Navigating the world of real estate in New South Wales (NSW) requires more than just a keen eye for property. Real estate is a heavily regulated industry across Australia. As such, you will likely need a licence to engage in real estate activity. Whether you are arranging property sales or overseeing rentals and strata management, a solid grasp of legal and regulatory nuances is essential. This article explores the necessary licences required to run a real estate agency in NSW.
When Do I Need a Licence?
In NSW, you must have a real estate licence to sell, lease and manage real estate on behalf of clients. This includes where an individual is:
- acting as an agent for a prospective purchaser, seller, landlord or tenant;
- negotiating transactions, including in relation to buying, selling, exchanging or leasing property;
- providing collection services for rent for a lease;
- providing property management services; or
- providing auctioneering services (on the condition that you possess auctioneer accreditation).
Not all roles within the real estate industry require a real estate agent licence or a certificate of registration. For example, where you are only involved in such activities as managing phone inquiries, addressing basic customer concerns and arranging appointments for agents, you may not need a licence to perform your functions. To ensure you select the appropriate credential, review the specified functions associated with each licence or certificate category.
You can obtain a real estate licence from NSW Fair Trading. This is the regulatory body responsible for overseeing real estate agents and agencies in the state.
Key Licences For Real Estate Agents
Class 1 Licence
Class 1 Licences allow an individual to:
- operate a real estate agency;
- deal with clients;
- perform various real estate activities, including property sales, property management, and providing advice to clients;
- assume the role of a licensee in charge (LIC);
- function independently as a sole trader; and
- if designated as an LIC, oversee and authorise trust account transactions for your business.
To obtain a Class 1 Licence, you need to complete a Certificate IV in Property Services (Real Estate) qualification or its equivalent. Additionally, you must hold a Class 2 Licence for a minimum of two years. During this time, you are expected to cultivate your experience and proficiency to prepare for the responsibilities of a Class 1 agent.
Class 2 Licence
A Class 2 Licence is required for individuals who work under the supervision of Class 1 agents and allows you to assist with property transactions and other activities.
Under a Class 2 Licence, you are authorised to:
- represent clients in property sales, purchases, and exchanges, encompassing properties, businesses, and professional practices;
- engage in negotiations with both clients and vendors; and
- facilitate the collection of rent, deposits, bond payments, and associated fees in relation to leases, licences, or contracts.
The requirements for a Class 2 Licence include completing a ‘Certificate of Registration’ course and passing an exam. A Class 2 Licence holder cannot operate independently but can perform tasks such as:
- showing properties;
- assisting with open houses; and
- handling paperwork under the supervision of a licensed agent.
In order to qualify for a Class 2 real estate agent licence, it is a prerequisite to possess a certificate of registration as an assistant agent. This entails maintaining a certificate of registration for a minimum of 12 months, during which time you must accumulate practical experience under the guidance of a licensed professional.
Corporations Licence
A corporation engaged in real estate agency activities, which includes property management, needs to hold a corporation licence. Corporations are required to appoint a Class 1 license holder as the LIC. In addition, at least one of the corporation’s directors must possess a licence in the same category of work conducted by the business.
Corporations have the option to apply for licences valid for one, three, or five years.
Continue reading this article below the formRestricted Licences
Restricted licences restrict the tasks an agent can do. Prior to 23 March 2020, there were distinct licence categories for real estate agents, business agents, and on-site residential property managers. These roles have since been consolidated into the real estate agent licence.
Individuals who possessed one of these licences when this change occurred were allowed to switch to a real estate agent licence. However, such licences had restrictions limiting holder to only carrying out certain functions, such as performing real estate, business agent, or on-site residential property management responsibilities exclusively.
Examples of some common restricted licences include the licences listed below.
Class 1 or 2 Licence (Strata Managing Agent’s Licence)
If you wish to manage strata properties (multi-unit complexes) on behalf of property owners, you need to obtain a Strata Managing Agent’s Licence. The requirements typically involve completing specific training related to strata management and meeting experience criteria. Strata managing agents are responsible for tasks such as:
- organising meetings;
- managing finances; and
- maintaining common property.
Class 1 or 2 Licence (Stock and Station Agent Licence)
The Stock and Station Agent Licence is for individuals who want to represent transactions involving rural properties larger than 20 hectares or provide livestock and livestock agistment.
Certificate of Registration (Assistant Agent’s Certificate)
The Certificate of Registration is a qualification that allows you to work as an assistant to a licensed agent. It involves completing a shorter training course compared to the full Class 2 Licence. Certificate holders can assist with tasks such as:
- showing properties;
- arranging inspections; and
- preparing documentation under the supervision of a licensed agent.
You need a certificate of registration if you want to work as an assistant agent in real estate, stock and station, or strata management.
Note that where you have a restricted licence, you can add or remove certain categories to your licence. For example, if you have a Strata Management Agent’s Licence, you can add Stock and Station Agent or Real Estate Agent to your licence. Before applying for any additional categories, ensure that you can prove that you have the relevant qualifications and experience for those categories.
This factsheet provides an overview of a real estate agent’s professional obligations.
Key Takeaways
Before starting a real estate agency, it is critical that you comply with any licensing requirements. You will likely need a licence if you intend to act as an agent and negotiate transactions for buying, selling or renting properties.
If you are considering starting a real estate agency or if you have an agency and have questions regarding your licensing obligations, our experienced real estate lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
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