site.btaForum Discusses Regulation of Brokerage in Real Estate Deals

At a forum here on Wednesday, experts discussed the regulation of brokerage in real estate deals. The event was the first in this year's series of Real Estate Business Forums, organized by the real estate portal imoti.net.

The National Real Estate Association (NREA) last summer drafted a bill regulating real estate brokerage transactions. NREA head Alexander Bochev said that the branch is mature enough for such regulation and recalled that the NREA has been fighting for years for a regulation and law on broker services.

National Association of Real Estate Brokers (NAREB) Deputy Chair Iliana Rashkova noted that clear rules are needed for the industry to work under so as to clean up the image of the profession. She said that by up-skilling brokers and registering them officially as entities, every client would be able to make an informed choice on whom to trust and, thus, the industry would come out of the grey sector. For this reason, in her opinion, such legal regulation will contribute to clearing the name of the industry. Also, Bulgaria would get closer to European good practice. She pointed out that in 2021, there were already 18 countries with a regulated profession of "real estate broker"; the regulation there is either state or mixed.

Rashkova said that the organisation's concept for a bill aims to synthesize the rules to be worked on and this will unite the industry. She noted the role of the State, which should take over its functions for both education and maintenance of the register.

Vesselina Stoeva, Chairperson of the Board of the Association for the Development of Real Estate Brokers, highlighted the need to have rules. According to her, the main thing that hinders the work of the industry is the lack of a clear definition of unfair practices; also in need of defining are the minimum skills that brokers must have and by what means these are acquired. In addition, the technology of the transaction itself should also be discussed.

Georgi Pavlov, Chairman of the Advisory Board of AG Capital and Chairman of the Board of Directors of Realto Group, said that the industry is in favour of regulation, but the question is what kind of regulation. He pointed out that a bill has been submitted to Parliament by one of the parliamentary groups, and now it is time to work on the specific texts. According to him, the bill does not solve the problems mentioned, but "dozens of others in a very strange way for European practice and controversial for Bulgarian reality". He said that the bill was supported by one of the associations and not even by all the agencies of the association. "We have repeatedly told the NREA that the big agencies in it do not support the law as it stands," he said, calling for work towards regulation that unites the industry. He said that a position paper on the bill will be tabled in Parliament next week, which will be supported not only by the Realto Group but also by all the major agencies. "This is not good, we need to unite around five things," he added.

Dr. Gergana Tsankova, Commercial Director at LUXIMMO Group, pointed out that a clear distinction needs to be made as to what real estate transactions are. "I don't think an EUR 150-200 rental deal can be regulated in the same way as a multi-million commercial property sale," she said.  According to her, it should also be determined how and who can exercise the profession of broker, with the ultimate goal of increasing the share of transactions involving real estate agencies. It is also important to simulate fair competition.  "I would not like us, with the adoption of a law that aims to help the work, to get into the opposite hypothesis, in which we are overwhelmed by bureaucratic obstacles," she said. In her opinion, regulation should support the work of agencies and brokers, not one that regulates relations at any cost without taking into account the specifics of the activity.

Bochev said that when drafting the bill, the National Real Estate Association had taken into account the views of companies that are members of the organisation. According to Bochev, the thesis that the industry should be regulated and administered by a state body is unfounded, because no one in the State will pay attention to the industry for the simple reason that the State supports the need for such a bill, but has neither the financial nor human resources to administer these processes. For this reason, the NREA's bill proposes that they be administered through an industry chamber. It would be a branch organisation of all estate agencies, and any representative of such an agency could be a delegate to the general assembly, could be nominated to the bodies of that chamber, could vote and could be elected. The organs of this Chamber will have a three-year term of office. "I personally do not see a more democratic and fairer administration of this business," said Bochev.

This was described by Pavlov as an undemocratic and absurd statement.

During the forum it was pointed out that the State is ready and insists on having a specialized law for the activities of real estate brokers. It was further pointed out that the purpose of the NREA's bill is to make the real estate brokerage profession a regulated one, which means entering the register of specialized regulated activities that are of public and significant importance, such as doctors, aviators, and architects, which will lead to more administrative burdens and dependencies on the Chamber.

It was recalled during the forum that the regulation of the industry has been talked about since 1995 and the first bill was introduced in 2013. According to official data presented at the discussion, there are 26,845 companies in the real estate operations sector, and this includes those engaged in rented property management.