Following the introduction of the new Property Occupations Form 6 from 1 May 2024, now is an opportune time to check all of your letting appointments and correct any issues.
Regular reviews of your business paperwork, including Form 6’s, will ensure any issues are dealt with before they can impact on the value of your management rights business (i.e. when it comes time to sell) or before coming to the attention of the OFT.
Furthermore, it is important to remember that without a proper appointment there is no entitlement to a commission or to your fees and charges for any services you may provide.
What to look for
Letting agents should ensure that they are using the current Form, which is “Form 6 – V1-May 2024” from 1 May 2024 for any new letting appointments.
Common issues to look for include:
- not having signatures or dates in Part 9 of the Form;
- the correct name of the letting agent/licensee;
- the correct licence number;
- listing commission ‘exclusive of GST’ in Part 7:
- not attaching a scheduled of fees and charges;
- not including all fees and charges actually being charged;
- not including the ability to increase any fees;
- ensuring the appointment is continuing;
- having an appointment which was for a fixed term that has expired.
Importantly, the Form 6 is not sufficient on its own. It needs to have terms and conditions and a schedule of fees and charges.
The various industry forms have different special conditions or addendums and special care should be taken when completing these. Our preference is to use the ARAMA Addendum as it is relatively simple to understand and to complete. Importantly it also has some very carefully worded conditions dealing with the letting agent’s entitlement to make a profit from providing certain services to an owner or guests.
If you offer holiday lettings or short term lettings you may need to include what are commonly referred to as the “forced sale provisions” in accordance with the managed investment provisions of the Corporations Act. If at all unsure, check with your lawyer to see if they are required, as it is critical that they be included if they apply to your complex.
What to do now
One day you will want to sell and any well advised buyer’s accountant will be looking closely at your appointments. Of course you might also face a visit from the OFT doing a random check on your appointments. Be prepared and get it right the first time.
Mahoneys regularly assist letting agents to rectify and update their letting appointments.
Feel free to contact us if you require our assistance to held review your appointments.
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