New South Wales IPART’s final report on reforming licensing in New South Wales (NSW) was released on Tuesday 11 August 2015.
The report has recommended that the NSW Government should, by the end of 2015, abolish property valuer licences.
There are 3,200 property valuers who are licensed in New South Wales. Each year in NSW 700,000 valuations are undertaken by private valuers that are subject to the licensing system.
IPART noted that unlike in 1975 there are now a number of avenues available to regulate the property valuation industry including the following:
- introduction of the Australian Consumer Law in January 2011;
- the role of professional associations (such as the Australian Property Institute);
- the nature of the client base of property valuers: 80% to 95% of clients are large corporations (including banks and property funds) that repeatedly and frequently engage property valuers, meaning they are well placed to assess the quality of the service; and
- the amount of information on property values available to consumers via the internet.
The report noted in particular that for property valuers the finance industry is the largest client group, who largely seek valuations when assessing a home mortgage application. These clients are quite capable of protecting their position through contractual arrangements.
It was also noted that licensing did not exist throughout all of Australia and notably does not exist in ACT, Northern Territory or Victoria.
What does this mean for insurers, banks and property funds?
In the absence of a formal licensing/registration system in the largest state in Australia what is to be done by client users and professional indemnity insurers in terms of maintaining a level of comfort that there exists an acceptable standard of practice for property valuers in Australia?
Client users and professional indemnity insurers have historically required Responsible Valuers for an organisation either to be registered in their jurisdiction or hold an Associate level of membership in a governing professional body. In Australia this is largely the Australian Property Institute (API).
Fortunately the API remains a strong body with an established system in place for categorising different levels of membership. Importantly in order to reach the Associate category of membership, the property valuer must be qualified with a specified degree, along with training and other requirements. Full information is available on the API website.
The majority of property valuers are already API members and must meet API’s membership requirements. Client users and professional indemnity insurers will be well advised to confirm their documentation relies upon an appropriate API membership status, as a qualification criteria. Going forward the API may well find itself being the ‘de facto’ governing body for licensing purposes.