After being shot down as part of the dumped national licensing proposal, the removal of licensing requirements to transact commercial property has reared its head again in one state.
Earlier this year, the Victorian state government announced 36 red-tape reforms to reduce costs to business, including the proposed licensing changes for transactions over $10 million. However, according to CEO of the Real Estate Institute of Victoria (REIV) Enzo Raimondo, this was the first he’d heard about it.
“It caught us by surprise,” Mr Raimondo admitted to Real Estate Business. “There was no consultation with the REIV, the Law Institute of Victoria or the Estate Agents Council, which is responsible for advising the government on real estate practice issues. None of us were consulted before it was announced.”
Mr Raimondo said the REIV has been lobbying MP Peter Ryan and Treasurer Michael O’Brien since they released the proposal.
To make matters worse, no one in the government seems to be able to give a definition of ‘commercial property’.
“They can’t tell me if that includes an income producing rural property or retail shopfront. This will introduce a two-tier system where people who buy and sell commercial and industrial property below $10 million will use a licensed estate agent with a diploma and need to have an audited trust account. But anyone above $10 million doesn’t have to have any of that," he said.
“What happens to the interest earned in the account? What is stopping the ‘agent’ from taking the deposit and leaving the country? None of these circumstances have been given any thought.
“To say that all buyers and sellers of commercial property are ‘sophisticated’ is nonsense. People buying from overseas are unfamiliar with our laws and regulations; people who haven’t transacted property for many years will be out of the loop.”
The decision may also undermine the Victorian Property Fund, which relies on bank interest revenue earned from trust accounts to provide relief to consumers as a guarantee for property transactions.