ETHICAL PRACTICES IN THE ESTATE AGENCY INDUSTRY: EVALUATING REGULATIONS

ETHICAL PRACTICES IN THE ESTATE AGENCY INDUSTRY: EVALUATING REGULATIONS, INFLUENCES AND SOLUTIONS

Sr Dr Gunavathy Kanniyapan (Project Leader)

Prof. Sr Ts. Dr Ting Kien Hwa

Sr Tan Say Keat

Dr Chin Wen Aun 

Sr Tan Boon Yeow

Sr Irhamy Ahmad 

(Tunku Abdul Rahman University of Management and Technology)

ABSTRACT

The real estate agency sector in Malaysia plays a vital role in contributing to national revenue and is recognised as one of the top sources of tax collection by the Inland Revenue Board (LHDN). The sector's rapid growth underscores its significant position in the country's service economy. However, this expansion has brought about ethical concerns affecting intra-industry relationships and public trust in real estate professionals. Issues related to transparency, trust, and integrity have emerged as major focal points, influencing how consumers and agents perceive one another. These challenges are consistent with global trends in the industry. Despite the existence of regulatory frameworks and professional standards, ethical compliance in Malaysia’s real estate sector remains a critical area for examination, as lapses in ethical conduct can undermine consumer confidence and damage the industry’s reputation. This study investigates core ethical challenges within Malaysian real estate practices, focusing on three key areas: marketing and promotions, relationships among real estate professionals, and agent-client interactions. A methodological triangulation approach was adopted, beginning with document analysis of various legislative acts to develop the research framework. This was followed by a questionnaire survey to assess self-reported ethical behaviour and client perceptions, which were analysed using descriptive statistics, independent sample t-tests, and the PLS-SEM method. To validate the findings, a panel of experts participated in a Focus Group Discussion (FGD), which also contributed to addressing Objective 3. Through document analysis, survey findings, and focus group discussions, the research identifies gaps in industry compliance, ethical concerns, and areas requiring improvement. Key findings highlight persistent issues such as non-compliant advertising, misleading promotions, negotiator registration lapses, conflicts over exclusive agency agreements, and unethical agent-client practices like misrepresentation and undisclosed offers. The PLS-SEM model indicates that agent-client relationships exert the most significant influence on ethical behaviour, while peer relationships and marketing practices have moderate to small effects. Expert validation through focus group discussions underscores the need for enhanced regulatory enforcement, professional training, and technological interventions to improve industry ethics. Recommendations include stricter compliance monitoring, structured ethics training, digital transparency tools, and standardised marketing guidelines. Despite its contributions, the study acknowledges limitations in sample representation and temporal scope. Future research should explore the impact of digitalisation on estate agency ethics, consumer trust dynamics, and the role of organisational culture in fostering ethical behaviour. Strengthening enforcement mechanisms and embedding ethical principles within real estate transactions will be crucial for promoting accountability, consumer confidence, and sustainable professional practices.

Keywords: Ethical behaviour; Real estate agent; Client-agent relationship; Marketing; Consumer