Real Estate Industry Reforms

About this Item
SubjectsReal Estate; Auctions
SpeakersSpeaker; Hay Ms Noreen; Meagher Ms Reba
BusinessQuestions Without Notice

Page: 411

    Ms HAY: My question without notice is directed to the Minister for Fair Trading. What is the latest information on the real estate industry?

    Ms MEAGHER: I take this opportunity to congratulate the honourable member on her election to this House. Buying a home is, without question, the biggest investment that families will make in their lifetime.

    Mr SPEAKER: Order! I remind members that question time has not concluded. The calls to order I have noted against members stand. The Minister will be heard in silence.

    Ms MEAGHER: Over the past few years property prices have risen steadily and it does not appear that there will be any let up in the near future. Australia-wide, half a million dwellings worth around $124 billion changed hands last financial year—an increase of more than $34 billion on the previous financial year. Last year this Parliament passed the most significant reforms in the real estate industry that it has passed in the last 60 years. The main area of our reform involves properties that go to auction. In New South Wales 20 per cent of residential property sales are by auction. We have all heard stories about the practice of dummy bidders—representatives of the vendor who make bids at an auction in an attempt to artificially lift the sale price. It is a frustrating practice that cheats genuine buyers out of a sale. It is not only unfair; it is also unethical. Under our new reforms, it is illegal.

    Prospective bidders will now have to register with the agent prior to an auction. They will have to provide proof of their identification and other information that can be tracked by the Office of Fair Trading to investigate complaints of dummy bidding. Each bidder will be given a number and, on auction day, only those bidders with a number will be allowed to bid. Honourable members will be interested to hear that today I will release an 84-page draft regulation statement—the next important phase of these reforms.

    Mr SPEAKER: Order! I call the honourable member for Baulkham Hills to order.

    Ms MEAGHER: The regulation also makes it an offence to influence someone's bid by inducement and it provides for warnings about this to be included in the conditions of sale for the auction. To try to prevent someone from making a bid, or perhaps influence them to bid at a certain price, carries a penalty of up to $11,000 for an individual and $22,000 for a corporation. Other measures in our package of reform include a comprehensive code of conduct for agents, which will provide a clear guide to the professional and ethical standards expected by the public, particularly in the conflict of interest area. For example, agents cannot offer inducements to gain a client, engage in high-pressure tactics or harass a potential client. An agent who breaches the code can be fined up to $2,200 for each offence.

    Further reform measures include: ongoing professional education for agents and auctioneers to raise standards across the industry; the disclosure of commissions, including any secret fees to the client; a one-day cooling off period for agency agreements to ensure that people are not pressured into a sale; and giving consumers access to a public register enabling them to check whether an agent is licensed and what, if any, disciplinary action has been taken against them. Finally, there are new powers for the Fair Trading Commissioner to act quickly against illegal and unethical operators, getting the shonks out of the business. Most agents do a good job, but they want the shonks out of the industry just as much as we do. They are interested in protecting the good name of the industry in which they work.

    The draft regulation is now out for public comment. Submissions will be received until 6 June, with reforms anticipated to commence on 1 August. Those reforms will be backed by a rigorous compliance package and education campaign. Last year more than 16,000 residential auctions were held across New South Wales. Obviously, it would be impossible to have a Fair Trading inspector at every one of those auctions. However, inspection of property auctions, as conducted in the past, will be unannounced and usually covert. Every agency will be notified in the coming months to ensure that they know their rights and responsibilities under the new Act. I invite people to make submissions to this important reform so we can have a system that protects consumers and, at the same time, improves standards in the industry.

    Questions without notice concluded.