Regulators target unethical real estate practices

Property professionals have been warned they could be fined up to $220,000 if they exploit consumers.

NSW Fair Trading said regulators from around Australia have been working together to investigate the activities of certain property promoters.

One of the red flags is when spruikers suggest specific investment opportunities, as they may have an undisclosed interest in the transaction, according to Fair Trading.

Other danger signs are “claims of capital growth rates that may not be independent or credible” and “high-pressure sales tactics characterised by rushed decision-making”.

Fair Trading also issued warned about spruikers who push people to buy properties interstate that cannot be seen, or off-the-plan properties that don’t yet exist.

It has been revealed that in the past two years 20 professionals have received legal notices requiring them to substantiate claims made in advertisements and at their seminars.

Seven of them subsequently gave legally enforceable undertakings to regulators, promising to modify their behaviour and to stop making misrepresentations.

Fair Trading commissioner Rod Stowe said a common theme reported by regulators is of consumers being misled about the financial benefits of buying into a particular scheme.

“We are sending the message to the industry that they have to act fairly with consumers or face action by consumer law regulators using the Australian Consumer Law,” Mr Stowe said.

“Failure to do so will render the promoter liable for civil and criminal penalties, in some instances up to $1.1 million for a corporation and $220,000 for an individual.”

“These operators bring the entire profession into disrepute,” she said.

“This highlights how important independent advice is, and if someone is considering a major property purchase they should always seek a second and even a third opinion.”

[Related: Rick Otton vows to fight back against regulator]

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