AS a centrally-located South Pacific hub consisting of 333 islands, the word ‘Fiji’ naturally conjures an image of tropical bounty in most minds, complete with pristine beaches and lush rainforest. This reputation has long attracted the attention of retirees, former residents, celebrities and a host of other investors from around in the world, while the country has progressed through several decades of economic booms and upheavals, frequent political turmoil, and a once minimally-regulated real estate industry.
Traditionally, local real estate businesses typically manifested as small, family-run organizations that could list and sell almost any property without much by way of an advertising campaign. This concept of minimal agency was widespread during the industry’s infancy in the 1970s, resulting in a view that connecting buyers to sellers in Fiji was relatively easy. These days, the broad array of agencies and realty houses that have cropped up, coupled with a growing tendency to advertise listings beyond the confines of office walls, public notice boards and newspaper classified pages, has crafted a constantly developing and highly competitive marketplace in the industry.
Despite the growing sophistication and complexity of this marketplace, real estate licensing laws were only enacted in Fiji a decade ago. All real estate agents now operate under the regulatory authority of the Fijian Government’s statutory watchdog, the Real Estate Agents Licensing Board (REALB).
REALB is chaired by Dr Abdul Hassan, Land Management lecturer at the University of the South Pacific (USP), along with Registrar, lawyer Virisila Tuimanu. The Board has undertaken rigorous review processes and implemented stringent measures in the past year, with a view to solidifying its work. This has included legislative reviews, license grants and cancellations, and amazingly, the launch of the country’s first series of national real estate workshops.
As Tuimanu shares, some of the major challenges faced by the Board include commissions, agency agreements and the introduction of a Code of Ethics, all of which are currently being addressed.
“There must be some guidelines in place for the amount of commission to be paid to agents, as some are excessive and it is usually too late when respective clients realise it,” she explained.
“For agency agreements, there is the need to have standard and uniform provisions in the agreements signed out by agents and respective vendors and clients, and a Code of Ethics, which is currently being drafted, and there is a much greater need to have this in place in order to regulate activities of agents and branch managers and salespersons.”
The Board has also been looking into a review of current laws governing the real estate industry, namely the Real Estate Agents Act (2006) and its subsidiary legislation. This will necessarily involve close consultations with its line Ministry, the Ministry of Industry, Trade & Tourism, and most importantly, industry stakeholders. Further, in order to improve the Act’s implementation, several regulations will be developed in the coming years, including standardized agency agreements, a Code of Ethics and Professional Client Care, a prescribed examination for salespersons, as well as stronger provisions relating to commission.
In the future, it is likely that the Board will also consider pricing control and mandatory valuations for local properties before they are listed, as a response to widespread concerns about overpriced properties from Fijian residents, as highlighted in Property.com.fj’s recent Fiji Real Estate Survey 2016.
In the context of its vital regulatory role in the industry, the Board has observed that more agents are becoming aware of the important roles that they play, and the obligation that they have to strictly abide by industry procedures and guidelines. This observation is no doubt stimulated, at least in part, by the increased degree of public oversight for agents in legal practise, as evidenced in late September by the cancellation of 14 real estate agent licenses, the expiry of 23 licenses, and withdrawal of six.
An MOU signed with the Fiji Revenue & Customs Authority in late September also signified the enhancement of efforts to exchange vital information between these two statutory agencies. Under this document, the FRCA is now able to access information relating to the purchase and sale of properties, as well as data about the exact number of registered real estate agents in the country.
As FRCA CEO Visvanth Das noted, the MOU ensures that they have access to real time data about the number of properties sold each month, and whether these sales are properly accounted for in tax collection for those months.
“In most countries, the real estate sector has been branded as a sector used to facilitate tax fraud and money laundering,” he said.
“This includes generating and investing unreported income. In Fiji, there have been few cases where a large amount of cash has been used to purchase properties. The sources of these funds are also unknown.”
Recently announced government plans to extend several town boundaries are also expected to affect property prices, although, as Tuimanu pointed out, this largely depends on market dynamics. As a regulating agency, if an increase in property prices also creates the need for more licensed agents, the Board will ensure that all requirements are met by applicants prior to authorising the licensing of any new agents.
“Nadi’s declaration as a City in 2017 will have an effect on real estate, and REALB anticipates the increased need for having more licensed agents and possibly the need to grant permits for applicants who would need to carry out short term real estate activities too. However, we reiterate that local requirements under the law and those set out by the Board must be satisfied in order to issue a real estate agent license.”
As was also noted by Dr Hassan, real estate is the single largest component of wealth in a society. It thus not only plays a key role in shaping the economic conditions of families and people, but can highly impact on a community’s ability to finance all important public works and expenses.
By virtue of their role as industry regulators, REALB is adamant on continuing to develop and administer a more vibrant real estate industry in Fiji, as well as sustaining an environment of professionalism, expertise, integrity and quality within all industry dealings∎
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