The new rules try to put an end to bad behaviour, but what about the shabby suits?
It could be a lack of land, or it could be a failure to develop alternative investment opportunities, but it’s probably more satisfying to blame China’s ever-rising home prices on rascally real estate brokers.
Frustrated in its attempts to dampen demand for new housing among Chinese investors, China’s chief housing regulator is aiming its regulatory might at real estate developers and agents as the government shows its determination to cool down an ever-rising property market.
On May 19th, China’s Ministry of Housing and Urban-Rural Development (MOHURD) released draft regulations on housing sales management. In addition to set up stiff new rules for developers, the regulations also target property brokers.
Buying a Cheap Black Suit No Longer Enough to Launch Sales Career
Known to be a free-spirited group in any economy, China’s real estate boom has been a boon to individuals looking to climb the ladder as agents. Usually paid only a minimal salary, if any, the agents work for commission and there have been few rules to govern a ruthlessly competitive industry.
The draft law says that the government will implement a professional qualification for mainland real estate agents, and set rules for their activity. All brokers must now be registered, and will not be allowed to conduct business as individuals, but now must be part of a company. Also, no broker can work for more than one agency at a time.
When marketing properties, agents are now expected to clearly display price information and are forbidden from creating false or misleading real estate listings both in their shops and on the Internet. While performing their duties, agents are required to provide clients with their full names and qualifications.
Making Sure Agents Stay in Line
In September last year, when the government was just beginning to launch its latest campaign to rein in the country’s rambunctious real estate market the government already made agents a target, arresting six Shanghai brokers for spreading false rumors of potential hikes in mortgage rates. In February this year, one of the brokers went to trial, charged with causing severe market instability.
The new regulations do not spell out criminal penalties for rule-breakers, but do include sanctions for those who fail to follow the new government line. Agencies which fail to enforce the requirements for broker qualifications, publish misleading information, or otherwise neglect the new rules can lose their rights to sign new contracts through the government’s online contract signing system – thus losing their ability to collect commissions.
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