Time for government to get serious about property market

A PEAK real estate body has called on the Victorian Government to repeal sections of a new bill it said will “undermine confidence in the property market”.

Toby Balazs, chief executive of the Real Institute of Victoria, said the Consumer Legislation Amendment Bill falls short on all fronts.

“At a time when Victoria’s property market is crying out for greater confidence and certainty, the Government has instead proposed reforms that appear to have been developed without sufficient understanding of how property transactions operate in the real world,” Balazs said.

“While the Bill seeks to enhance consumer protections and increase transparency, several of its proposed changes will likely deliver the opposite.

“The reforms as currently drafted threaten to increase legal complexity, expose consumers to greater litigation risk and undermine confidence in the property market further.”

Balazs said nowhere is this more apparent than in the proposed amendments to the Sale of Land Act.

Under the Bill, it would be illegal for buyers and sellers to enter a contract unless the Section 32 vendor statement has been available for at least 14 days.

“This means a buyer who has spent months searching for the right property is prohibited from capitalising on an opportunity if the 14-day period has not elapsed,” he said.

“Similarly, a seller will be unable to accept a genuine pre-auction offer despite both parties being informed and willing to proceed.

“The result is a fundamental shift in buying and selling dynamics. Opportunities would be lost, transactions delayed, off market transactions made redundant and choice diminished. And for what gain?

“Importantly, the issue here is not the intent of the reform – REIV fully supports Section 32 being made available early – it’s the wording of the Bill.

“A simple amendment requiring Section 32 to be made available within 14 days of the property being offered for sale would achieve the desired outcome without stifling transactions and creating unnecessary legal risk.”

Of similar concern is the plan to repeal Section 27 of the Sale of Land Act.

Section 27 provides a well understood statutory framework that enables sellers to access deposit funds before settlement while maintaining important safeguards for buyers.

“Replacing this with a contract condition would require buyers to have every contract reviewed by their solicitor before bidding.” Balazs said.

“While this may appear straightforward, it is often impractical, particularly in auction settings where contract terms are largely pre-determined and there is no cooling-off period. 

“Under the proposed Bill, successful bidders may have little choice but to accept early deposit release, unless the contract terms have been pre-negotiated.

“This change once again reflects a misunderstanding of how property transactions operate. Making the decision post contract signing allows buyers greater discretion.

“And in a clear turn on the industry with no apparent rationale, agents are not permitted to access their commission for services delivered even when the buyer approves the early release.”

Balazs said, in the absence of any real evidence demonstrating genuine consumer benefits, the case for abolishing Section 27 remains unconvincing.

“Taken together, these reforms represent a major change in how Victorians buy and sell property,” he added.

“The irony is that changes intended to simplify transactions and improve transparency will likely deliver the opposite. In disregarding industry expertise, the bill fails to reflect the practical realities of property transactions.”

Balazs contends that ff the Government is serious about addressing the challenges in Victoria’s property market, it should reconsider the proposed bill before it becomes law.

“Now, more than ever, Victoria needs sensible property reform that is guided by evidence, practical experience and a genuine understanding of how property transactions operate in the real world,” he said.

“Only then can legislation deliver meaningful consumer protections while preserving the nuances of property transactions which a healthy property market depends upon.”