Act 242 fails to stem real estate industry misconduct | Malaysian Institute of Estate Agents

Act 242 fails to stem real estate industry misconduct


LETTERS: The Malaysian Institute of Estate Agents (MIEA) came out with an advisory recently, advising the public to be wary of scams especially during the MCO period and make a verification with the Board of Valuers, Appraisers, Estate Agents and Property Managers (BOVAEP) so that the public deals only with registered estate agents or negotiators.

Therein lies the problem which I am calling out to relevant bodies and agencies. Yes, i'm referring to MIEA, BOVAEP and MOF. Since the enactment of the Valuers, Appraisers, Estate Agents and Property Managers Act 1981 (Act 242) and its amendments, close to 40 years have passed but the issue of illegal brokers persists and has worsened many times over.

In fact, and I believe, there are many out there getting bolder in their illegal brokering activities. Even registered Estate Agents companies are circumventing Act 242 and failing to register their sales people as negotiators and getting their people out into the field under many creative titles.

Denying does not make the problem go away, it only emboldens others. Is the Act 242 just another toothless tiger? Is it effective enough to protect the Malaysian public and consumer? Or has enforcement been lacking? Granted, there are people who break law in this country, but some are caught, fined and some thrown into jail. Where are the statistics to show the enforcement of the Act 242 and more importantly, where are the convictions necessary to serve as deterrence?

The large majority of practitioners are negotiators and most if not all need to pay a percentage of each deal to the Principals and tax authorities (not to mention other expenses incurred like advertisements, travel etc.). The net effect of such is that the take home amount could possibly hover around the 50 per cent mark of the commissionable fee. Yet, they persevere on the long and narrow road hoping for the authorities to see the imperfection of the system. Let’s not even start discussing the contents of the permissible commission scheme which all Estate Agent companies disregard.

In my personal opinion, the Act 242 has been used since the 1980’s as a barrier to entry by those higher up the food chain and keeping the share of the market among themselves. Allow me to illustrate the current situation. Negotiators are required to pay an annual fee of RM200 and attend 2 days of seminar to get the practicing certification under the guise of training and/or self-improvement. Where does the money go and how is it spent? For the betterment of the majority of negotiators or the industry? Spending it on a couple of roadside billboards is just not going to cut it I’m afraid.

The choice of speakers at those seminars is another question mark. There are hundreds of self-styled gurus and experts on the internet today. Do they really add value for the negotiators or are they on a “syok sendiri” self-promoting session?

Where is the value to the Malaysian public and consumer? Even for negotiators wanting to go higher up in the food chain to be an Estate Agent and set up a company, paper qualifications are needed and in addition to that, 2 years of practice under a Principal is required with a further interview session.

Lawyers who are dealing with much more serious issues are required to chamber for only 9 months. The one that really takes the cake was when some time back, foreigners were allowed to practice in the industry. This effectively deprives Malaysians of their rice bowl.

Note that this happened against a backdrop of the weakening Malaysian economy. I cannot help but give a sad analogy to the above situation. The negotiator gets slapped in the face, and then is required to still smile while another throws mud at his direction. Anymore to come?

To add to that, proptech companies are eating into the share of the industry. Where is the protection for the Malaysian public, consumer and importantly the tens of thousands of negotiators? Can we say Act 242 as effective?