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- 18 September 2003
Property Law Reform
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Page: 3615
Mr PEARCE: My question without notice is addressed to the Minister for Fair Trading. What has been the community response to the Government's new property laws, which include a fairer auction process?
Ms MEAGHER: As honourable members would be aware, the Government's property reforms came into effect on 1 September. The laws represented the biggest overhaul of the industry in more than 60 years. They aim to increase transparency in the auction process, raise the level of competence and ethical standards of agents, and improve consumer awareness of their rights when buying or selling property. I can report to the House that there has been a positive response to the new laws. "New auction system gets thumbs up" was how on 4 September the Australian Financial Review reported on one of the first auctions conducted under the new laws. The article stated:
Bidders did not seem to be discouraged by the requirement that they register before bidding and use numbered cards, similar to paddles, to identify themselves during the process.
The buyer of a Paddington property, Mr John Normyle, described the registration process as simpler and more transparent. On 3 September the Australian quoted L. J. Hooker chief auctioneer, Graeme Hennessy, as saying:
I think it's a good thing because it gives the method of marketing more credibility, integrity and transparency.
The Central Western Daily editorial of 1 September welcomed the reforms that require agents to justify the estimated selling price to both vendors and buyers. It said:
All good news to better protect people as they make the biggest financial commitment of their life.
Industry players such as the Real Estate Institute of New South Wales [REI] have been instrumental in the implementation of these laws. The president, Chris Fitzpatrick, said there were long-term benefits for the industry in raising the standard and the perception within the community. I observed first-hand the laws in practice when attending an auction on 6 September at Malabar in Sydney's east. The vendor and successful buyer both expressed satisfaction with the new process. While the response has been encouraging, there is no room for complacency and the Government will continue to ensure the law's objectives are being met. Before the laws came into effect, the Office of Fair Trading conducted a number of seminars around the State attended by more than 1,200 real estate agents. We also established a hotline for consumers and agents that was available on Saturdays and late Wednesday and Thursday nights.
Since the hotline began in late August close to 1,400 calls have been fielded. Last year more than 16,000 residential auctions were held across New South Wales. Obviously, it would be impossible to have Office of Fair Trading [OFT] inspectors at every one of those auctions. But the implementation of these reforms has been a top priority for the OFT team. Inspections of property auctions, as conducted in the past, are unannounced and usually covert. As part of its compliance the Office of Fair Trading is also assisting vendors, buyers and agents comply with the new laws where inadvertent contraventions of the laws have been identified. I inform the House that in the first two weeks since the laws began our investigators have visited 110 auctions in Sydney as well as a number of auctions in regional New South Wales. They have issued 45 formal cautions to agents and auctioneers.
[Interruption]
Mr SPEAKER: Order! I call the honourable member for Lismore to order.
Ms MEAGHER: No, I will not detail them. They included cautions for failing to properly display the auction conditions and bidders not displaying identifying numbers each time they bid. However, I am advised that compliance has generally been high and complaints have been minor. I am advised that our investigators will be more active in the next fortnight, taking the total number of auctions visited in the first month to about 250. It is important to note that each of these auctions involves different agents and auctioneers. Some concern has been raised about the practice of dummy bidding. Over the years we have all heard about the practice of dummy bidders—that is relatives and friends of the vendor calling out bids in an attempt to increase the sale price. It is a frustrating practice that can cheat genuine buyers and even vendors out of a sale.
One of the main aims of the auction law is to give a clear deterrent to those who may practise dummy bidding. Auctioneers and real estate agents are liable for fines of up to $11,000 if they accept a bid from an unregistered bidder. Fines of up to $22,000 can be imposed on auctioneers, real estate agents and anyone involved in collusive practices such as dummy bidding. If people are determined to continue this unlawful practice the message is you could be caught and the penalties are severe. Likewise, agents and auctioneers face not only stiff fines but also the risk of losing their licence. This will be a permanent and public blight on their record—a risk I am sure they are not willing to take. These laws are a step in the right direction in providing a more transparent and fair process that protects consumers and, at the same time, improves the standards of the industry. We will continue to monitor the effectiveness of these reforms. Over time, if there is feedback, we will be happy to take that on board.
Questions without notice concluded.
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