John Manciameli, founder and CEO Slipstream Australia examines the Property, Stock and Business Agent Bill
Many brokers in the industry may not be aware that earlier this year the government made sweeping training reforms to the Property, Stock and Business Agent Bill. The amendment requires all advisers in the property space to have a certificate of registration licence and is accompanied by a 600% increase in training requirements for all real estate agents, mortgage brokers, financial planners, accountants and anyone else earning a commission from a property referral.
The updated legislation is designed to stamp out advisers who are taking advantage and earning a commission by referring potential property investors to unscrupulous operators who have vested interests.
Prior to the update, literally anyone (even a barista) could refer people to agents selling property, without having any credentials and while earning a commission – and the government was powerless to act. Furthermore, the training was woefully inadequate. It used to take longer to get a bartender qualification than it did to get a real estate licence. This will all change now that the updated legislation is in effect.
When I heard about the changes, as a seasoned broker and investment property specialist I welcomed the reforms and increased scrutiny with open arms because I think they will almost certainly act as a safeguard against unscrupulous practice in the real estate industry and, ultimately, improve transparency and long-term relationships with our clients. This, combined with the royal commission, means that never before has there been greater critical observation of property advisers across the board. While of course this is tough, it’s also necessary.
When the grace period allowing advisers to adjust to the changes ends – which is likely to be early in 2019 – the government will be set on prioritising enforcement of the changes and cracking down on those without a licence. So, what should we all be doing to ensure we’re compliant before the grace period ends?
Make sure you’re licensed, otherwise the government will come after you and you could be fined or lose your broker licence
The main priority for anyone referring clients to agents selling property right now is to make sure you’re licensed, otherwise the government will come after you and you could be fined or lose your broker licence.
If you can navigate the new landscape properly and obtain a licence, I think it will be a really exciting time for advisers and clients alike. Australians will now have peace of mind knowing that they can trust the advice of brokers, financial planners and accountants who are licensed to refer potential investors to property groups. And advisers can leverage this opportunity to specialise in property investment.
I firmly believe that mortgage brokers, financial planners and accountants are the ideal people to turn to for property investment advice as we understand individual financial goals and circumstances. There is an excellent opportunity for advisers to leverage the changing landscape in order to deepen their knowledge and expertise in property investment by seeking out additional property investment training opportunities.
This will mean that more of our clients will receive quality advice from professionals in the field who can provide them with a full analysis of investment opportunities, including all the facts and figures about the whole life cycle of a property investment, from purchase to management and eventually the sale of the asset. The client will then be able to make an informed decision about a purchase.
With the royal commission making it harder to earn a decent living as a mortgage broker, diversifying into property investment also makes business sense. According to the MFAA, the average mortgage broker earns gross upfront commissions of just $83,000, yet mortgage brokers are working twice as a hard to earn this now, thanks to the royal commission. It’s a sad indictment to say that you could be much better off becoming a bus driver than a mortgage broker.
Rather than seeing the reforms as just one more hurdle for advisers, let’s see them as offering a new opportunity – one that will improve the industry immeasurably, and one that could potentially open doors for you to develop a new revenue stream, and to reinvigorate or grow your business at the same time as developing highly sought-after skills in a related field. What could be more fulfilling than that?
Founder and CEO