Estate agent regulations: What are they?

¿There are any estate agent regulations? Until recently, there was no official regulation required for estate agents in Spain. Now this is changing in some regions. In this article we explain what the new expectations will be, how your local agent will be held accountable and what this means for buyers and sellers.

Estate agents are one of the professional bodies relied upon by those looking to buy or sell their property. As real estate is probably the largest financial transaction that you will ever make, this is a great responsibility and yet, it is only now that measures and estate agent regulations, are being put in place to hold agents to account for the job that they do.

The move to monitor estate agents is being tackled on a regional rather than a national level. Andalucia, the Canary Islands, Madrid and Murcia had already begun to require registration and now Valencia has joined them in creating its own registry within the community, which includes the Alicante, Valencia and Castellón regions.

Registering the business is only the beginning of the new expectations. Estate agents must also now abide by a set of guarantees and requirements and have official training. If things go wrong, their actions can also be monitored through the electronic civil liability record. They are, after all, professional bodies dealing in the interests of the public and as such it is mystifying that ways of checking up on their practice weren’t already in place.

For those established estate agents with a history of excellence and recommendations, this will come as a relief to some extent. It has perhaps been too easy for people to set themselves up in the trade and make a great deal of money out of it. Most of the genuine agents will be pleased to see the sheep’s clothing removed and an opportunity for their clients to be more discerning in who they choose.

And if they don’t comply? As you might expect there will be some stringent sanctions with serious rule breakers being fined between 10,000€ and 350,000€ and even more possibly for those considered to have committed very serious crimes. The new laws come as a series of decrees issued in 2022 and which are only now coming into force.

The purpose of the new regulations is to improve the transparency of those ‘mediating, advising or managing transaction on property’. It will help to protect consumers, particularly in relation to the purchase of housing rather than businesses, and will apply to all those companies and individuals who are currently engaged in arranging sales on a regular basis in the Valencian Community.

Estate agent regulations: Qualifications

The estate agent must be someone who can offer some trained opinion and work. Especially trained to degree level in social and legal sciences, engineering or architecture or someone who have the necessary professional training. This professionally trained person will need to have had at least 200 teaching hours in the real estate sector. The training person will have different formation options: face-to-face study, distance learning, online or through a mixture of these methods.

For estate agents of foreign origin, this creates some hurdles. If they do not have the required university degree, then they will need to engage in an academic training course. This will allow them to acquire the correct credentials to continue practising. Not surprisingly, these courses are now popping up to enable those dedicated to the profession to ensure that they can legally continue to trade.

Alongside carrying out any additional training, estate agents must also register themselves. This applies to those who practice on a ‘regular basis’. A definition which includes being intermediaries in more than two purchases in the Valencia community per year. Once an estate agent is registered in one community. However, it is likely that they will also be considered to be validated for registration in other communities. Especially the ones that have opened up similar schemes.

The requirements

Registered estate agents must have an establishment that is open to the public unless their services are provided exclusively online. These offices where the business takes place. These, will need to have all the necessary opening licences and be registered for tax purposes too. If they operate the business purely online, then they must still have a physical contact address within the Valencian community. So, for example, a Belgian, German or British estate agency which offers services in the Valencia region of Spain. It must have a physical address in the region.

Whether the business operates in person or online there must be attention to inquiries, complaints and claims from consumers in relation to the services provided. At least one person must meet the professional training requirements and this person cannot oversee more than three establishments.

The estate agent must have insurance and service guarantees to cover responsibility for damages and public liability. The estate agents must protect the deposits placed against the risk of the agent being in financial difficulties. Civil liability insurance will cover damages caused to clients due to error or professional negligence. As a client you can ask to be provided with the policy number and the name of the insurance company.

Estate agents must follow a code of conduct and a level of professional ethics. This also applies to the fixing of commission rates and procedures. They will have to declare their compliance with these requirements through the Valencian registry.

Estate agent regulations: Registration

Once the registration is made, it need not be renewed. Also, a standard mark will be awarded to the complying agency. This can be revoked. However, if the agent is shown to be in breach of requirements and they will need to keep their registration updated when details change.

These estate agent regulations have some timings. August 2023 has been given as the deadline for estate agents to comply with the new requirements. It is expected that once the system is in place and established, it will give prospective buyers and sellers greater confidence in those agents that they trust with their property. It should certainly weed out those trading with a minimum of training or experience. So the agents are taken seriously and acted upon, they must provide a threshold standard and enable a complaint. In the end, it will continue to be important for homeowners to seek other sources of recommendation. Especially before making their final decisions about who should represent them.

This is a new law and as such it will be interesting to see how it pans out in real terms. The estate agents should move towards regulation, monitoring and accountability. This is encouraged and welcomed. Estate agent regulations are here, and apparently, to stay. However, there is much that must be worked through before we can see what level of improvement it brings to the practice of advertising properties and matching buyers.