by consultants – something our agency has long forbidden – as it only serves to inflate the market. A much more professional approach is required overall.”
The original interview in full appeared in the February edition of The Business Observer