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27 February 2012

The State Government will reform South Australia’s real estate industry to provide a new layer of protection for buyers and sellers.

Minister for Business Services and Consumers John Rau said the reforms would also cut red tape for real estate agents.

Mr Rau said the new reforms built on changes introduced in 2007 to crack down on agents advertising properties at prices lower than expected.

“These reforms were effective, but discussions with the real estate industry and consumers have identified some areas where consumer protection can be improved,” Mr Rau said.

“Buying a property is the biggest financial investment most people will ever make. It is crucial that the legislation is tight enough to give vendors and purchasers confidence that their transactions are handled professionally and ethically.

“I have also listened to concerns of the industry about the amount of red tape they must go through in the course of their business. While a strong regulatory framework is essential, the Government can make some changes to ease the bureaucratic burden without damaging the rights of consumers.”

Mr Rau said the Government would draft legislative amendments to close a loophole in the reforms introduced in 2007. These reforms were designed to prevent ‘bait advertising’ or underquoting, in which agents advertised properties at prices lower than expected.

While the reforms were effective, a loophole was identified which allows agents to advertise price ranges such as $500,000+ or ‘mid $500,000s’. The law will be changed to ensure this sort of marketing is also covered by the provisions preventing underquoting.

Changes will also be introduced to give vendors more confidence in an agent’s estimate of the selling price of their property. At the moment, agents’ agreements with vendors must specify the agent’s genuine estimate of the selling price.

“The Government will change the legislation to require agents to provide the vendor with comparative sales data and/or a report which justifies their estimate,” Mr Rau said.

In addition, the two-day cooling-off period for purchasers will be extended to bodies corporate. The use of private companies has become widespread, in particular those run by ‘mum and dad’ investors as trustees of superannuation funds or family trusts.
 
“In these circumstances, it is reasonable that such investors be entitled to a cooling-off period and the opportunity to consider a vendor’s statement before deciding whether or not to proceed,” Mr Rau said.

He said the Government had accepted a range of proposals from the real estate industry to reduce red tape.

Measures include:
•    Relaxing the time requirement for agents to deliver agent’s certificates and sales agency agreements to vendors (extending this to 48 hours, instead of ‘immediately’).
•    Allowing an extension of the current 90 day limit on sales agency agreements.
•    Removing the time-consuming requirement for standard conditions of auction to be read audibly before the auction of residential land.
•    Allowing a number of forms to be delivered electronically.