The new Property, Stock and Business Agents Amendment (Property Reports and Exemption) Regulation 2016 (NSW) will commence on 15 August 2016. The Regulation will introduce several changes, including current definitions of commercial property agency work, affiliate, entity and related entity.

Deregulation of Commercial Property Agents

The most significant change will exempt commercial property agents from needing to comply with requirements under the Property Stock and Business Agents Act 2002 (NSW) if they sell or manage property for:

  • an affiliate; or
  • a large commercial property owner.

An affiliate is any entity that 'controls' the agent eg by being able to make decisions about the agent's financial and operating policies, or is a related body corporate of an agent if it holds a corporation licence.

The second limb exempts commercial property agents carrying on agency work on behalf of any entity who, alone or with affiliated entities, owns property with an aggregate market value of $40 million or more, or an aggregate gross floor area of 20,000 square metres or more. Residential property and rural land are excluded from this calculation.

To fall under the exemption, an agent will need to be solely dedicated to leasing, selling or managing property for its affiliate or for large commercial property owners. In practice, an exemption means an entity that currently needs a real estate agents licence will no longer need to hold the licence, or comply with requirements to keep professional indemnity insurance or undertake the frequent professional development training required under the Act.

This will be welcome news for many property companies. As an example, a property management company who manages retail leasing activities for a shopping Centre landlord, will not need to hold a real estate agent's licence to manage any of the properties owned by that landlord or its affiliates, as long as the landlord owner is affiliated with the agent or the properties the landlord and its affiliates own meet the size and value thresholds (in aggregate).

Other Changes

In relation to residential properties, the Regulation will also require real estate agents to obtain and provide pre-purchase property reports to prospective buyers and continue to include the offer price in agency agreements.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.