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06-09-2008

Real estate reforms include $100,000 compo for rip-offs

NZHERALD

Sweeping new real estate reforms were passed by Parliament last night, bringing in a consumer-friendly era for house buyers and sellers.

Associate Justice Minister Clayton Cosgrove pushed through tough changes to the system and the House voted 65-53 in favour of the new Real Estate Agents Act.

That act overturns a 30-year-old piece of law which consumers had complained about, despite a massive defence by the Real Estate Institute which opposed many of the changes. Mr Cosgrove told the House around $1 million was spent on a highly sophisticated lobbying campaign to kill the bill.

The House vigorously debated the new law from 10am yesterday to 8pm with National MPs accusing Mr Cosgrove of having a vendetta against the agents.

But Mr Cosgrove said after the law was passed that for the first time consumers would get a fair go if they felt they had been ripped off when buying or selling what is usually their biggest asset.

"The new law will also support good honest real estate professionals," he said

It is due to come into force 14 months after royal assent and will mean consumers who feel ripped off can claim up to $100,000 in compensation against agents.

Under the old law, agents could be fined a maximum of just $750.

Mr Cosgrove backed down on some points, including pushing out the time frame for the law to become operative from a year to 14 months. He also agreed to a review of property managers and whether they should be covered by the new law.

The new act raises doubts about the future of the REINZ because there will be no compulsory membership.

The institute is also being stripped of its regulatory powers for failing to refer complaints to its higher authority, the Real Estate Agents Licensing Board.

But the new law will usher in a real estate authority and disciplinary tribunal.

"In real estate it is often said that the three most important things are location, location, location. Now with the passage of the bill, the three most important things are the consumer, the consumer, the consumer," Mr Cosgrove said.

REINZ president Murray Cleland said the new law did not go far enough to protect consumers.

He refused to comment on Mr Cosgrove's accusation that REINZ had spent $1 million lobbying against the law, engaging top Wellington advocate Mai Chen. But he said he was disillusioned with some MPs.

"It's disappointing that people who said they would support us didn't," Mr Cleland said. The institute would not be disbanded but become stronger, despite non-compulsory membership, he predicted.

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