Real Estate Compliance: Key Regulations for Property Agents in Singapore

Singapore’s real estate market is one of the most dynamic and lucrative in the world. Whether you're a seasoned property agent or just starting out, it's crucial to be well-versed in the various regulations that govern the industry. Compliance with these laws not only ensures the integrity of the market but also protects both property agents and their clients.

In this blog, we will discuss the key regulations that property agents in Singapore must adhere to and why compliance is critical to maintaining a reputable career in the real estate sector.

1. Estate Agents Act 2010

The Estate Agents Act 2010 is the cornerstone of property agents also known as estate agents in Singapore. Enforced by the Council for Estate Agencies (CEA), this Act provides a framework for regulating the conduct of estate agents and agencies. Its primary goal is to protect the interests of consumers while promoting professionalism and ethical standards in the industry. It is important to note that the Act applies to “estate agency work in respect of property situated in Singapore and outside Singapore.”

The key components of the Act include:

• Licensing of Estate Agents: All real estate agencies must be licensed and agents must work under a licensed agency. The license must be renewed time to time.
• Conduct of Estate Agents: Agents must adhere to strict ethical guidelines and best practices in dealing with clients, including transparency and honesty in transactions.
• Appointment of Key Executive Officer: All real estate agents must appoint to a qualified key executive officer for the proper administration and overall management of the business and the supervision of their salespersons.
• Dispute Resolution: The Act outlines procedures for addressing disputes between consumers and real estate agents, ensuring that any grievances are handled efficiently.
• Prevention of Money Laundering and Terrorism Financing: The Act prohibits money laundering and terrorism financing (ML/FT). Agents must conduct due diligence and risk assessment to identify potential risks of money laundering and terrorism financing.

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Licensing Requirements

Property agents in Singapore must meet specific licensing requirements as per Estate Agents (Licensing and Registration) Regulations 2010 to practice legally. The CEA issues two types of licenses:

• Salesperson License: This license is for individuals who want to work under the employment of any real estate agent or as his director or limited liability partner.
• Agent License: This license is for persons who intend to carry on estate agency work.

All real estate agents and salesperson must clear the Real Estate Agency Examination and Real Estate Salesperson Examination respectively to obtain license under CEA. This licensing process helps ensure that all property agents in Singapore are qualified and competent to carry out their roles effectively.

Code of Ethics and Professional Client Care

To further uphold the professionalism of the real estate industry, the CEA has implemented a Code of Ethics and Professional Client Care. This code is a part of the Estate Agents (Estate Agency Work) Regulations 2010 and ensures that property agents uphold high standards of behaviour, including:

• Non-dual representation
• Non-reference to moneylenders
• Not holding transaction monies for or on behalf of any party
• Maintaining professional indemnity insurance.

Failure to adhere to the code of ethics can lead to disciplinary actions from the CEA, including fines, suspension, or even revocation of an agent's license.

Prevention of Money Laundering and Terrorist Financing

As real estate agents are in direct contact with property transactions, they are required to implement measures that prevent ML/FT. The Estate Agents (Prevention of Money Laundering and Financing of Terrorism) Regulations 2021 provides certain compliances to real estate agents in the prevention of ML/FT.

Key compliances include:

• Conduct customer due diligence before engaging in work
• Enter into agreement with client setting out business relationship clearly.
• Maintaining records of transactions for at least 5 years
• Conduct periodic review of information obtained from customer due diligence
• Conduct risk assessment to identify ML/FT risks in relation to acquisition or disposal?of property
• File report about suspicious clients to STRO.

These regulations ensure that the real estate market in Singapore remains transparent and free from illegal activities, which helps to maintain investor confidence and the overall integrity of the market.

Fair Advertising and Marketing

When it comes to advertising properties, real estate agents must adhere to certain advertising standards to ensure that their marketing materials are truthful and not misleading. Under the Advertising Guidelines for Estate Agents issued by the CEA, real estate agents are prohibited from making false claims about properties, inflating prices, or using misleading photos.

Key compliance include:

• Maintain proper identification in all advertisement, promotional materials etc.
• Prohibition on giving false offer, proposal, statement.
• Prohibition on advertising property price different from client’s instruction.

Misleading advertisements can lead to penalties and damage the agent's reputation, so it is essential to follow these regulations carefully.

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2. Personal Data Protection Act 2012

With the rise of digital transactions and data sharing, privacy and data protection have become increasingly important in the real estate industry. In addition to the primary law, real estate agents performing transactions digitally are required to comply with the Personal Data Protection Act (PDPA), which governs the collection, use, and disclosure of personal data.

Key compliances include:

• Designate officer for protection of personal data and make his / her business contact information available to public.
• Formulate a process for receiving and responding to complaints.
• Obtain consent from individuals before collecting, using or disclosing personal data.
• Inform individual regarding purpose for collecting, using and disclosing personal data.
• Formulate and implement personal data protection policy and communicate it to employees / staff.

In addition to that agents must also follow the Advisory Guidelines for the Real Estate Agency Sector.

For more details, refer to the official website of Council for Estate Agencies (CEA).

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Conclusion

Real estate compliance is not just a legal obligation wherein failure to comply can result in license suspension or revocation, hefty fines or imprisonment or both. It is also a vital safeguard for maintaining the integrity and professionalism of Singapore’s property market while protecting the country from being exploited for money laundering by unscrupulous elements.

The largest money-laundering case in Singapore came to light in August 2023 and has resulted in a number estate agents also coming under the scanner for their role. While the investigation is ongoing a news article reported that there was an uptake in AML compliance by real estate agents following the case being unearthed. However, it is crucial for real estate agents to be proactive and remain compliant at all times. This not only helps them to build a strong reputation and achieve long-term success in a highly competitive industry but also supports Singapore’s efforts to combat money laundering as a member of the Financial Action Task Force. By adhering to these regulations, real estate agents contribute to a robust, transparent, and fair property market, in line with Singapore’s commitment to high standards of conduct in the real estate sector.

Written by: DEBASHIS BANERJEE

Co-authored by: Swapna Umakanth

Disclaimer

The information provided on this blog is for general informational purposes only and is not a substitute for professional legal advice. We are not a law firm and are not authorized to practice law in your jurisdiction. Laws and regulations are complex and constantly changing, and information that may be true in one jurisdiction may not apply in another. Before acting on any information you read here, you should consult with a qualified lawyer practicing in the relevant jurisdiction for your specific legal issues or concerns. While we strive to provide accurate and up-to-date information, we make no guarantees that the information on this blog is completely current or error-free. We disclaim any liability for any actions taken or not taken based on the information on this blog.