COMPLAINTS AGAINST REAL ESTATE AGENTS

COMPLAINTS AGAINST REAL ESTATE AGENTS: 12.

Mdm Halimah Yacob asked the Minister for National Development (a) how many complaints had the Ministry received against real estate agents over the last three years and how were these resolved; (b) whether the existing regulations are sufficient in dealing with abuses and unscrupulous practices; (c) when will the Ministry be introducing the mandatory industry examinations; and (d) whether the Ministry is concerned with the current trend where credit companies working with real estate agents advance money at exorbitant rates to ignorant and desperate homeowners who are selling their flats.

Mr Mah Bow Tan: Mr Speaker, Sir, real estate agencies are currently licensed by the Inland Revenue Authority of Singapore (IRAS). Over the last three years, IRAS has received a total of 154 complaints against real estate agents – 47 cases in 2007, 63 cases in 2008 and 44 cases in 2009).

The current licensing regime does not empower IRAS to investigate into misconduct by real estate agents. IRAS’

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practice is to refer the complaints it received to the Singapore Accredited Estate Agencies (SAEA) for investigation and resolution, if the agent is from an SAEA-accredited agency. Otherwise, IRAS will refer the complaints to the estate agencies directly. Where there are serious allegations, for example, cheating or falsification of documents, IRAS will advise the complainant to report to the Police.

Besides complaints to IRAS, consumers also lodge their complaints with CASE. There has been an increase in complaints received by CASE in recent years, with 1,055 cases in 2007, 1,100 cases in 2008 and 1,079 cases in 2009.

The Member asked about flat sellers who borrow money at exorbitant rates against the sale of their flats. The Housing and Development Board (HDB) flats are not meant for short-term profit taking. They should also not be used as "security" for loans. We have received feedback that some moneylenders provide loans on the condition that the borrowers repay the loans from the sales proceeds of their HDB flats. My Ministry is currently working with the relevant authorities on appropriate measures to curb such abuses.

Existing regulations are clearly inadequate to deal with potential abuses and unscrupulous practices by errant real estate agents. This is the reason why my Ministry is considering strengthening the regulatory framework to protect public interest and to raise professional standards in the industry. Mandatory examination is one component under consideration. My Ministry will be announcing the key elements of the new regulatory framework shortly. I will be also introducing legislation in this House to formalise those new regulations.

Mdm Halimah Yacob: Sir, I am happy to hear that the Ministry will be introducing legislation to curb excesses

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and abuses. One common practice currently is that credit companies are filing caveats against HDB flat owners who had borrowed money from them at a very high interest rates, so that when these HDB owners sell their flats, the credit card companies will get the first bite. Will the Ministry review the measures to curb such practices of abusing the caveat system? The caveat system is not meant for this purpose.

The second point the Minister has mentioned is that complaints will be referred by IRAS to the SAEA, provided these are members of SAEA. If not, complaints will be referred directly to the agencies concerned. I think there is a loophole here, because if you are the real estate agency, I think there will be less reason for you to find something faulty with your own agents. Otherwise, that will affect your name in the market. Are there any measures to try to improve these regulations, in order to better protect homeowners against such abuses, rather than leaving it to the industry to regulate itself?

Mr Mah Bow Tan: On the first question about the caveats, as I indicated in my reply, the HDB home is not meant to be used as a collateral for loans, whether to illegal or legal moneylenders. Unfortunately, there has been a loophole that has allowed legal moneylenders to lodge such caveats. That is the reason why my Ministry is now looking at how we can prevent this from happening. This is going to be done before the regulations for the real estate agents are finalised. In other words, I am treating it as a matter of urgency. It is obvious that there has been abuses and people have been exploited. In this regard, the role of some rogue estate agents should also be examined. Here again, we are going to look into these malpractices, even before we finalise the regulations for real estate agents. This is

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going to be taken separately, from the measures we are taking to regulate estate agents, which comes to the Member's second point – whether there is a current loophole.

The answer is yes, and that is the reason why we are looking at the whole industry structure. There is a need for us to raise the standards for the industry as a whole. I must say that most estate agents are genuine, helpful and provide a professional service. But unfortunately, if the industry is not regulated, and in the current climate especially, there are a lot of temptations for some real estate agents to take short cuts and to indulge in illegal or questionable practices. That is the reason why we are now taking a fundamental re-look at the whole industry. We are looking into whether we should have a formal form of registration for real estate agents. What are the mediation avenues available? If not, what are the dispute resolutions mechanisms available? Finally, if not, what are the punishments that can be meted out to those who flout the rules? I would urge the Member to be patient. This legislation will be brought into Parliament in the not-too-distant future.