Tag Archives: Estate Agents Act

Property agents who broker short-term leases may lose licence

Some agents are facilitating short-term rentals due to the sluggish housing market.

Property agents who violate the rules against short-term leases of residential properties for less than six months may lose their licence, according to the Council for Estate Agencies (CEA), reported The Business Times.

“Property agents have to be mindful at all times that they are required to comply with the Estate Agents Act (EAA) and its regulations when conducting estate agency work. They should not do anything that abets or facilitates anyone to breach any law or regulation,” said Acting Deputy Director for Licensing, Chua Geck Siang.

However, there are some agents who facilitate short-term rentals due to the sluggish housing market, even though the commission for facilitating such transactions is not as high as brokering sales. They usually receive half-a-month commission per year of tenancy.

Some agents were found to be referring potential clients for stays of under six months at St Thomas Lodge, Devonshire Apartments and Oxley Thanksgiving Residence, even though none of the three have been granted permission to be operated as a serviced residence.

“Agents who engage in these activities are either desperate or not well-informed. If they want to earn this kind of money, they might as well drive (for) Uber to earn money legally,” said Eugene Lim, Key Executive Officer, ERA Realty.

However, enforcing the rules against short-term leases is tough, especially for private properties. To skirt the rules, some landlords use a standard contract of six months with early termination clauses.

Further exacerbating the problem is the popularity of short-term rental portals like Airbnb and Homeaway, as well as the significant supply of studio and shoebox units, coupled with the strong demand from foreigners who work or study for a few months in Singapore.

As such, Century 21 Singapore CEO, Ku Swee Yong, is urging the various government agencies to work together to define the laws and increase enforcement against short-term leases.

$2,500 fine for handling transaction monies

A former Key Executive Officer (KEO) of an estate agent, Nicholas Kok Chiew Leong, was convicted and sentenced in April 2014 for handling transaction monies, according to the Council for Estate Agencies (CEA).

Kok was fined $2,500 for handling an option exercise fee of $4,000 for his clients, and another charge of a similar breach was also taken into consideration for sentencing.

A couple engaged Kok to purchase a unit in Clementi, and made an offer for it after the second viewing.

Two days after making the offer, Kok’s clients handed him $1,000 in cash, the proposed option fee and they signed the resale checklist and Option to Purchase.

Two weeks later, they handed Kok the option exercise fee of $4,000, which he subsequently passed to the sellers.

Salespersons are not allowed to handle transaction monies, so as to protect the clients’ interest and to minimise the risk involved in loss of sales proceeds. CEA also states it “is not under their scope of responsibilities”.

In a property lease transaction, transaction monies include rental deposits, monthly rentals and stamp duties. Meanwhile, transaction monies in a property sale and purchase transaction include option fee, down payment, stamp duties, deposits and sales proceeds.

The ban on handling transaction monies applies to buying and selling of properties situated in Singapore and leasing of HDB properties.